Grading system needed for local office buildings
By Dinh Dung in HCMC
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| Office buildings in downtown HCMC - Photo: Dinh Dung |
As his office building has a good location in the central business district and was designed with the latest technology and building materials, Ha Van An wonders why the A&B Tower underway on Le Lai Street in downtown HCMC is classified as a grade B office building. The chief executive officer eventually learns that his building’s grading follows the criteria applied in the city, hence it is not Grade A, because of a limited floor plate of some 800 square meters. Like many other developers and tenants, he wonders what standards apply to the office building sector in the country.
Fourteen years since the first Grade A building, Saigon Tower on Le Duan Blvd, launched into the office market, the segment has increased significantly, over a thousand percent, and is expected to grow by a further 160% in the next five years, according to the market research company Colliers International.
However, Vietnam has yet to have its own standards for office buildings. Most standards applied in the country have been borrowed from other countries, brought by foreign market research companies like CBRE, Savills and Colliers International.
“We really need a standard grading system for the office market, but the Ministry of Construction has not set up a local one,” Nguyen Van Hiep, deputy director of the HCMC Department of Construction, told the Daily last week. The local office market has no other way but to follow standards introduced by foreign property management companies.
According to Colliers International, there are no common international standards for office buildings, and differing standards have been unofficially adopted by agencies, developers, investors, tenants and industry professionals across the country. Every agent quotes a standard based on its own company’s evaluation, on market practices. There are many common measures that experts believe are important in determining a building’s grade, such as location, services, age, accessibility and management standards.
“Vietnam does not have specific grading system except for that of either agents or developers,” says James M. Graham, associate director of commercial leasing for Colliers International.
He says agents adopt a standard based generally on location, age and size of floor plates, while developers will grade their building based on their “vision”.
A Grade-A building, besides interior and exterior access and mechanical systems, requires a location in the central business district with a net floor area of over 20,000 square meters and a floor plate over 1,000 square meters.
In HCMC, there are five buildings built between 1996 and 2006 that are considered to be Grade A including Diamond Plaza, Saigon Center, Saigon Tower, The Metropolitan and Sunwah Tower. The remaining 800,000 square meters of office space is considered to be Grade B or Grade C. In addition to these five buildings, there are five more buildings either completed in the past 12 months or due to be finished by the fourth quarter of 2011 that have been or are expected to be marketed as Grade A, including Kumho Asiana Plaza, Vincom Center, A&B Tower, Bitexco Financial Tower and M&C Tower.
Graham says with the exponential growth in the office market in HCMC over the next five years and beyond, it is essential that a grading system be developed and implemented by property professionals, and tenants should pay a fair price for their premises. The result would be a fair and transparent property market where both landlords and tenants can make objective decisions on their property strategies.
Colliers introduces Australian standards saying that with a growing and maturing market, Vietnam needs to adopt a similar grading system in the country, and all the factors may not necessarily be relevant for the different markets in Vietnam, but at least it is a starting point for adopting a concise and well researched methodology.
“There is no reason why the Australian standards cannot be adopted by property professionals and landlords in Vietnam with relevant weightings adapted to the local markets,” Graham says, adding it will at least bring a standardized approach to the classification of buildings to assist in the maturing of the property market in Vietnam.
The company says it will no longer quote ‘International Standards’, but instead, ‘Vietnam Standards’ qualified by a documented methodology based on an internationally recognized property body’s standards. Through this approach, the other agencies and developers will begin to adopt a similar approach to keep up with the emerging maturity of the office market as the industry grows and matures.
The Saigon Times Daily