HCMC Office Leasing Guide
This is the overall characteristics and guidelines about Ho Chi Minh – HCMC Office Leasing for companies that want to start or expand businesses and look for an office in Vietnam.
Of course, there will be a lot of issues that need to be clarified and agreed upon in the search and lease agreement process. In order to get the best agreement as well as save your resources and time, it is better for a professionalism and credibility local agency to represent you to work with the landlords by their relationship, knowledge about the local and office leasing market.
TYPICAL HCMC OFFICE LEASING
3 – 5 years. Longer for tenants required large space
|Rent basis||Rental fee + service charge|
|Currency||Must be denominations in VND|
|Free-rent||1 week – 1 month for fitting-out|
|Escalation||Corrected if the lease is for less than 3 years, but the growing rental includes escalation to address forex concerns|
|Tenant’s broker||The landlord pays, with the guarantor of the tenant|
|Landlord delivers bare shell. Tenant pays fit-out, typically within rent free fit-out period|
|Right to sublet||Negotiable|
|Transparency||Disclosed with the consent of the parties|
LEASE LENGTH OF HCMC OFFICE LEASING
In Vietnam, the lease term usually lasts from three to five years. Anchor or international tenants looking for longer leases can negotiate terms from five to ten years.
|Termination or Break||Breaking options are rare but can be negotiated.|
|Renewal||Renewal options are negotiable, usually have caps and|
collar in place. A collar is the opposite of a cap, ie, the minimum rental rate.
SPACE MEASUREMENT OF HCMC OFFICE LEASING
|Space Measurement||Space is measured in square meters.|
|Efficiency||The percentage of carpet area with NLA is 95%. The ratio of NLA to GFA is usually around 80, 85%, although this may be as low as 60%.|
|Rent|| Rent Quoted|
Rents are usually quoted in USD per square meter per month.
Currency for Payment
The tenant pays rent in VND. By law, the landlord must have a VND bank account. If the tenant pays in USD, the bank will convert the payment into VND before crediting to the landlord.
When the USD to USD exchange rate decreased in 2009 – 2011, tenants with US $ rent were subject to hidden costs because the US dollar rent required greater payment in the dong when the currency depreciated.
New leases are almost entirely signed and signed in bronze, due to increased enforcement of government regulations. With persistent depreciation pressure on the VND, both landlords and tenants try to hedge risks. Leases are made in VND with a fixed annual increase that allows some compensation for the expected devaluation of the currency. Forcing a dong to rent at the rate of USD / VND does not comply with the regulations; therefore, homeowners insert a fixed annual increase in rental rates to compensate for the expected currency devaluation.
Rent is usually due on a quarterly basis, including service charges, in advance. The tax rate of 10% is not included, but due
at the same time.
The free rental term is negotiable. Typically, the rent exemption period is based on a specific case based on the occupancy of the building, the magnitude of the covenant, the lease term and the title rent. The rental exemption period usually includes a suitable time period, although service charges and 10% VAT are still applicable during this period. Under current market conditions, landlords are increasingly competing for incentives including free rent periods.
Leases longer than three years usually stipulate that the parties will renegotiate the rental price after the initial three-year period. The parties manage the risk of long-term lease by agreeing to lease the amendment to a predefined range, usually 10-15% of the base rent.
|Service Charge||Service fees include management, 24-hour security for common areas, cleaning, lighting, power supply, plant and machinery maintenance, pest control in common areas, outside window cleaning, clean up trash, lift, and electricity to operate the air conditioning system during normal business hours.|
The tenant pays a service charge plus 10% VAT in addition to the rent, based on the rented area, on a GFA or NLA basis.
The charge varies from building to building, depending on the services provided and the quality of the building. Particular Service fee is:
Grade A: USD 5–8 per square meter per month.
Grade B: USD 4–6 per square meter per month.
Grade C: USD 3–4 per square meter per month
|Taxes||VAT tax 10% is due to both rental and service charges. VAT is paid to the landlord|
|Fit-Out||Standard handover is ceiling cover, ie, concrete floor/floor with the finished ceiling. Tenants usually pay for all tenant improvements, such as receptionists, partitions, interior doors, wiring, cables, furniture, floors, and ceiling modifications. Hardware and IT phone systems are the responsibility of the tenant. Appropriate costs range from 150 – 600 USD / m2.|
|Restoration||The tenant usually must restore the property to its original condition at the end of the lease term or pay the landlord, unless otherwise agreed.|
|Security Deposits and Guarantees||The tenant pays the deposit based on the leased area, on a GFA or NLA basis. A three-month security deposit is usually paid when signing the lease. At the end of the lease, the landlord will return the deposit in the same currency as received, excluding interest. If the parties renew the lease for a different term, the security deposit is usually adjusted at the new market rate.|
|Car Parking||Renters often pay extra for parking. In Ho Chi Minh City, this tax is approximately $100 – $200 + 10% VAT per car parking lot per month for Grade A buildings. In Ho Chi Minh City, motorbike parking is usually $10 – $20 + 10% VAT per bike every month. Depending on market conditions, landlords are increasingly competing for incentives including parking.|
Other Occupancy Costs
Air conditioning after working hours, internal hygiene and insurance
|Agency Fees||Landlords pay this fee, tenants do not have to spend any cost for an agency to find an office for them.|
|Legal Fees||Both parties share legal fees.|
|Other Transaction Costs||Both parties share other costs incurred (if any) related to the preparation and implementation of the lease contract.|
OTHER LEASE PROVISIONS OF HCMC OFFICE LEASING
|Landlord or agent provides the draft lease agreement, usually with standard terms and conditions|
|Right to Sublet||The sublease is carried out on a case-by-case basis, but requires the owner’s consent if the business license does not grant the sublease right.|
Option to Expand & Right of First
|Options to expand are negotiable. Tenants may negotiate in their lease agreement the first right of refusal to contact space on the same or floors adjacent to the same terms and conditions contained in a party offer. Tuesday, with 15 days to match any third party Party offers. Usually negotiated on a case by case basis|
|Signage and Naming of Building:||Depending on the market and building conditions, each building has a place to place the company’s name in the building (standard size). If a tenant wants to place a large-size sign outside the building to promote the company’s image, the tenant will have to pay an extra fee to place the billboard.|
If you want to inquire about an office location or start operating or expand your business in Vietnam, contact us today. We offer a free consultation to understand your requirements and put you on the right track.
We offer a free consultation to support you to find a suitable Office For Lease In Ho Chi Minh:
Phone: (+84) 398 716 459 – Available via Whatsapp/ Viber/ Zalo