Data released from Savills illustrates the changes to the residential & commercial market.
Real estate firm Savills have recently released their review of 2017 so far encompassing the office and residential market in Hanoi and Ho Chi Minh City. Vietnam’s two most active cities that draw business to drive the economy.
Commercial space
The office market is continuing to perform well. This reinforces the sentiment that these two cities remain the best performing office yields globally. For Ho Chi Minh City occupancy rates have improved by two points year-on-year. This is supplemented with an increase in rents of two percent.
Occupancy rates are at an impressive rate in Ho Chi Minh City’s central business district. Standing at 97 percent there has been no change for the first three months of this year but overall it is an increase of one point for the year. Demand is outstripping supply pushing rents in an upwards direction. Average rents are up one percent on the quarter. Outside of the CBD is a similar story. Occupancy rates have however improved on a quarterly and yearly gain.
Due to this limited supply Savills have forecast that rents should increase by seven percent in 2017. This could be influenced by the launch of two new projects set for midway through the year, but much needed when noting that take-up rates are down due to the lack of supply.
For Hanoi overall the office market has seen movement due to rising occupancy rates. However the limited supply in the CBD has pushed tenants to the outer areas. This has resulted in rents increasing 2.4 percent quarter-on-quarter and 3.6 percent year-on-year. There is a lack of supply in the CBD on the horizon. This will help to continue to hike up rents as the theme of tenants look to new buildings situated outside of the CBD as alternatives is maintained. As this happens tenants will have more choice and ensure that rents become competitive.
The residential market
For the residential sector in Ho Chi Minh City Savills have noted that there was a surplus of mid and high-end stock in 2016. The firms property price index (SPPI) slowed down for the first quarter of 2017 as a result.
In Hanoi due to a large amount of supply absorption rates were down. At approximately 27 percent this is a four percent decrease quarter-on-quarter and eight percent year-on-year. Despite transactions numbers being down for the quarter by two percent, overall it is an increase of 15 percent for the year signalling the strength of the market here. The forecast expects the market to remain stable spurred on with the growth of the affordable housing sector in districts including Ha Dong, Hoang Mai, Tu Liem and Thanh Xuan.