Vietnam’s economy has recovered with strong GDP growth and FDI inflow, which in turn has boosted office demand.
According to real estate firm Savills in its latest research of the Vietnam Office Sector, in Ho Chi Minh City(HCMC), on the back of limited vacancies and improved macro-economic conditions, some landlords are set to increase rentals for Grade ‘A’ and ‘B’ buildings. In Ha Noi, the market is expected to be steady in the short term.
Demand for Grade ‘A’ and ‘B’ offices has strengthened in Vietnam’s two major cities. In HCMC, buildings with large contiguous floor plates are in short supply. Large occupiers will need to be mindful of lease expiry and engage early with their space planning.
Several Grade ‘A’ landlords are reportedly planning to increase rentals, despite the present ‘A’ grade market gross rental running at US$ 46 per sqm per month.
During Q3 2015 the average occupancy of Grade ‘A’ and ‘B’ was 93 percent, up 2 percentage points year-on-year. Grade ‘A’ recorded the best performance at 96 percent, the highest in the last six years.
Current HCMC supply is limited to only nine buildings, including the entry of Vietcombank Tower in Q3 2015. The newest Grade ‘A’ projects – Saigon Center Phase 2 and Deutsches Haus – will only enter the market during Q3 2017.
In Hanoi, the average gross rent of Grade ‘A’ and ‘B’ in Q3 2015 was US$ 21 per sqm per month, down 0.2 percent year-on-year. According to Savills demand is recovering with occupancy at 81 percent, up 9 percentage points year-on-year.
As macro-economic conditions improve, so is the demand for Grade A and B office space.
To read to full Savills Vietnam Office Sector research report click here.
