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Vietnam office segment to boom

Released at: 16:15, 26/09/2018

Vietnam office segment to boom

Photo: Ngoc Lan

2018 a stepping stone before market takes off in 2019 and 2020, according to Savills.

by Ngoc Lan

Vietnam’s office leasing market is poised to enter a new boom period, with 2018 in particular being a stepping stone and 2019 and 2020 quite exciting, according to a Savills report released its “The Office Trends in Vietnam and Asia Pacific: What Tenants Need to Know During 2018-2020” conference held on September 25 in Hanoi.

The report noted that although the Asian region is considered expensive, the high-end office market in Vietnam has relatively modest prices.

According to the Prime Benchmark survey for the second half of 2017 in Asia Pacific conducted by Savills, the cost of high-end office rentals in Hanoi and Ho Chi Minh City is $38.8 per sq m and $52.2 per sq m; significantly lower than neighboring markets such as Taipei (China), Sydney, Singapore, Seoul, and Shanghai. With high occupancy rates at many Grade A office buildings and limited supply in the future, rents are likely increase in the next two to three years.

The office market is clearly changing, with noteworthy points including fluctuations in supply and demand and new office models that have created both opportunities and challenges for businesses, according to Savills.

Mr. Matthew Powell, Director of Savills Hanoi, said that after reaching its bottom the office market in Hanoi has recovered and is growing. “The average occupancy rate for the whole market in Hanoi in 2017 was 95 per cent with an average asking price of $38.8 per sq m per month,” he added. “These are very good figures compared to markets in the region.”

The Savills survey showed that although Grade C buildings have a 99 per cent occupancy rate due to low rents, they are no longer appealing to customers because of deteriorating quality. This proves that tenants’ tastes are gradually changing, with quality and office space being given more focus.

Mr. Bui Trung Kien, Deputy Director of Savills Commercial Leasing Hanoi, said it should be noted that with the current high rental capacity, future office supply in Hanoi remains limited and rents will likely increase, but tenants still have a lot of space options in many projects and must make careful considerations, putting project quality and prestige at the top.

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