Office leasing in Ho Chi Minh City flourished
According to Vietnamplus, information from Knight Frank Vietnam Company, in the first quarter of 1, Ho Chi Minh City's office rental market continued to record prosperity when newly launched buildings had a high absorption rate. At the same time, many successful transactions were recorded with rental areas of up to 2024 square meters right in the city center area.
According to Knight Frank Vietnam Company, the first quarter of 1 ended with the appearance of two new buildings in District 2024, The Nexus and VP Bank Saigon Tower, adding 1 m55.371 of leasable floor area (NLA) to the market. Grade A office school.
Two new buildings entering the market also caused the asking price of Grade A office space to increase to 58,06 USD/m2/month, 1,98% higher than the previous quarter and 0,3% higher than the same period in 2023. The vacancy rate in this segment reached 16,7%, with an absorption rate of nearly 32.000 square meters.
This high level of absorption is mostly the result of multiple leasing activities prior to the official opening at The Nexus building, where lease transactions ranging from 2.000 to 10.000 square meters took place.
In the first quarter of 1, Ho Chi Minh City's office rental market continued to record prosperity. Illustration photo from the internet
Meanwhile, the Grade B office segment is reported to have a positive operating situation, with an average asking rent of 34,31 USD/m2/month and a vacancy rate of 9%. The asking rent of Grade B is relatively stable, only increasing by 0,5%, while the vacancy rate decreased by 2,3 percentage points compared to the previous quarter, because the OfficeHaus building just completed a lease transaction of 10.000 m2 of space. in the first months of 2024.
Mr. Leo Nguyen, Director of Strategy & Tenant Solutions at Knight Frank Vietnam commented: "In the past, it was very rare for us to witness rental transactions with an area of more than 10.000 m2 in the city." , but just in the first quarter of this year there were three such transactions in newly opened office buildings. This shows that the demand for large office space is increasing rapidly as foreign businesses expand their scale. The surge in demand also reflects the potential for flourishing business activities and positive prospects for the commercial real estate market in Vietnam.”
Regarding tenants, according to Knight Frank Vietnam's records, the majority of large transactions in the first quarter of 1 this year come from tenants in the technology industry (2024%), retail (75%) and pharmaceuticals ( 9%), most of them are moving office locations (6%) with rented space larger than 94 m2.000 (2%). Many businesses that move offices also choose to rent a larger area than the old location.
Analyzing this trend, Mr. Leo Nguyen commented: it can be seen that these companies are growing and need more space to expand their operations. The sudden increase in demand for large offices and the determination to expand scale and rent larger premises shows the confidence and potential of the Ho Chi Minh City office market.
According to Knight Frank Vietnam's forecast, by the end of 2024, in Ho Chi Minh City, Grade A office space will be supplemented with 80.000 m2 of new supply from The Sun Tower project (District 1); Grade B will have an additional 52.780 m2 from the D'Saint Raffles (District 1) and Etown Central (District 4) projects.
Abundant supply in the Grade A segment, with high asking rents, is expected to push the average asking rent up to about 60 USD/m2/month and the vacancy rate to about 27%. Meanwhile, Grade B offices will see asking rents gradually decrease, down to about 33 USD/m2/month and vacancy rate at 13%.
In 2024, many experts believe that the Southwest real estate market is considered an outstanding market, a bright spot in terms of profits when owning low-priced premises compared to the whole country...
Stable growth in 2024
Information from Industry and Trade, according to records, in the fourth quarter of 4, rent increased 2023% quarter-on-quarter and 1% year-on-year to reach 5 VND/m779.000/month with high capacity of 2%, down 89% quarter-on-quarter and 1% year-on-year.
Commenting on this result, Mr. Neil MacGregor - Managing Director of Savills Vietnam - said: The Vietnamese office market is going against the global industry's downward trend and maintaining a high occupancy rate with Stable rental growth. Among them, City. Ho Chi Minh has emerged as one of the best-performing office locations in the Asia-Pacific region due to strong rental demand and limited supply compared to economic development potential.
Accordingly, consumption in the quarter reached 38.000 m2 of net rental floor area, mainly coming from new Grade A and C projects. Grade A accounted for 66% of sales with tenants from the banking and information technology industries, while Grade C accounted for 19% of new contracts from businesses in the distribution industry.
Also according to Savills' survey of transactions in 2023, office space expansion transactions account for 74% of the total transaction area. Tenants in the finance, insurance and real estate (FIRE) sector prefer high-quality projects and tend to move to areas outside the center.
While tenants in the information technology and distribution industry prioritize projects with good rental prices. New office opening transactions account for 15% of the leased area, of which foreign businesses account for 74% of the transaction area and favor class A and B projects. Domestic businesses choose the class C and class segments. accounts for the remaining 26%.
It can be seen that tenants are increasingly looking towards high-end new buildings that meet sustainable development standards and green certificates... Notably, industry groups such as finance and manufacturing are still the main tenants leading the market in the context of economic fluctuations.
Savills Vietnam said that in 2024, it is expected that 10 projects with 142.000 m2 of net rental floor area will enter the market. On the other hand, according to the Center for Human Resource Demand Forecasting and Labor Market Information of Ho Chi Minh City. In Ho Chi Minh City, businesses in the finance, insurance and real estate (FIRE), information technology and distribution industries will continue to expand in 2024. Good demand will push the market to continue to maintain. High capacity and stability.
By 2026, about 70% of future supply from Grade A and B projects will have green certifications such as Green Mark and LEED. Forecasts based on future supply and economic prospects, rental prices are expected to decrease slightly by 1% per year in the period 2024-2026.
Hanoi office market received large supply
According to CBRE Vietnam's report announcing the real estate market highlights in Hanoi and Ho Chi Minh City in the fourth quarter of 4, in Hanoi, Lancaster Luminaire, Diamond Park Plaza and Lotte Mall West Lake are Grade A office projects located in Hanoi. in the Ba Dinh - Dong Da area and the west of Hanoi, providing the market with about 2023 square meters of high quality premises.
In 2023, in Hanoi, asking rent prices for offices of grades A and B will have opposite developments. Grade A office asking rent increased slightly by 1,2% at the beginning of the year and remained stable throughout the year, reaching 29,0 USD/m2/month. This price increase mainly comes from a few office buildings located in the Central area that have plans to renovate and improve service quality.
The total office area successfully leased in 2023 in Hanoi is 20.000 m2, mainly from Grade A buildings such as Capital Place, Lancaster Luminaire and Lotte Mall West Lake Hanoi.
It is expected that in 2024, Hanoi office market will continue to receive large supply of nearly 128.000 square meters from projects such as Taisei Hanoi Office, 2 Cat Linh Tower, and Heritage West Lake. Meanwhile, new supply in the Ho Chi Minh City office market is approximately 36 m53.000 and is all located in non-central areas.
Commenting on the office market in 2024, Ms. Pham Ngoc Thien Thanh, Head of Research and Consulting of CBRE in Ho Chi Minh City, said that when the economy has not shown clear signs of recovery, supply is abundant. In general, office space rental prices will generally tend to be adjusted flexibly, through more favorable rental terms for tenants.
“Only a few quality projects in central locations, with convenient transportation, and outstanding features such as green certification, diverse building amenities, etc. can have a slight price increase this year. next. At the same time, in future lease transactions, negotiating contract terms related to green and sustainable factors will gradually become more popular," Ms. Thanh commented.
Dao Vu (Th)
