Recovering from all the global post-pandemic challenges suffered by the office market, Vietnam is faring better than their regional counterparts with Ho Chi Minh City and Hanoi experiencing a shift towards a more competitive office market.
Office stock in Ho Chi Minh City in the third quarter of 2023 increased by 3% from the previous quarter and 4% year-on-year, according to Savills.
The addition of Grade A projects in the Thu Thiem urban area in HCMC, like The METT, a state-of-the-art office building ideal for banks, F.I.R.E companies, or other tenants looking for high-quality offices, is boosting the market’s net leasable area. Another Grade A project, The Hallmark, boosts river and city views and offers tenants a green workplace and personalised and user-friendly security systems.
Office stock in Hanoi also increased although at a slower rate of 1% from the previous quarter and 2% year-on-year. Overall, despite a 1% decline in occupancy rates from the previous quarter, the market kept a robust 90% occupancy level corroborating strong occupancy rates and steady rental growth.
Major transactions last year mostly saw tenants from the banking, insurance, and technology sectors relocating (62%), whereas finance and oil and gas industries tended to renew (19%) according to Knight Frank.
Gross rents also rose in both cities, with a 4% growth from the previous quarter and a 7% year-on-year in HCMC, due in part to the new Grade A projects in the Thu Thiem area. In Hanoi, rent increased by 2% from the previous quarter and year-on-year, also due to increases in rent in Grade A buildings which are popular with foreign companies looking for premium locations in both cities (source).
Amy Lam from Compass Offices highlighted, “As businesses increasingly favour agility, there’s a noticeable demand for flexible office solutions in premium locations. Our clients value the adaptability these spaces offer, aligning with the dynamic nature of modern business environments in Ho Chi Minh City and Hanoi.”
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Source: Vietnam Insider