According to the CBRE report, 2017 is a year of positive developments in the Hanoi office market. In particular, the record for occupancy and occupancy rates in the past five years.
5 years witnessed the same class with increasing rent
CBRE reports that in 2017, office space supply in Hanoi will continue to increase in Class B with an additional 67,500 sqm of new leases from six projects.
This results in a 5% increase in cumulative A and B out of 2016, lower than the 5-year average (10% a year). The market continues to show a tendency to expand beyond the center. By 2017, the West will remain the main office supply, accounting for 48% of total supply.
Remarkably, 2017 saw a rise in rents in both A and B for the first time in five years. By the end of 2017, asking rents of Class A at $ 24.8 / sqm / month (excluding VAT and service charges), up 9.5% on a year. Meanwhile, Class B office also increased slightly compared to last year (up 0.4% on year) reached $ 13.6 / sqm/ month.
The highest occupancy rate in 5 years
In terms of occupancy, CBRE’s vacancy rate improved markedly after one year without new supply, averaging 91.1%, an increase of 6.8 percentage points over 2016. This is a high record in the last 5 years.
For Class B, with new supply coming in late last year, occupancy declined 1.2 percentage points from a year ago to 82.5%. However, this rate is still higher than the average of the previous five years from 2012 to 2016.
In terms of demand, the absorption rate is about 80,000 square meters throughout the year 2017. The absorption area is mainly from buildings outside the center. In 2017 witnessed many large office leasing deals with transactions up to 5,000 sqm.
According to CBRE, in the year 2018, rents of both Class A and Class B offices will continue to increase, especially in Class A when there is no new supply.
In addition to traditional tenants from banking / insurance, manufacturing or information technology, common workspace also promises to be a potential source of demand for competitively priced locations.
High office rents, central occupancy rate reached 97%
According to Savills, the office rental market in the central area today is difficult to find office space large area. The reason is that the influx of FDI into Vietnam has rapidly increased the demand for office space, especially for the central and high-end offices.
“The occupancy rate of the whole market has been rising steadily for the past two years and reached 94% in the fourth quarter of 2017. In the CBD, the capacity is currently at 97% and is expected to increase in the near future. Until there are no specialized office projects in operation in 2018, “Savills said.
According to Savills’ 2017 tenant survey for the CBD, the main source of income comes from the F.I.R.E (finance, banking, insurance, real estate) and manufacturing sectors. Occupancy of tenants in the field of F.I.R.E accounted for 50%, followed by manufacturing with 14%. Manufacturing and consultancy are the sectors with the highest demand for office space in the last three years.
According to the survey, the share of foreign tenants in buildings in the region has increased from 45% in 2014 to 56% in 2017.
Class C office has the highest capacity in the market
According to Savills’ survey, Class C occupancy rates are always higher than Class A and Class B, which is maintained at over 90% since the second quarter of 2015 and reaches 99% in the fourth quarter of 2017. .
The majority (63%) of Class C projects have the maximum capacity, while the maximum capacity is 30% in the B-segment and 36% in Class A
” Class C continues to record high capacity due to low rents and a slight increase in supply in recent years, but the customer satisfaction survey for this segment is still relatively low. Due to the degraded quality of Class C office buildings, management and operation are not focused on customer service development. “
According to Savills, Class C rents average VND 280,000 / sq m / month, much lower than Class B (VND 390,000 / m² / month) and Grade A (VND 630,000 / sq.m / month).
Class A and Class B has averaged 1.6% and 5.8% per year respectively over the past four years, while Class C supplies have not recorded a new supply since the fourth quarter of 2016.
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