Asia-Pacific office leasing market is forecasted to grow sharply in 2018 thanks to the positive signals of office leasing business due to the shortage of new supply in 2017.
Only emerging markets in the region such as HCMC can increase by 20% in some Grade A buildings this year.
Office is shortage, dragging up prices
According to the statistics of the building management companies, since 2015, HCMC office market welcomed the expected number of bridges with the net area is quite impressive, across all segments of the office for rent. . In 2017, HCMC only has Grade A and Grade B buildings entering the market. Of these, 3 buildings occupied 70% occupancy at the time of opening. Therefore, experts predict, in 2018 and 2019, the office market in the center of Ho Chi Minh City will continue to exceed supply.
According to Cushman & Wakefield Vietnam, rents in key markets have increased sharply; In particular, the office leasing market in Ho Chi Minh City has the vacancy rate dropped to extremely low levels, pushing rental rates to the highest since 2009; Estimated, the rent may rise to 20% in some Grade A buildings this year.
“The market demand is huge for new buildings, quality and beautiful location. The pressure to find the position of businesses will continue until the end of 2019, “said Alex Crane, general director of Cushman & Wakefield Vietnam.
According to the JLL, the occupancy rate for Grade A and Grade B offices in Ho Chi Minh City is currently higher than 94%. This shows huge demand in the market for Grade A and Grade B buildings, including old and new buildings.
JLL’s average office rents have rebounded sharply in 2016 and 2017, to $ 38.9 / sqm/month, due to higher demand coupled with higher quality. The average price of Grade B office is also increasing yearly, reaching $ 22.3 / sqm/month. In particular, new Grade A buildings entering the market have pushed rental rates up by $ 10 sqm/month compared to buildings built before 2010.
In terms of demand, companies said average office rents have doubled as companies continue to expand and new entrants are entering the market. Average size of tenants in HCM City market doubled over the same period last year, reaching 500-600sqm
In addition, emerging industries such as e-commerce are boosting demand for office space in Vietnam. Other sectors such as co-working, logistics and manufacturing also account for a large proportion of the fast absorption of office space in HCMC.
According to JLL representative, with the land fund and opportunities in CBD (downtown HCMC) limited, tenants are gradually looking out of the central area. In particular, the Thu Thiem New Urban Area in District 2, which is considered the commercial center of Ho Chi Minh City in the future.
A positive signal from the office rental market
According to Savills Vietnam, the recovery of Vietnam’s economy after the crisis, with the influx of FDI into Vietnam, has accelerated the demand for high-end office space. Although there is a growing supply, there is still a considerable distance from market demand. The office buildings are in full swing and the market rents remain high at over 95% in 2017.
Neil MacGregor, managing director of Savills Vietnam, said that 2018 will be the booming office leasing market in Ho Chi Minh City, in addition to the residential segment. and ground. By now, Ho Chi Minh City has enjoyed a unique mechanism for economic development. In addition, a series of trade agreements are signed and countless opportunities for integration will make Ho Chi Minh City attractive to foreign investors to invest in and need to work offices.
“With the strong development of the Vietnamese economy, foreign investors will continue to show their interest in the real estate segment. In the coming time, investors will focus on offices and hotels due to the boom of tourism in Vietnam, as well as the strong development of industrial and warehouse real estate, ” Neil MacGregor said.
Highest price for office in Ho Chi Minh City
Previously, Savills Vietnam also announced the report of the operation of offices for rent in the two largest cities. In 2017, these two markets have the most impressive indexes in the region.
Office leasing market in HCM City is a bright spot to attract investors thanks to the operating capacity and high rents. Rental prices in HCM City far out of other cities in the region, approaching the $ 50 per sqm.
It predicts that market performance will remain high in 2018 and rents will tend to rise due to pressure from demand.
The price of office space for rent in Ho Chi Minh City surpasses that of other cities in South East Asia.
Ho Chi Minh City’s office leasing market recorded 1.7 million square meters of floor space, a relatively high figure but has maintained a shortage of supply in recent years. The vacancy rate is always at a minimum and it is difficult to find large office space in the central area. The office buildings are fully occupied and the market occupancy rate remains high at over 95% for all quarters in 2017.
The shortage of supply in the short run has led to higher rents and will continue to boost capital inflows into the office market in Vietnam, said Greg Ohan, Business Development Director of JLL. from the current investor and the new investor to the market. Adding a positive signal to the office leasing market in Ho Chi Minh City, this year, HCM City officially applied the policy of moving about 2,000 private enterprises operating in the apartment out of the apartment. This will be a great source of demand for the office rental market.
You are reading the article “HCMC Office Leasing Market Will Grow Sharply In 2018” in the section “Real Estate News” on the website: https://realestatevietnam.com.vn/.
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