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(+84) 898 898 688Office In HCM City Increases Lease By 5%
Date: 21-09-2017 | 10:16
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The average rent for both Grade A and B offices in HCMC remained stable over the last quarter but tended to increase in annual terms.
Cushman & Wakefield’s 1st quarter office leasing market report shows that both Grade A and Grade B segments in HCMC are good growth. Grade An office occupancy was at 96%. This figure increased nearly 2% compared to the 4th quarter of 2016 and increased 5% over the same period last year. Meanwhile, Grade B office rents recorded an increase of only 1% compared with the 4th quarter of 2016, at 95%.
Total absorption of the market recorded a record increase, reaching 29,000 sqm, up 66% from the previous quarter and up 723% over the same period last year. Of which, Grade B rental occupies 88%. The absorption of Grade An office has had a significant recovery from the previous quarter, recording nearly 3,400 sqm in the first quarter of 2017.
The lack of supply is the reason why Grade An office rents have increased sharply
The average rents of both Grade A and Grade B remained stable over the previous quarter but tended to increase on a yearly basis. Typically, Grade A offices increased by 5% and Grade B by 1%, respectively 1.1 million / sqm / month, equivalent to 48.3 USD / sqm / month and 643,000 VND / sqm / month, equivalent 27.8 USD/ sqm / month.
On the supply side, during the period, a Grade B office building has completed the construction, supplying an additional 23,000sqms to the market. Currently, there are 10 Grade An office buildings and 51 Grade B office buildings, total office space for lease reaches approximately 194,000 sqm and 769,000 sqm. All Grade A offices and half of Grade B office space are concentrated in the central area.
In 2017, Cushman & Wakefield expects to offer over 180,000 sqm of the new area for rent, half of which is concentrated in the central area. Two Grade An office buildings scheduled for completion in the 3rd quarter of 2017 will provide over 1/3 of the total new area for rent of 2017.
Mr. Alex Crane, General Manager of Cushman & Wakefield Vietnam added: “The market will experience 6-9 months of supply shortages and a slight increase in rents. We realize that demand for office space is increasing sharply in HCMC in the past 12 months. It is expected that the city will welcome a new source of supply that can meet this demand in the rest of the year.
Currently, many office leasing deals are due to the need to relocate headquarters. We think that the last 6 months of 2017 will be a good time to negotiate rental terms such as rent cost, as the investor is under pressure to fill up the buildings”.
On the supply side, during the period, a Grade B office building was completed, providing an additional 23,000m2 for the market.
Vietnam’s economy continues to record positive results in the first two months of 2017: In particular, industrial production index (IIP) increased 2.4% over the same period last year, the private mortgage insurance (PMI) index reached 54.2 in February, import and export increased by 15.4% and 19.6% respectively, inflation remains at a manageable level of 5.12% over the same period last year.
Foreign direct investment (FDI), including newly registered and disbursed capital, reached 3.4 billion USD, up 21.5% over the same period last year. Implemented FDI is estimated at 1.6 billion USD, up 3.3% over the same period last year. Vietnam is still on track to achieve a 6.7% growth rate thanks to stable growth, improved production and improved business environment.
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