The positive economic growth has contributed to the driving force of the construction and real estate industry to have positive signs. Compared to many other segments, office for lease is a bright spot in the Hanoi and HCMC market. Ho Chi Minh City when continued to be vibrant and recovering.
After the epidemic, office for lease segment has changed in trend and rent. In big cities like Hanoi and Ho Chi Minh City, office for rent are having different developments.
In Ho Chi Minh City, the office segment still performed well with a vacancy rate of 5%. Supply continued to grow steadily in the first 6 months of the year. In the second quarter alone, the market added 91,000 square meters of new supply. With rents increasing 4% YoY and average occupancy high at 95%. Particularly in the second quarter of 2020, the rent increased by 1% QoQ and 4% YoY.
In Hanoi, total stock is about 1.8 million square meters, relatively stable QoQ and up 1% YoY with most projects located in the western part of the city. Average rental decreased by 1% QoQ and 1% YoY.
Office for lease in Ho Chi Minh, grade B segment increased after a long period of good occupancy, Grade C rent decreased. Meanwhile in Hanoi, the office for lease at Grade A segment remained stable while Grade B and C recorded a decline.
The market for office for lease in Vietnam belongs to the Investor
Hanoi and Ho Chi Minh City are two typical representatives with the most dynamic office market. High demand and low vacant space are the driving force for homeowners and developers to increase rent continuously in recent years.
During the Covid-19 pandemic, the landlord/owner kept the rental price and moved to support the tenant with a short-term reduction in the rent and negotiate the terms to suit both sides. Tenants in the situation or accept the rent, consider alternatives such as moving to lower class buildings, from the center to the center, or to townhouses, …
The amount of additional leased areas in the second quarter of both Ho Chi Minh City and Hanoi recorded negative numbers. Landlords/developers have more flexibility in applying a variety of preferential terms to assist tenants and maintain operations. While developers/owners of low-end buildings quickly take action, high-rise property owners/developers handle requests for assistance on a case-by-case basis, providing mainly short-term solutions. for existing tenants.
With the second Covid-19 translation commencing in July 2020, the office market will continue to face the challenge of declining demand as tenants seek to tighten spending and reconsider office costs. This leads to vacancy rates expected to increase in the second half of the year. Investors and tenants will discuss the terms in exchange for a longer lease term, towards longer term and more sustainable business results. If you want to reduce the rental price or discount in the long term, tenants need to reconsider the longer term to ensure building capacity and share risks.
Office for lease recovered quickly after the pandemic
View of the Saigon River – Bitexco building
While most of the cities studied had a decrease in office for lease at Grade A, the two major cities of Vietnam had stable rents in Hanoi and an increasing trend in Ho Chi Minh City. In the ASEAN region, office rental rates in the city. Ho Chi Minh City and Hanoi are second only to Singapore.
High quality office space tends to attract more foreign tenants, so interest in Grade A office space will increase proportionally with FDI and Vietnamese inflows. Ho Chi Minh City and Hanoi continue to attract FDI and are in the Top 5 provinces with the highest FDI capital. FDI inflows are expected to increase after the pandemic, when a series of free trade agreements are signed recently, especially the European Union (EU) Free Trade Agreement. – Vietnam (EVFTA) took effect in August 2020.
Tenants will probably appreciate flexible working methods such as: rent co-working spaces, allocating human resources to many offices in different areas. In addition, businesses are also starting to pay more attention to the health of their employees through the selection of high-quality office space in buildings instead of just focusing on cost savings. than before.
In general, the office market is expected to recover strongly from the Covid-19 pandemic crisis in 2020, especially in the second half of 2021 until early 2022.