In HCMC, CBD office supply levels remain tightly held and rents are rising. With a landscape like this, new supply in Thu Thiem New Urban Area is seen as a welcome entry to the market and these offices are increasingly popular with occupiers
2022 Market Performance
According to Savills Viet Nam’s latest research, office supply in HCMC was 205 million m2 with occupancy of 90% in Q1/2022. Districts 1 and 3 had an overage occupancy of 93%.
Lai Thi Nhu Quynh, Senior Leasing Manager of Commercial Leasing at Savills HCMC, said “Rent for Grade B offices is currently sitting at approximately US$34/m2/month and Grade A offices charge approximately US$60/m2/month. As occupancy is high and demands are rising, we are seeing prices increase. ICT, e-commerce, and logistics tenants are driving demands, with many companies needing large offices or spaces that allow for future expansion. As such, we are seeing companies move their operations to areas outside of the CBD like Districts 2 and 7.”
By the end of the year, 60,000 m2 of new office supply is expected. However, with HCMC expecting 310,000 new jobs in 2022, the new supply is insufficient. This is because the average office worker requires 8 m2.
Office building. Source: Internet
Positive Outlook for 2023
“By 2023, several large Grade A offices are expected in Thu Thiem New Urban Area. These projects will add about 80,000 m2. This will mean tenants looking for prime offices will have a larger variety to choose from,” Ms Quynh added.
Several factors are driving the supply shortage. The first relates to complex legal procedures that result in lengthy approval processes. Second, investors are facing increasingly strict regulations in terms of project development. Third, land banks in the CBD are scarce, which means that land is also more expensive. Lastly, construction costs have also increased, some as much as 30% compared to last year. These factors are significant barriers for investors who want to develop new projects.
Conclusion
Savills Commercial Leasing provides bespoke services for tenants and landlords. No matter if you are looking for consultancy, sourcing, or operational support, we are here to help. Contact Quynh to find out more.
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