Ho Chi Minh City, July, 3th 2014, Cushman & Wakefield Vietnam releases its quarterly Office Market Beat report. After a quarter forecasted as “stable in short term”, the Office Market Beat is much more competitive with the entry of new supply in both major cities in the either side of the country: Hanoi and Ho Chi Minh city (HCMC).
In particularly, Hanoi has one new grade B project in the CBD area entered the market this quarter. The total grade B supply in Hanoi is raised into over 729,000 square meters (sq.m.). Meanwhile, the total stock for grade A remained unchanged at around 330,000 sq.m. Similarly, HCMC welcomes a new grade B office building, adding approximately16,000 square meters (sq.m.) of office space to the market and pushing the total grade B supply into 664,000 sq.m. Total grade A stock in HCMC is stable at 157,000 sq.m. Total supply of HCMC office then reaches 820,700 sq.m., nearly 2% increase quarter-on-quarter and 6% increase year-on-year.
In terms of average asking rent (*), Hanoi witnessed a slight decline while HCMC showed improvements after a consecutive period of decrease. Specifically, Hanoi office grade A recorded an asking rent decrease of 0.7% in comparison with Q1 2014. Hanoi office grade B also decreased by 0.12% quarter-on-quarter due to increasing vacancy. “In Hanoi, rents continued to slip and with the introduction of Lotte Center into the market in the coming quarter, we expect this trend to continue as supply continues to outstrip demand and landlords are more competitive”, Alex Crane, National Head of Commercial Agency, Cushman & Wakefield in Vietnam commented. In contrast, in HCMC, grade A’s rent increasing by 1% on both quarter-on-quarter, while grade B’s rent remained stable quarter-on-quarter but increasing by 1% year-on-year. “Rents across all grades in HCMC generally remained steady and we expect this to continue until the end of the year when the next wave of projects come online”, Alex said.
In terms of occupancy rate, Hanoi witnessed reversed trends between grade A and grade B. While grade A saw a climb of 1.33 percentage points quarter-on-quarter to 78.2%, grade B continued its downward trend with a 4.4 percentage point decrease over the quarter to reach roughly 72.0%. In HCMC, average occupancy rates of both grades stood at around 91%, remaining stable compared to the previous quarter.
Alex Crane comments: “Quarter 2 2014, landlords are making better efforts to retain occupiers approaching lease expiry and are encouraged to do this by the threats posed by Sunny Tower, Vincom, Lim Tower (HCMC) and Lotte Center, Cornerstone (Hanoi) which all have reasonable vacancy. Recently, C&W represented Philip Morris on a relocation to Vincom in HCMC with a total of 2,300m2 office space.”