According to Savills report, in the third quarter of 2023, office supply in Hanoi reached 2.16 million square meters, up 2% over the same period last year. Office leasing activities are also gradually stabilizing.
The majority of leasing transactions are from office relocation, most tenants prefer inner-city areas where there are new, high-quality projects, suitable rental prices and close to the city center.
In terms of industry, manufacturing tenants had the most transactions, with the largest total leased area; followed by tenants in the information technology, finance, insurance, real estate and education industries.
Office rental prices in Hanoi unexpectedly decreased compared to last year. (Photo: XD)
Also according to Savills' report, the gross rental price of the whole market in the third quarter of 2023 increased slightly by 2% quarterly and annually, reaching VND 513,000/m2/month.
Of which, class B and C rental prices remained unchanged, while class A office segment was the only segment to record a quarterly increase of 2% to VND824,000/m2/month.
Ms. Hoang Nguyet Minh, Senior Director of Commercial Leasing, Savills Hanoi, commented: Office rental costs in Hanoi are currently stable or even decreasing compared to the same period last year, especially in some large projects. Therefore, potential tenants should consider this an ideal time to rent new or expand office space.
Ms. Minh forecasts that by the end of 2026, the Hanoi office market is expected to have an additional 220,000 square meters of leasable floor space, equivalent to a 13% increase compared to the current supply. Average rents are expected to decrease slightly by about 1% per year until 2026 as the economy and industry performance are forecast to slow down in the next three years.
Explaining the slight decrease in rental prices, Ms. Minh said: The supply of large-scale projects entering the market from 2019 to 2026, along with a cautious mentality, will put significant pressure on rental prices, especially in the Grade A segment when this segment will have 9 new projects, accounting for 77% of the total future supply.
“In addition, new supply entering the market at the same time will cause the occupancy rate to drop to 85%,” said Savills experts.
However, Ms. Minh said that although rental forecast models show a decrease, the office market in Vietnam in general and Hanoi in particular is still expected thanks to many key demand drivers.
From there, it will be easy to surpass the average of the past years thanks to positive points such as the growth of the banking and insurance sectors, industries that often rent large office spaces, large-scale shifts of Government agencies, and the development of the education sectors and innovation, research, Healthcare and Science centers.
Overall, facing global impacts on office rental demand is inevitable, but the office market in Hanoi has been noted to develop in an unconventional manner and perform well over the past years.
“This is also a market that is considered different, reinforced by diverse structures and positive demand for office space for lease,” Ms. Minh emphasized.
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