On the afternoon of October 3, Knight Frank Vietnam announced the third quarter 2023 data of the office market in Ho Chi Minh City. Accordingly, the asking price of Grade A offices decreased by 2.2% and Grade B decreased by 0.2% quarter-on-quarter.
The vacancy rate for Grade A offices reached 18.2% and Grade B was at 11.6%. This is the highest vacancy rate for Grade A offices in the past 12 years. Currently, the Grade A office segment has a total vacant floor area of about 73,000 m2 and the average asking rent is 57.6 USD/m2/month.
Grade A offices in Ho Chi Minh City are having difficulty finding tenants. (Photo: D.V)
Mr. Alex Crane, CEO of Knight Frank Vietnam, said that in 2022, the company had predicted that office rental prices would decrease, so this was not a shock to investors. On the other hand, this new supply is very welcome to the market, because since 2017, Ho Chi Minh City has not had any more Grade A office buildings.
“Currently, the total office floor area for lease in Ho Chi Minh City is higher than in 2011. At that time, the vacancy rate was also at 20%, however, the market size was much smaller. The total floor area of class A offices at that time was less than half of what it is now, ” said Mr. Alex Crane.
Knight Frank representative commented that the trend of decreasing average rental prices of Grade A offices is partly a result of the opening of new office buildings in Thu Thiem peninsula - where rental prices are more attractive than in the central area of District 1.
“ The newly developed high-end office space in Thu Thiem has more competitive rental prices than the central area, giving tenants more choices between three areas: District 1, Thu Thiem and District 7 when they want to set up an office according to international standards,” Mr. Alex Crane shared.
Knight Frank data also shows that an additional office building will come online in Q4 2023, adding 50,000 square metres to the Grade A office market. This will push the office vacancy rate to more than 20% by the end of this year.
Knight Frank predicts that in the last quarter of 2023, Grade B office rental prices may also decrease by another 6%, down to $32/m2/month.
According to a study by Savills Vietnam published on October 3, despite the addition of new Grade A office supply from the Thu Thiem peninsula, in the third quarter of 2023, Grade A offices were still 90% occupied, meaning the vacancy rate was only about 10%. Tenants mainly come from customers in the finance, banking, and information technology industries.
Savills Vietnam forecasts that by 2026, Ho Chi Minh City will have an additional 300,000 square meters of office space for lease. More than 80% of class A and class B projects pay great attention to “green” certifications, as foreign tenants are particularly interested in these certifications.
DAI VIET
Source
Comment (0)