Office Occupier Update (2019H1EN)
With overall occupancy of 98% and Grade A rental of US$60/m²/mth, HCMC’s office market is one of the best performing within Asia. The strong performance is expected to continue, with just 20,000m² expected to enter in the next two years. Tenants seeking new space or merely wishing to expand need to carefully weigh up their options as the near future will be marked by limited opportunities. Already companies who cannot afford the higher prices are relocating to fringe and decentralized locations.
Meanwhile, average occupancy has remained at 93% for the past two years in Hanoi’s office market. With the exception of one recently launched building, Grade A projects were limited - existing buildings in the CBD are rapidly ageing and lack modern facilities. As high-quality office space is more attractive to foreign tenants, interest for Grade A is anticipated to increase in line with good FDI and vigorous M&A activities. Demand for Grade B will remain high due to affordability. Savills expects a dynamic Grade A and B market in upcoming years, particularly in the Secondary and Western areas. The low vacancy and limited future CBD supply; means tenants are relocating to the Midtown and West. Many lease expiries will need to accept rent increases.