Office rents continue upwards in Hanoi & HCMC


Office rents in both Hanoi and Ho Chi Minh City remained on an upward trend in the first quarter of 2018, according to the latest report from leading global real estate services firm Cushman & Wakefield.

No new buildings were completed in Hanoi, while one Grade A and one Grade B building ceased leasing and put the space to internal use. Grade A stock decreased 1.6 per cent on both a quarter-on-quarter and year-on-year basis, while Grade B supply was reduced by 0.6 per cent quarter-on-quarter but was up 6.3 per cent year-on-year. Both grades continued to experience improved performance, with reduced vacancies and registered total absorption of nearly 22,800 sq m), 73 per cent of which was contributed by Grade A projects.

Average rentals in both grades in the capital continued to show an upward trend, with marginal increases of 0.3 per cent quarter-on-quarter and 0.4 per cent year-on-year. Higher rents were quoted by projects with improved occupancy. The addition of huge stock in the future will cause more competition and keep the market in favor of tenants.

There were also no new office buildings of either grade entering the market in Ho Chi Minh City during the first quarter. Both Grades A and B showed modest improvements in rents while total net absorption stood at roughly 12,300 sq m. Grade B accounted for over 80 per cent of the total space absorbed in the quarter. In terms of location, nearly 60 per cent of total transactions were for buildings in District 1.

Average asking rents have been on an upward trend over the last four years and continued to record quarter-on-quarter and year-on-year increases of nearly 1.0 per cent and 9 per cent, respectively, in the first quarter, mainly driven by high rents offered by recent new buildings as well as rental increases in existing buildings in prime locations with limited available space for lease. The upward trend is expected to continue in the short to medium term due to limited supply.

“Asking rents continue to see stable increases,” said Mr. Alex Crane, Managing Director of Cushman & Wakefield Vietnam. “What is not apparent in the market is that effective rents have increased quite significantly, as landlords have been reducing incentives to new tenants. Investors must be acutely experienced when looking at this sector due to yield compression, and occupiers must look to efficiencies in their operations to drive any financial benefits.”

He added that the region will continue to benefit from the global rebound in terms of increased demand and reform agendas. “As such, take-up levels across the major cities that we track in Asia-Pacific are set to surge to their highest levels in 2018, at 120 million square feet (m sf),” he added.

Ho Chi Minh City office market

Sub-market Inventory

(sq m)

Vacancy rate Planned & under construction (sq m) Average asking rent
VND/sq m/mo $/sq m/mo
Grade A 261,500 7.0% 304,000 VND1,201,000 $52.75
CBD 261,500 7.0% 304,000 VND1,201,000 $52.75
Grade B 821,800 2.4% 265,000 VND670,000 $29.44
CBD 419,300 2.9% 37,000 VND813,000 $35.73
CBD Fringe 66,100 1.4% 15,000 VND526,000 $23.09
East 37,600 0.8% 143,000 VND585,000 $25.68
South 93,400 5.5% 15,000 VND481,000 $21.13
North 156,400 0.8% 30,000 VND495,000 $21.73
West 49,000 1.0% 25,000 VND626,000 $27.50
TOTAL 1,083,300 3.6% 569,000 VND798,000 $34.65

Hanoi office market:

Sub-market Inventory

(sq m)

Vacancy rate Planned & under construction (sq m) Average asking rent
VND/sq m/mo $/sq m/mo
Grade A 394,500 9.4% 279,100 VND693,000 $30.43
CBD 111,600 1.9% 19,200 VND834,000 $36.61
Secondary 108,300 15.3% 178,900 VND715,000 $31.42
West 174,600 10.6% 81,000 VND589,000 $25.86
Grade B 850,000 6.9% 844,100 VND424,000 $18.64
CBD 108,700 3.6% 32,500 VND596,000 $26.18
Secondary 491,100 9.9% 274,000 VND405,000 $17.79
West 227,400 1.9% 435,200 VND399,000 $17.51
Suburban 22,800 8.8% 102,400 VND281,000 $12.33
TOTAL 1,244,500 7.7% 1,123,200 VND510,000 $22.38

All rents are inclusive of SCT but exclusive of VAT 



Photo: VAM