Grade A office rents in HCMC increased by nearly 20%

A Grade A office building in the heart of Ho Chi Minh City. Picture: Vu Le

In the second quarter, grade A towers in Saigon increased due to scarce supplies.

According to HCMC office market report released by CBRE Vietnam, in the past three months, rents for buildings in the central core of this urban center have continued to climb. Grade A and B office rents went up compared to the previous quarter and last year.

Grade A rose 7% quarter-on-quarter and rose 17% from the same period last year. The cause is that new buildings are quickly filled and supplies are scarce. Similarly, the asking rent of Grade B towers was 7.3% higher than last year.

In the past year, office space in new buildings has been rapidly absorbed by the market. Vacancy rates for both A and B are below 5%. With the demand for office space, the current tenant structure has not changed much.

From the transactions in this unit's system, most of the tenants came from traditional manufacturing (22%), finance, banking, insurance (22%) and technology, transmission pine (17%). In terms of location, the group of tenants from Asia Pacific accounted for 61% of rental requirements, while the remaining 15% were from European visitors.

In the second quarter of 2018, HCM City did not have a new office supply. Total Grade A office supply remained unchanged at 382,763 square meters. Grade B office space surged 968 m 2 to 814,330 m 2 as Viettel Complex expanded its outsourced space this quarter.

In the next 6 months, Grade B office will have two buildings in the outskirts of Thaco Building in District 2 with 6,000 m2 and M Building in District 7 with 3,000 m2. Both of these buildings occupy most of the internal office space, and only a small portion is rented to the outside.

CBRE Vietnam's CEO, Dang Phuong Hang predicts that Grade A office rents will continue to increase as supplies remain limited until 2019. The vacant office space will be less and less. Let's go. Office market in 2018-2020 will continue to be the playground of the building owners.