HCMC, Hanoi office space among Asia Pacific’s most sought after

By Dat Nguyen February 15, 2020 | 07:04 pm PT

Buildings seen in District 1, Ho Chi Minh City. Photo by Shutterstock/Hani Santosa.

HCMC and Hanoi were among the best office markets in terms of investor returns across Asia Pacific last year thanks to rising rent and occupancy.

HCMC saw rent for Grade A and B office space soar to the decade high $29.1 per square meter in Q4 last year, up 7.4 percent year-on-year, supported by strong demand and limited stock, reported real estate consultancy Jones Lang LaSalle (JLL).

In Hanoi, the occupancy rate reached 93 percent in Q4 for Grade A and B listings, with rent upping 6 percent year-on-year to $17.8.

These figures indicate high investor returns, making the two cities, along with Japan’s Tokyo, Australia’s Melbourne and the Philippines’ Manila outperformers in Southeast Asia last year, JLL added.

Internal investment return (IRR), which indicates profitability, is around 20 percent for HCMC and Hanoi, compared to around 10 percent in South Korea’s Seoul, Singapore and Australia’s Sydney.

JLL forecast demand for office space in HCMC would continue to grow 8-10 percent annually over the next 10 years, with the proportion of citizens employed in related services rising from 30 percent to 40 percent, against annual GDP growth of up to 6 percent.

Hanoi is expected to see a large supply of new Grade A and B space this year with demand expected to remain steady.