HCMC office rents hit $60 per sq.m in premium, $35 in mid-range segments

The average rate is now US$60 per square meter in the premium segment and $35 in the mid-priced one, the firm said in a recent note.

Leo Nguyen, its director of occupier strategy & solutions, said landlords feel more confident about hiking rates now that demand for new office space is soaring and occupancy rates are high at 88-90%.

Savills Vietnam, another property consultancy, said the average occupancy rate at premium projects was 89% in the third quarter, up 5 percentage points from the second.

The finance, banking, insurance, and real estate sector accounted for 39% of leasing transactions in the quarter, followed by technology (31%) and manufacturing (13%).

Some 75% of tenants were foreign firms, mainly from the U.S., South Korea, and Japan.

Some 73% of the leasing was done by companies looking to upgrade to better offices, Savills said. As a result older offices are seeing high vacancy and tenant turnover rates.

Knight Frank’s Nguyen said this shift is due to new projects meeting criteria for green certification and shared communal spaces, which are factors increasingly favored by both international and domestic tenants.

New buildings also offer good incentives for large tenants, he said.

He expected the office space market to become more competitive, and said landlords need to offer attractive rents and other policies to retain tenants, especially as many new projects are offering higher quality and lower rents.

"We (Knight Frank) predict that many landlords will have to review their leasing policies, resulting in a wider difference between asking and achievable rents in the coming months."

The firm expected supply of office space to be limited in 2025 due to delays in legal procedures and construction approvals in the last two years.

Giang Huynh, head of research at Savills, forecast that 196,412 square meters of office space at 15 projects will come into the market by 2027.

Green certification would be a major focus for office buildings in the future, with 63% of upcoming high- and mid-range supply aiming to meet these standards, she said.

"This will put significant pressure on older projects, forcing landlords to rethink their policies and rental rates in the coming years."