Expanding supply to increase Hanoi, HCMC office vacancy

By Ngoc Diem   March 3, 2024 | 03:07 pm PT
Expanding supply to increase Hanoi, HCMC office vacancy
Office buildings in Duy Tan Street, Cau Giay District, Hanoi. Photo by VnExpress/ Ngoc Diem
New office supply in Hanoi and Ho Chi Minh City is poised to push vacancy rates past 20% over the next two years, according to real estate consultancy Cushman & Wakefield Vietnam.

In its recent market report, Cushman & Wakefield Vietnam projected an average annual growth of 3.5% in total office supply in Hanoi, which is expected to have nearly 81,000 square meters of new supply, primarily in non-central districts, this year.

Meanwhile, Ho Chi Minh City is anticipated to see nearly 120,000 square meters of new Grade A office space from three projects in District 1, along with an additional 81,000 square meters in non-central areas between 2024 and 2025.

Le Hoang Lan Nhu Ngoc, head of commercial leasing at Cushman & Wakefield Vietnam, said the surge in office supply in Ho Chi Minh City is driven by developments in the Thu Thiem New Urban Area and District 7, thanks to competitive rents, ample land availability, and enhanced infrastructure.

Ngoc noted that the demand for office space in Hanoi has slowed down since the second half of last year, and is projected to remain low this year. The capital’s office vacancy rate is forecasted to range between 25-30% in the coming years before gradually decreasing to slightly above 20% in 2027.

Similar trends are foreseen for Ho Chi Minh City. Savills Vietnam, another real estate consultancy, predicted the launch of numerous large projects until 2026 may lead to lower rents, particularly for Grade A office space. In Ho Chi Minh City, rents are expected to decline by 1% per year over the next two years.

The main tenants in both cities continue to be in the information technology, finance, insurance, real estate, and manufacturing industries.

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