According to Savills Vietnam’s market report on Q1-2019, limited supply pushed the occupancy rate of HCMC office market to reach 98 percent, an increase of 1 percent quarter-on-quarter and 2 percent year-on-year. In the period, the market also recorded the lowest vacant rate in the last decade, with only 2 percent of office space not yet occupied.
Rent remained robust with another 2 percent quarter-on-quarter gain, continuing its ﬁve-year momentum into the ﬁrst quarter of 2019. Rents for top-tier grade offices (Grade A) continued to lead, increasing percent quarter-on-quarter, representing accumulative growth of 13 percent for ﬁve successive quarters.
Ms. Tu Thi Hong An, Associate Director, Head of Commercial Leasing at Savills Vietnam says leveraging high demand but limited available stock, landlords have continued to raise rent and hold ﬁrm in negotiations, whilst tenants have had to either accept the rental hikes or consider alternatives, such as non-core locations or ﬂexible working spaces.
Thanks to favorable macro fundamentals, Savills expects office market will maintain this momentum in 2019. During this period, 11 projects with 206,000 sqm will come online, serving the avid demand for high quality space. In this context, Savills forecasts rent will increase in the prime segment and secondary buildings.
The function of an office is changing alongside the development of new technology and working-styles. With remote work becoming more common, co-working spaces are now booming globally. HCMC has seen rapid expansion of co-working spaces over the last two years, at over 90 pa to reach over 37,000 sqm as of studied period. The majority of space (20,000 sqm) is concentrated in the CBD, representing a 56 percent share. Notable players are WeWork, Up, Dreamplex, Regus, Compass and Kloud. These companies are anchor tenants in many buildings. The industry is expected to steadily expand due to demand from both domestic and global ﬁrms, who are looking to minimize costs, increase ﬂexibility and establish a foothold in the market.