Country-wide, Grade A office is gradually leaving the stage to Grade B and flexible workspace. Nonetheless, the premium segment still retains its high occupancy and rent considering stable demand from foreigners
Delays to approvals for new office developments, along with proposed land price hikes, are unsettling the prospects for the Ho Chi Minh City office segment heading into the next decade.
In the future, Technology and Flexible Workspace will continue to dominate office demand thanks to the boom in new start-ups and the thriving of technology industry of Vietnam in recent years, according to CBRE's report.
Co-working is no longer a model attracting only start-ups or SMEs as established corporations are switching to this model due to the flexibility offered, according to a Savills report.
With flexible workspace in the spotlight as never before, there’s a growing urgency to identify which models work best.
Tenants should expect higher rents or be prepared to negotiate strongly or decentralize. Many lease expiries will need to accept rent increases, according to Savills’ report.
The supply came largely from Grade B which is located in both central business district (CBD) and non CBD.
Even though the office market is favoring landlords and demand is forecasted to stay positive, more supply expected to launch coupled with global economic uncertainty may affect unpredictably and turn the market around.
According to CBRE Vietnam, the Hanoi office and retail market both post a positive performance in the second quarter of 2019, as investors heading towards the West of the city.
With some increases in rental prices and areas, the Ho Chi Minh City’s office market continued to see stable growth in the first half of 2019, experts said.
The increasing incorporation of advanced technology into workplace will continue to reshape the office space usage, making it increasingly more flexible.
Young population, affordable labor costs as well as a stable economy make Vietnam a potential market for international investors. On that basis, the office market in Hanoi and Ho Chi Minh City (HCMC) has many potentials for strong growth, Savills reported.
The three major cities Hanoi, Danang and Ho Chi Minh City are best representative of their regional real estate markets. Overall, flexible and co-working space are forseen to dominate the Northern and Southern markets, while Central Vietnam is a new but promising property scene.
Both markets showed positive figures across most criteria including rental value, growth rate, occupancy percentage and especially demand.
The improved business environment and policies had brought Vietnam 28,450 newly established ventures and a total registered capital of US $16.5 billion in Q1/2019, Savills reported. This seriously pushed demand for office spaces and expanded what used to be known as CBD.