Hanoi Office Market Q2 2021

The fourth wave of Covid-19 postpones new completions

The fourth outbreak in Hanoi has deferred the opening of some projects that had planned to enter the market in 2Q21.

The total vacancy of Grade A & B in 2Q21 was around 210,422 sqm, down by 1.2% q-o-q. Each Grade A and B took up quite a similar composition in the total vacancy rate, accounting for 51% and 49%, respectively, and mainly from new projects coming on stream since 2020.

Technology companies lead the market demand

Despite the resurgence of the pandemic in May, Hanoi Grade A & B office market still recorded a positive net absorption, resulting in the occupancy rate at 87.8% in 2Q21. In the Grade A segment, the demand was mostly driven by large inquiries (around 500-1000 sqm) coming from technology, e-commerce, construction and chemical companies. One of the most prominent transactions in this quarter is Shopee's office expansion with about 2,000m2 of floor space at Capital Place. Meanwhile, in the Grade B segment, due to the better rents, many buildings in the West of the city, such as Cau Giay and Dong Da district, have recorded many large transactions from technology companies, mostly for expansion and relocation.

Rents remain constant across the market

The average net rent of Grade A & B remained stable at USD 18.7/sqm/month, down by 0.23% q-o-q, yet up by 6.5% y-o-y. Particularly, the y-o-y growth of the rental rate was mainly driven by the completion of new Grade A projects. Meanwhile, most existing buildings either kept their asking rents constant or decreased them slightly because the escalation of Covid-19 induced the need to tighten the budget of tenants. In addition, landlords of those buildings with large vacant spaces still offered rental incentives and flexible rental terms to attract new tenants during this challenging period.