HCMC Office Market 1Q2022

Continuously limited new supply in 1Q22

Only one Grade C building with 5,600 sqm was completed in 1Q22. However, it operates as the investor’s headquarters, not for rent. Grade A & B office sectors did not record any new supply, remained at 1.67 million sqm, of which 167,000 sqm is vacant and ready for rent, mostly from Grade B buildings.

The trend of renovating current buildings to increase the leasing areas and upgrade to higher grade becomes increasingly common in the context of limited land.

The demand is slow due to the prolonged effects of the pandemic

The Grade A vacancy space slightly rose, around 1,288 sqm, mostly from long-time operated buildings as existing tenants reduced rental area. In contrast, the Grade B market recorded many significant transactions in new buildings, helped improve net absorption for both Grade A & B office markets, and made it rise to a positive level, around 1,142 sqm, but still significantly dropped compared with the previous quarter. Enterprises in Information Technology and Manufacturing with foreign-invested capital continuously led the demand in this quarter.

However, existing Grade B buildings are relatively cautious in their leasing strategy due to challenges of demand decline in 1Q22 - a consequence of the prolonged effects of the pandemic.

Rental fees stabilised by year and by quarter

Although facing a decline in demand, landlords generally kept the rental prices stable, thanks to a positive vision for the nine months left of 2022. The average rent fee stabilised at USD 30.7 sqm/month, gradually rising by 0.3% y-o-y and 0.2% q-o-q.