HCM City’s office space market rebounds strongly

Ilustrative image (Photo: VNA)

HCM City - Office space for lease in Ho Chi Minh City in the first half of 2022 continued to make a recovery with a total net absorption area of about 21,000 sq.m, equivalent to 38pc of 2021, although the new supply remained limited, according to real estate firm CBRE.

In its report on the real estate market in HCM City in the second quarter of 2022, CBRE Vietnam said that the average vacancy rate of Grade A decreased by 1.6 percentage points quarter-on-quarter and 2.1 percentage points year-on-year to 10.1pc, mainly thanks to the strong absorption of office space in District 7.

Meanwhile, the average vacancy rate of Grade B remained at 9.7pc, almost equivalent to the figure reported in the same period last year.

The total office space for lease in HCM City in the first six months stood at 1.5 million sq.m.

According to CBRE Vietnam, the information technology and manufacturing industries account for nearly 50pc of the total transaction areas.

Along with the recovery of the manufacturing industry after the COVID-19 pandemic, suppliers have also actively searched for office space with a significant increase in successful transaction rates in the new rental category.

Regarding leasing purposes, transactions related to relocation still accounted for the majority with over 50pc of total transactions. The rest were transactions of expansion, renewal and new leases (27pc, 12pc and 10pc respectively).

Notably, transactions related to narrowing space dropped off compared to 2020 and 2021.

According to experts from CBRE Vietnam, the first half also marked the return of demand for flexible offices with an occupancy rate of more than 90pc.

CBRE Vietnam’s report said that HCM City is expected to welcome about 30,000 sq.m of new office space in the second half of 2022 from three Grade B buildings and two Grade A buildings. Along the banks of the Saigon River, many office buildings where construction was suspended due to the pandemic, have now been completed. The total space for lease in this area is 250,000 sq.m.

Rentals of both grades are not expected to see much adjustment until 2024 as most of the new supply in the second half of 2022 will come from non-CBD areas, CBRE Vietnam said.