More affordable high-quality office in 2016

TNR Tower

At its April 5 press conference reviewing the first quarter of Hanoi’s property market and provide forecasts for 2016, CBRE expected that approximately 290,000 square metres would come on stream throughout the year. However, no new Grade A buildings are on sight.

Earlier this year, Grade A office TNR Tower, located on Nguyen Chi Thanh street, entered the market with 52,800 square metres of net lettable area (NLA), boosting Grade A stock by 15 per cent. By the end of the first quarter, the total office space in Hanoi reached approximately 1,158,000 square metres, of which Grade A and Grade B offices account for 36 and 64 per cent, respectively.

Vincom Center - Nguyen Chi Thanh, HN

As for CBRE, because new projects are offering promotional rental rates below the market average, the average asking rental price of Grade A buildings in the first quarter of 2016 posted a decrease of 4.2 per cent quarter-on-quarter, to $28.1 per square meter per month. Grade B buildings, on the other hand, saw a slight increase of 0.3 per cent quarter-on-quarter.

“Increases in rent occurred mostly in the west, where the infrastructure is well-developed,” said Nguyen Hoai An, director of CBRE Vietnam’s Hanoi branch.

“Rental rates in Grade A buildings, especially in the west and midtown, are becoming more reasonable, which enables tenants to lease high-quality office spaces for the same budget as Grade B buildings in the central business district,” she added.

During the first quarter, the office market in Hanoi saw relatively strong demand, primarily from local occupants, with a net absorption of 37,320 square metres, up 26 per cent quarter-on-quarter and eight per cent year-on-year. Tenants in technology, electronics, IT, banking, finance, as well as insurance, still lead the market in terms of office expansion. In 2016, the outsourcing sector is expected to grow, occupying more space and renewing longer lease terms.