Office market in HCM City predicted to become vibrant

Offices for lease in Thu Thiem new urban area in Ho Chi Minh City (Photo: VNA)

HCM City – The office market in Ho Chi Minh City has become vibrant recently with the opening of two office buildings in Thu Thiem new urban area which provides an additional 85,000 sq.m of floor space.

The trend is predicted to continue until the end of this year as many buildings in the central area will be put into operation, insiders said.

According to CBRE Vietnam, a real estate service provider, the two office buildings, which are of Grade A, are located in a convenient location close to the central area and obtain green certificates. It signals that new office buildings with high standards in favourable locations still attract the attention of businesses, especially multinational companies, CBRE said, adding that due to new supply, the total floor space of offices in the city has reached approximately 1.6 million sq.m.

According to Duong Thuy Dung, head of Valuation, Research, and Consulting at CBRE Vietnam, most of the large leasing transactions in the third quarter took place at new buildings, which were finished after 2020. The total new leasing area of both Grade A and B in the third quarter was approximately 24,000 sq.m.

Experts said that the new supply also means increased competition, driving the vacancy rate of Grade A offices from 7.5 per cent to nearly 20 per cent.

Besides, landlords are still relatively cautious with pricing decisions when the contract rental price may have to come with many incentives to attract or retain customers. While economic difficulties are forecast to last until the end of the first quarter of next year, this caution is necessary as the supply of Grade A office space continues to increase in the coming years, they said.

Pham Ngoc Thien Thanh, Deputy Director of CBRE Vietnam Research and Consulting Department said the city's office market is expected to soon become more vibrant in the context that the market has been waiting for truly quality supply for a long time, especially the Grade A office segment.

In addition to pursuing high-quality standards relating to construction and operation, investors also pay great attention to green criteria, ensuring quality of life for office workers because this is a prerequisite to attract and retain large tenants and multinational corporations. It means that Grade A office buildings that have been in use for a long time should undergo renovation to ensure competitiveness, she said.

According to Trang Le, Senior Director of Research and Consulting Services at JLL Vietnam – a real estate service firm, late 2023 and early 2024 continues to witness a big competition from a wave of newly-launched projects.

Despite being the locality that attracts the top Grade A tenants in the country, HCM City's office market is expected to return to a balance in the negotiation between landlords and tenants, she said.

Real estate developer rejects Thu Thiem land plot Real estate developer Binh Minh Investment and Trading Company Limited has rejected the purchase of land at Thu Thiem New Urban Area, Thu Duc City, despite initially winning the bid for it at auction. The move comes after Tan Hoang Minh Group earlier also did not go through with a planned purchase.

Stuck in the mud: reviving the fortunes of Thu Thiem Once expected to be the Pudong of Vietnam, after more than a decade of slow development the Thu Thiem area of Ho Chi Minh City is not close to fulfilling its potential, with incomplete plans galore.