Offices for lease in Ho Chi Minh City: Negative net absorption area was recorded for the first time in a decade
Real estate consulting company, JLL, has just released its Ho Chi Minh City Office Market Report in the second quarter of 2020, accordingly, the net absorption area was recorded negative for the first time in a decade.
Supply is quite limited despite a new building was completed in the quarter
Friendship Tower will be completed in the second quarter of 2020, providing about 11,900 m2 of floor area for lease to the market. Besides, we recorded negative net absorption are in many buildings this quarter due to customers' earlier return of the premises due to financial difficulties. As a result, Grade A&B office vacancy increased by 107 percentage points quarter-on-quarter; however, the market is still considered quite limited in terms of supply with vacancy rate of 8.0% in the second quarter of 2020.
The net absorption area was recorded negative for the first time in a decade
JLL's report notes that Grade A&B offices in Ho Chi Minh City are starting to feel the pressure with net absorption area being negative for the first time in a decade, at -3,619 m2 in the second quarter of 2020. The main reason is that small and medium enterprises, which are the main sources of tenants in Grade B offices, have reduced their size and earlier terminated their contracts due to the impacts of the Covid-19 epidemic.
The Grade A office market, despite being more resistant thanks to the tenants with good financial standing, is also under pressure. This is evidenced by signs of slowing down from the need to expand and establish new enterprises during the pandemic.
The rent increases in the context of unstable economy
Despite the prolonged economic instability, Grade A&B rents continue to rise for ten consecutive quarters, reaching 30.9USD/m2/month in the second quarter of 2020, according to JLL. Rents increase by an average of 3.1% QoQ and 8.5% YoY as most landlords are still quite confident in the context of current and future shortages of supply.
However, due to the impact of the Covid-19 pandemic reducing lease demand, customer support policies from landlords have become more popular this quarter such as rent support or flexible rental policies in terms of negotiation.
Market Outlook
JLL forecasts that by the end of 2020, the market will welcome more than 100,000 m2 of Grade B office area, mainly from the Non-Central area, increasing the total supply of Grade A & B office area to 1.5 million m2.
The global economic outlook is still uncertain, especially under the impact of the Covid-19 epidemic, Grade B&C office tenants will be affected first, and possibly Grade A office tenants later if Covid-19 virus is not under control globally. Therefore, buildings with large vacancy areas, especially in the lower grades, should review rents and lease strategies to maintain the required occupancy rates.
Retail market shows positive signs of recovery, and office rents will increase
This comment was standed by CBRE in the report announcing the focus of the real estate market in the first quarter of 2021 on the morning of April 07
Real estate is still an attractive investment channel, trusted by many people
At the Honor Ceremony of the leading real estate brand in 2020 - 2021 and the Spring Real Estate Talkshow recently organized by Vietnam Real Estate Online Magazine (Reatimes) and Vietnam Real Estate Research Institute (VIRES), experts have recognized, evaluated and forecast common problems of the real estate market in the period of 2020 - 2021.
Outlook for the real estate market in 2021
According to the survey results recently conducted by Vietnam Report Joint Stock Company (Vietnam Report), economic experts and businesses operating in the real estate field expect that in the first half of the year and for the whole year of 2021, the real estate market will continue to recover and grow, even boom in some certain segments and regions.
3 driving forces for the office market to grow steadily in 2021
In the context of macroeconomic recovery, the office market maintains stable gross rents and average occupancy rate. Many businesses have changed from fixed working style to flexible one to prioritize efficiency through the requirement of less fixed workspace and many shared areas.
Which real estate segment benefits from macroeconomic indicators
The internal force of the economy is the foundation that promotes the prospect of the real estate market. Accordingly, looking at the current macro indicators, real estate in 2021 will witness very good growth in some segments.
Office rents increase despite the epidemic
The average offer price of Grade B office spaces in Ho Chi Minh City increased sharply in the third quarter, while that of Hanoi only decreased by 1% over the same period last year.
Office market faces difficulties until the end of 2020
In the last coming months of the year, the office market will continue to face challenges when demand decreases and the vacancy rate is expected to increase further.
Retail and commercial premises: Changing strategies to "overcome the storm"
The Hanoi market records an increase in the vacancy rate in commercial centers and prime locations. And for the first time, the market have witnessed lessors negotiating prices with lessees.
The real estate market before a new cycle: After rain comes sunshine
Although starting the new development cycle with depression and difficulties, experts say that these are only objective factors, while the nature of Vietnam's real estate market still has a lot of room and opportunities for investment.
“Real estate will recover fastest compared to other industries”
“The supply-demand mismatch makes it difficult to reduce real estate prices, especially in quality real estate products. It is one of many notable remarks at the conference "Vietnam Real Estate in 2020 - 2021: Ready for a new cycle".
How does office market survive the 2nd time?
In the second quarter, the average rent of the Grade A segment decreased by 4.9% compared to the same period of last year and the vacancy rate increased by 9 percentage points year-on-year, at 11.8%. Grade B office rents remained unchanged without decrease tendency and the vacancy rate increased slightly.
