The Hanoi office market is thriving with new commercial infrastructure,leading to higher occupancy and decreasing rents, noted CB Richard EllisVietnam Co Ltd (CBRE)'s Hanoi branch.
The new emergingcentral business district (CBD) in the West continues to showconsiderable development, but on the other hand, the current CBD areaaround the Hoan Kiem district is also considered a favourable officelocation.
In the last five years, the number of Grade A andB office buildings have increased significantly from 35 units to 76units, an increase of 117 percent. As a result, the availability ofGrade A and B office buildings nearly tripled from 330,000 square metresto approximately 1 million square metres by the end of the finalquarter of 2013.
This is a boom period for tenants, as highsupply and low prices have created favourable conditions, and thetenants have a wide-array of available options that can match theirexpectations, according to Nguyen Bich Trang, a senior manager from theHanoi branch's Office Service.
Due to theaforementioned increased availability of office space, rentals in West,Mid Town, and CBD have remained under check due to competitive pressureover the past few years.
For instance, in the last quarterof 2009, the highest average asking rent for a Grade A office space wasrecorded at a level of 50 USD per square metre per month, which at thattime was amongst the highest rents in the Southeast Asian region.
Currently,the average asking rent for a Grade A office space broadly rangesbetween 18-43 USD per square metre per month, with the later beingapproximately 50 percent lower as compared to the rental levels in 2009,noted CBRE, one of the foreign property service providers in Vietnam.
Onehas to take into account that the current asking rents are excludingincentives, such as rent-free periods, free parking, or longer fit-outperiods. Depending on the tenant, the size, and lease term, totalincentives can reach up to 20 percent.
The Grade B officerentals showed a downward trend from 25 - 35 USD to 15 – 24 USD persquare metre per month in 2013, which represents a staggering decreaseof approximately 30-50 percent.
Despite this decline, CBREexpects that the Grade B office rentals have yet to see their lowestlevels and that the Hanoi office rental levels will continue to dropin 2014.
For the Grade B market, CBRE also expects thatthis year, a further increase is inevitable. Regarding the Grade Amarket, the forecast looks less dramatic as the Lotte Center Hanoi isthe only upcoming Grade A development in the capital city.
Anotherinevitable effect of the additional office stock is increasedavailability. Vacancy itself is not a bad thing as up to 5-10 percent isconsidered an acceptable rate in any given market, according to CBRE.
However,last year, the available space increased to 20-50 percent. The onlydownward trend was apparent in Grade A buildings in the West, where theKeangnam Hanoi Landmark Tower and Indo Plaza Hanoi have beensteadily leasing out their office space since their completion in 2011.
Theincreasing office stock has helped to strengthen the net absorption inHanoi . The five-year net average absorption (2009 – 2013) was 84,000square metres per annum. The average net absorption over the past twoyears was even higher, at 91,000 square metres.
" Hanoihas been recording historically high take-up numbers, which is theresult of decreasing rental levels along with an ongoing flow of newoffice developments," claimed CBRE.
"It, therefore,becomes attractive for especially large tenants to relocate and expandtheir Hanoi office," Trang reported.-VNA
The new emergingcentral business district (CBD) in the West continues to showconsiderable development, but on the other hand, the current CBD areaaround the Hoan Kiem district is also considered a favourable officelocation.
In the last five years, the number of Grade A andB office buildings have increased significantly from 35 units to 76units, an increase of 117 percent. As a result, the availability ofGrade A and B office buildings nearly tripled from 330,000 square metresto approximately 1 million square metres by the end of the finalquarter of 2013.
This is a boom period for tenants, as highsupply and low prices have created favourable conditions, and thetenants have a wide-array of available options that can match theirexpectations, according to Nguyen Bich Trang, a senior manager from theHanoi branch's Office Service.
Due to theaforementioned increased availability of office space, rentals in West,Mid Town, and CBD have remained under check due to competitive pressureover the past few years.
For instance, in the last quarterof 2009, the highest average asking rent for a Grade A office space wasrecorded at a level of 50 USD per square metre per month, which at thattime was amongst the highest rents in the Southeast Asian region.
Currently,the average asking rent for a Grade A office space broadly rangesbetween 18-43 USD per square metre per month, with the later beingapproximately 50 percent lower as compared to the rental levels in 2009,noted CBRE, one of the foreign property service providers in Vietnam.
Onehas to take into account that the current asking rents are excludingincentives, such as rent-free periods, free parking, or longer fit-outperiods. Depending on the tenant, the size, and lease term, totalincentives can reach up to 20 percent.
The Grade B officerentals showed a downward trend from 25 - 35 USD to 15 – 24 USD persquare metre per month in 2013, which represents a staggering decreaseof approximately 30-50 percent.
Despite this decline, CBREexpects that the Grade B office rentals have yet to see their lowestlevels and that the Hanoi office rental levels will continue to dropin 2014.
For the Grade B market, CBRE also expects thatthis year, a further increase is inevitable. Regarding the Grade Amarket, the forecast looks less dramatic as the Lotte Center Hanoi isthe only upcoming Grade A development in the capital city.
Anotherinevitable effect of the additional office stock is increasedavailability. Vacancy itself is not a bad thing as up to 5-10 percent isconsidered an acceptable rate in any given market, according to CBRE.
However,last year, the available space increased to 20-50 percent. The onlydownward trend was apparent in Grade A buildings in the West, where theKeangnam Hanoi Landmark Tower and Indo Plaza Hanoi have beensteadily leasing out their office space since their completion in 2011.
Theincreasing office stock has helped to strengthen the net absorption inHanoi . The five-year net average absorption (2009 – 2013) was 84,000square metres per annum. The average net absorption over the past twoyears was even higher, at 91,000 square metres.
" Hanoihas been recording historically high take-up numbers, which is theresult of decreasing rental levels along with an ongoing flow of newoffice developments," claimed CBRE.
"It, therefore,becomes attractive for especially large tenants to relocate and expandtheir Hanoi office," Trang reported.-VNA
