Saigon office rents are rising across all categories despite new supply as demand remains high.
Landmark 81, the tallest skyscraper in Ho Chi Minh City, one of the premium office buildings in the city. Photo by Shutterstock/Ho Su A B.
A new report by real estate firm Jones Lang LaSalle (JLL) shows that Grade A rents in the second quarter increased 4.8 percent year-on-year. Grade B rents also rose 7.5 percent, while that of Grade C rents went up 8.5 percent.
The rents have gone up despite the market getting new supply of 42,700 square meters from seven buildings, bringing the total office space area to 2.23 million square meters. But the rise in supply has mostly occurred in non-central business districts.
In the central business districts, supply has remained restricted with no new Grade A and B supply recorded in seven consecutive quarters, the report said. The occupancy rate in the whole market is now at 96-97 percent, showing that demand was strong.
The report also noted that in the second half of the year, the market is expected to receive a wave of new completions which may result in a decrease in overall occupancy rate.
JLL forecast an enriched new supply coming on stream in the next three years, which will put some pressure on the performance of the existing supply.
An earlier report by real estate firm Colliers International Vietnam confirmed the trend. In the first quarter, HCMC had an average occupancy rate of 95 percent in premium office with no new building coming online.
But the low supply situation is set to improve with five new high-quality office buildings set to open this year in HCMC with 150,000 square meters of leasable area, it said.