HCM City office market set to bustle by year-end
HCM City office market set to bustle by year-end
In the second half of 2015 the HCM City office market is expected to add more than 100,000sq.m of office space from one grade A and three grade B projects, according to the latest report from Cushman and Wakefield on the city real estate market.Competitive deals remain available for the best and largest tenants as new supply gets delivered with Vietcombank, Lim Tower 2, and Pearl Plaza being the most prominent. A lack of quality Grade A leasable space may mean rents will stabilise in the fourth quarter of 2015.
In the second quarter occupancy rates for both grades continued to increase, grade A by 1 per cent on both a quarterly and yearly basis to 92 per cent, and grade B, whose average occupancy has trended upwards during the last eight quarters, by some 2 per cent year-on-year to 94 per cent.
Grade B buildings in the central business district (CBD) achieved a high average occupancy of 94per cent.
Approximately 35 per cent of grade B buildings in this area saw occupancy increase. On the other hand, over the last four quarters average occupancy remained slightly lower in the CBD then elsewhere at 95 per cent, showing that tenants remained attracted due to the area's affordability.
In terms of rents, the average rents of both grades remained stable on both a quarterly and yearly basis at around VND1 million (US$46.60) per square metre per month for grade A and VND595,000 ($27.30) for grade B.
Residential overview
Affordable apartments of small s will continue to be the most sought-after. Notably, there is no future supply located in the city centre due to limited supply of development sites while permission to build housing is also difficult to obtain.
Therefore, future supply will be in non-CDB areas but which offer easy access to the city centre – such as Districts 7, 2, 4, and Binh Thanh.
Especially projects located along the first metro line will attract more buyers and investors.
Some suburban districts like 8, 9,12, and Binh Tan with an abundant stock of affordable apartments, sufficient land for projects and improving infrastructure are also attracting developers and low income earners.
The amendments to the Housing Law, which took effect on July 1 and allow foreigners to own commercial properties in Viet Nam will help strengthen demand, especially for mid – to high-end projects.
In addition, the new guarantees required by developers from banks for new developments will add more confidence to the market. However, the cost of these guarantees is expected to be passed on to the consumer.
The residential market in HCM City continues to improve and this is likely to continue throughout 2015 and beyond.
