Colliers International Vietnam HN Market Insights Q22015 - Office Sector (ENG)

1. SUPPLY
As of Q2 2015, one existing Grade B office project (EVN Tower B) will
potentially start leasing to external tenants and there were no new
office buildings enter the market. The total office supply was more than
1,050,000sqm NLA from 80 office projects in all grades, stable q-o-q.
The West of the city was the main supplier for the office market with a
total stock of approximately 630,000sqm, at 42% of market share; whilst
the CBD stock remained unchanged, stayed at approximately 263,000sqm,
accounting for 18% of market share.
PERFORMANCE
Q2 2015 experienced an improvement in performance in all grades due
to increasing demand from both local and foreign companies. The CBD
and the West of the city showed strong increase in occupancy over the
last few quarters.
In terms of occupancy, the average occupancy rate in the review quarter
was 81%, up 4 ppts q-o-q. Grade B had the highest level of occupancy
improvement, up 5 ppts q-o-q, followed by Grade A and Grade C, up 4 ppts
and 2 ppts respectively.
In terms of asking rent, the average rent showed a slight increase of
1.2% q-o-q, stabilising around US$18/sqm/mth. An upward trend in rent
was most observed in the CBD, especially in highly-occupied mature
buildings. This is due to limited supply space in reputable office projects
and significant growth in occupancy.
DEMAND
Strong performance of the office market was parallelled with strong FDI
inflow to Hanoi since higher demand from newly established foreign
companies has increased, particularly from the Asian countries such as
Japan, Korea and Singapore. Accordingly, take-up rate of office buildings
is projected to remain positive in the next few quarters.
The trend of competitive rents also lead many landlords to upgrade the
physical conditions of the buildings and offer lower rents with promotional
package in order to keep and meet tenants’ requirements.
OFFICE SECTOR
Q2 2015 | MARKET INSIGHTS
HANOI
Figure 1: Supply by Grade
ECONOMY OVERVIEW
Vietnam has experienced a positive sign of the economic recovery in
1H 2015 when GDP grew 6.28% y-o-y, which is the highest level in the
last 10 years. The consumer confidence index also witnessed significant
improvement when reaching 143.1 points, up 10 ppts y-o-y compared to
the average target of last year.
Total disbursement rate in the foreign funded projects grew by 9.6%
y-o-y to US$6.3 billion. In which, real estate sector continued to attract
lucrative foreign direct investments with 13% of total new FDI, placed at
second after manufacturing.
In parallel with the new legal amendment of the Vietnam Housing Law
came into effect in July 1st 2015 allowing foreigners to legally own, sell and
transfer their properties will boost confidence in property investments.
Short-term Outlook Grade A Grade B Grade C
Average Rent Rate
Occupancy
Construction
Table 1: Market Snapshot
Figure 2: Market performance by location
DAVID JACKSON
General Director
david.jackson@colliers.com
PLEASE CONTACT US FOR ANY INFORMATION
TRAN NGUYEN
Business Development Manager
tran.nguyen@colliers.com
www.colliers.com/vietnam
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©2015 Colliers International Research
26%
55%
19%
Grade A
Grade B
Grade C
Source: Colliers International Research
* US$/sqm/mth (NLA)
OUTLOOK
In 2015, an approximate of 265,000sqm NLA of office space from
20 projects is expected to come online, mainly in the New CBD
area, accounting for 70% of total market share. Newly registered
companies as a result of improving economic conditions and
increasing FDI investment in mid to long-term will increase
demand on the office market increasing performance, however
pressure on rents and incentives will be created by developments
new to the market.
* Rent includes service charge but excludes VAT
0
20
40
60
80
100
0
10
20
30
40
CBD Sub-centralised West Others
%
US$/m²/month
Source: Colliers International Research
Average asking rent Occupancy