Savills: Vietnam's office rentals still modest in region

In local terms, prime office lease markets in most cities in Asia rose slightly but many are late in the cycle, the latest Savills’ Prime Benchmark Survey found.

In local terms, prime office lease markets in most cities in Asia rose slightly but many are late in the cycle, the latest Savills’ Prime Benchmark Survey found. The report was prepared to provide a benchmark of occupancy costs of selective prime properties in various cities in Asia, inclusive of rents, management fees, and government taxes or rates.

In the office segment, Hanoi has been in the late downswing while Ho Chi Minh City in the late upswing. However, both major cities recorded a minus rate of 0.4 per cent in rental changes both in VND and US dollars.

“Vietnam’s office rents are relatively modest in a regional context,” said Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam. “However, with full occupancy and whole floors increasingly difficult to find, over the mid-term there is likely to be pressure for rents to increase.”

In the retail segment, Hanoi has seen no changes in rents while Ho Chi Minh City saw a slight fall of 1.6 per cent.

“New retail players in Vietnam continue to push market dynamics,” said Mr. Griffiths. “Every retail indicator is positive, but will a level of sales be achieved that justifies the continued expansion into contemporary formats?”

Vietnam’s strong FDI continues to support solid performance, with second tier and SMEs now the key focus in luxury serviced apartments.

In the hotel segment, the EU visa exemption policy has had a huge impact on Hanoi’s room rates. The capital had the highest regional growth rate, of 50 per cent, while Singapore’s rates were up 11.6 per cent, Manila’s 8.9 per cent, and Kuala Lumpur’s 7.4 per cent.

Outstanding performance in Vietnam’s hotel markets continued, influenced by increasing numbers of Chinese, Russian and South Korean inbounds. Hospitality development is booming as domestic and international developers move to secure or improve their positions.