Office buildings in Ho Chi Minh City (Source: VNA) HCM City (VNS/VNA) - Large office space and improvedconnectivity will be in high demand in coming years, accordingto market researcher Jones Lang LaSalle (JLL).
In report forecasting trends in the Vietnamese real estate market, JLLsaid that office space remains a hot commodity as rents have soared past therecent peak to reach a decade high.
Rental rates in Grade A and B buildings have increased, supported by strongdemand and higher rental rates in newer office developments. Tenants arestruggling to find bigger space because in the current market, only oneGrade A building and 10 Grade B buildings can provide a contiguous spacelarger than 1,000 sqm, the researcher said.
The demand for large office space will accelerate in the next few years asco-working operators grow in numbers and companies look to upgrade their officeto retain talent and expand businesses. Larger and more flexiblespace means a better chance of collaboration plus better use of energyand space.
In the fast-changing retail sector, success has never been more dependent onthe supply chain, JLL said.
“Omni-channels are adding new layers of complexity to retail logistics:it’s no longer just getting products on shelves, but making them availableanytime and anywhere. As a new trend in the market, both retailers andmall developers are reinventing themselves with focus on F&B andexperiential retailers, providing better customer services and applyingtechnology, consumer analytics to enhance their popularity and increase foottraffic,” the company said.
JLL also forecasts that limited new supplies will continue.
According to the latest report from JLL, about 30,000-35,000 units areexpected to launch officially in HCM City and 40.000-45.000 units in HàNội in 2020. However, the number is subject to a great deal of uncertaintygiven the Government’s tight control in granting land-use rights andconstruction licences.
Strong demand is set to carry on and will boost the price further across allsectors, JLL said. However, the demand in high-end segments, especially frominvestors, is likely to slow down in the long term as their already-high pricelevel and low rental yield make it a less attractive investment.
The green movement also received a tremendous boost after "finedust" and "virus" became buzzwords. Aspeople rush to buy masks, landlords are racing to upgrade their buildingsto protect workers and enhance profits as investments in indoor air quality andhygiene help to differentiate office buildings from competitors.
Stephen Wyatt, country head of JLL Vietnam, said: “Sustainability is not just atrend, it has to be the future of work. The next generation of buildings is setto become more ‘green’, with sustainable technologies to save on operatingcosts and innovative design to attract more occupiers and tenants.”
The industry is still the hottest sector in the market with demand growingstrong as companies are still looking to relocate from Chinaamid political uncertainty. Even before the trade war, significantinterest from foreign investors had led to land value and rental rate on theincrease.
Manufacturing is the sector with the most significant investment in the past 10years, and JLL predicts that it will continue to dominate the market inthe next few years.
Logistics is expected to be the future of the industrial market. In recentyears, increasing demand from both traditional retail and continuousgrowth from e-commerce sectors has put great pressure on existing supplychains, facilities and warehouses.
JLL predicts that the growth of retail will contribute to investment activitiesrelated to the current shortfalls of the industry.
Overall, macroeconomics like urbanisation, growth in smartphone and internetusage, and an ageing population, will fuel demand for alternativeinvestment choices. Alternative real estate such as senior and student housing,data centres, and cloud kitchens will be popular to investors in the next fewyears./.
VNA
