HCM City (VNS/VNA) – Ho Chi Minh City’s office market has achieved rapid growth fuelled by steady demand and burgeoning supply, reinforcing the city’s status as a premier destination for both local and international corporations seeking strategic growth opportunities in Southeast Asia, according to real estate consulting firm Knight Frank.
The market absorbed 96,400sq.m of net lettable area in the first nine months of 2024, and the city was on track to achieve its highest net absorption in over a decade.
The previous annual peak in recent years was 81,300sq.m in 2019.
The performance underscored the strength and resilience of the market.
But despite the high absorption rate, rentals had remained relatively stable, due to landlords offering incentives, which fuelled occupancy without significantly increasing rents.
Leasing activity was driven by strong demand from companies in the IT, technology, pharmaceuticals, finance, and banking sectors.
IT and technology led the way, with both local startups and multinationals seeking modern office spaces to support their rapid expansion.
Pharmaceutical companies contributed significantly, securing premium office spaces in response to growing healthcare investments.
Meanwhile, the expansion of domestic and international banks has led to larger and more sophisticated office solutions.
There was significant leasing activity in newly completed buildings, largely driven by tenant relocations.
This trend reflected the ongoing “flight-to-quality” movement, as tenants increasingly prioritised green-certified office spaces offering modern amenities.
Among the standout developments was The METT in District 2, whose occupancy soared from 10% in Q1 to over 80% by Q3, with its prime location in Thu Thiem and modern facilities making it a choice for high-profile tenants.
In the city’s south, Cobi Tower 1 achieved an impressive 90% occupancy rate in Q3, a 55 percentage point increase year-on-year, thanks to its competitive rents and excellent accessibility.
Truong Anh Nguyen, research manager at Knight Frank Vietnam, said: “The record performance of HCM City’s office market in 2024 highlights the city’s economic resilience and its growing reputation as a magnet for global investors.
“With sustained demand across key sectors and the rise of premium-grade developments, HCM City is solidifying its position as a leading commercial hub in Southeast Asia.
“To put this all into context, net absorption of 96,400sq.m is enough space for approximately 13,700 new desks in the city – that is a lot of jobs.”
But other markets in the neighbourhood showed mixed results.
In Hanoi, new supply rose by 18% in the first nine months, but slower absorption in newly launched buildings led to higher vacancy rates.
Bangkok experienced a significant decline in new supply compared to 2023, with occupancy rates across all office grades also dropping to their lowest levels since 2019.
Jakarta’s grade A office market continued to face challenges, with vacancy rates exceeding 30% in Q3 2024 and rents under persistent downward pressure.
But Kuala Lumpur showed signs of recovery, with grade A vacancy rates declining from 32% to 27% despite new project launches and rising rents.
The exceptional performance of the HCM City office market reinforced the city’s status as a premier destination for both local and international corporations seeking strategic growth opportunities in Southeast Asia./.
