HCM City (VNA) - Ho Chi Minh City's office market is experiencing record absorption in 2024, demonstrating its vitality and resilience as well as consolidating its position as an attractive destination for both domestic and foreign businesses looking for strategic development opportunities in Southeast Asia, according to Knight Frank, one of the world's leading real estate consultancies.
In just nine months of 2024, the city's office leasing market reached 96,400 sq.m of Net Lettable Area (NLA), aiming for the highest net absorption in more than a decade. This figure far exceeds the previous record of 81,300 sq.m NLA recorded in 2019.
The absorption rate is high, but the asking rent is still relatively stable, thanks to the building owners offering many incentives to tenants, helping to increase the occupancy rate without significantly increasing the rent, Knight Frank Vietnam assessed.
According to the consultancy, office leasing in the southern metropolis was significantly contributed by strong demand from businesses in the information technology, technology, pharmaceutical, finance, and banking industries.
Knight Frank noted that some older office buildings in HCMC have increasing amounts of vacant space as tenants choose the new buildings with Green Certificate in a ‘flight to quality’ scenario, particularly with good incentives being offered for large occupiers. As of Q3 2024, the vacancy rate of the whole market slightly increased by 2 percentage points quarter-over-quarter to 12%, which accounting for new supply, shows good performance.
“Since the HCM City office market is becoming more competitive for both landlord and tenant, it is important for landlords to keep rental rates attractive to prevent their tenants from moving to newer buildings that offer higher quality often at lower cost. We predict that many landlords will have to review their leasing policies, resulting in a wider difference between asking and achievable rent in the coming months. We expect this trend to continue into 2025 with the market remaining in favour of tenants for the time being,” said Leo Nguyen, Director of Occupier Strategy and Solutions at Knight Frank Vietnam./.
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