Hanoi, HCM City office markets comparable with regional metropolises
The two cities were among few regional metropolises offering investors high investment returns in 2019.
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Hanoi and Ho Chi Minh City were listed among Asia-Pacific official markets which outperformed in 2019 and continue performing well in 2020, according to leading professional services firm JLL.
Hanoi and Ho Chi Minh City are among few regional metropolises offering high investment returns in 2019 |
The emerging markets of Ho Chi Minh City and Hanoi together with Bangkok and Manila in Southeast Asia posted high initial yields, JLL said in a latest report, adding that the markets offered high investment returns via both yield compression and rent growth, supported by favorable demographic profiles.
According to the report, in the last quarter of 2019, HCM City’s office market witnessed Grade A and B’s rents soaring to a decade high, reaching US$29.1 per square meter (sq.m).
This was supported by strong demand and higher rental rates in newer office developments, explained JLL, a firm specializing in real estate and investment management.
Landlords continued to have strong bargaining power this quarter given the restless rental growth amid limited stock, it added.
Meanwhile, in Hanoi in the same quarter 2019, both Grade A and B submarkets recorded a higher net absorption in comparison to the previous quarter, indicating stable demand.
The occupancy rate continued to increase and reached 93.0%, in which the Grade A submarket posted a rate of 94.0%.
JLL forecast the demand for office space in the next ten years will continue to grow strongly by 8-10% annually in Ho Chi Minh City as the economy develops.
The proportion of the population employed in services is estimated to rise from 30% to 40%. This provides a great opportunity for developers to acquire sites to build more office space to cater to new companies and expansionary demand.
Nonetheless, on a regional basis, returns in 2020 are generally forecast to be smaller than in 2019, as rent growth and yield compression may both slow down during the year relative to last year, JLL said in the report.
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