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Dec 21, 2020 / 20:51

Hanoi, Ho Chi Minh City seen as regional metropolis for foreign investors

Office markets in Vietnam’s major cities are promising segments for foreign investors.

Hanoi and Ho Chi Minh City have been listed among Asia-Pacific official markets which outperformed in 2019, becoming comfortable destinations for foreign investors.

 Hanoi is compatible with regional metropolis for office indicators. Photo: Le Viet/Kinhtedothi 

The two cities were among few regional metropolises offering investors high investment returns in 2019, according to leading professional services firm JLL.

Hanoi and Ho Chi Minh City which are considered emerging market, together with Bangkok and Manila in Southeast Asia posted high initial yields, JLL said, adding that the markets offered high investment returns via both yield compression and rent growth, supported by favorable demographic profiles.

In Hanoi in the last quarter of 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%.

Meanwhile, 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, JLL said. Landlords continued to have strong bargaining power this quarter given the restless rental growth amid limited stock, it added.

Savills Vietnam, however, has said Hanoi’s Grade A office whose performance holds steady during Covid-19 and capitalization rate reaches up to 7% is gaining momentous foreign investor attention.

Demand for this real estate segment has remained stable despite impact of the Covid-19 pandemic while other real estate segments saw sizable decline, the company said.