HCMC reports drop of office rents as vacancy hits 12-year high

October 3, 2023
vi-lang Xem Tiếng Việt

Knight Frank, the world’s leading privately owned real estate consultancy, today announced a quarterly decrease in Ho Chi Minh office asking rents as new supply pushes vacancy to 18%.

In its Q3 2023 office market update, Knight Frank reported that Grade A office asking rent reflected a quarterly decrease of 2.2% and 0.2% for Grade B rents as vacancy rate jumped to 18.2% & 11.6%, respectively. Asking rents for Grade A offices now average $57.60 pm2 per month with cumulative available office space of around 73,000 m2. 

“We have forecasted since 2022 so it shall not come as too much of a shock to investors and this supply is very welcome by the market which has not seen a new Grade A office in Ho Chi Minh City since 2017, which really is too long for a city of our size,” said Alex Crane, Managing Director of Knight Frank Vietnam. “That said, the amount of available space today is higher than it has been since my records began when I arrived in 2011. While the vacancy then was also 20% with downward pressure on rents, the market was far smaller and cumulative space available in Grade A was less than half of that available today. What is far different now versus then is the quality of buildings on offer, but also the demand side from particularly multinational companies who continue to increase their presence in Vietnam and in particular Ho Chi Minh City.”  

Knight Frank also note that the push downwards on average rents in the Grade A segment is also a result of new buildings arriving in Thu Thiem, which are offered at a more competitive rent to the traditional District 1 core.  Crane added: “The new development of Thu Thiem is providing some high-class office space at a good discount versus the traditional CBD, occupiers have a greater choice now of three core areas in District 1, Thu Thiem and District 7 for international standard offices.” Data released also shows that a further building is due to launch in Q4 2023, adding an additional 50,000 m2 of leasable space to the market which Knight Frank forecast to push above 20% vacancy by the end of the year in Grade A buildings. Within the same period, Grade B rents expect a 6% fall in asking rents to $32.00/m2/month.