In 2022, 3 new office buildings have entered the HCMC market: CMC Creative Space (District 7, Q1), Pearl 5 (District 3, Q1), and COBI I & II (District 7, Q2), contributing nearly 70,000 m2 of office space for lease. This figure contributes to the full-year net absorption of 86,764 sqm, and brings the total office supply in the market to 2.39 million sqm.
While there is no new Grade A supply in 2022, older office buildings are seeing the trend of renovating and upgrading in quality, especially in the CBD.
Demand for Grade A supply in the CBD showed signs of recovery in Q4 2022, with positive absorption recorded in many buildings. Overall, for the whole year of 2022, a positive absorption was recorded in both Grade A and Grade B buildings across the market. The South and Central areas are still the areas with the highest amount of office absorbed.
This quarter, the grade A occupancy rate is 96%; The average rent is US$59/m2/month. The high occupancy rate of Grade A buildings throughout the year indicates a sustained demand for high-quality office space.
The Grade B office market remained relatively stable with an occupancy rate of 91% in the 4th quarter, increasing gradually throughout the year, partly as new supply continued to hit the market in the first half of this year ( typical: CMC Creative Space, COBI Tower I & II, Pearl 5).
Grade B rent remained stable at US$34/sqm/month, with growth below 1% QoQ and YoY. This is partly due to an increase in the USD/VND exchange rate; In addition, a decrease in rents was also recorded in some buildings.
Supply-wise, many grade A projects are expected to be complete and go into operation in the next few years.
Notable projects: The Hallmark (2023 – 54.500 sqm), The Mett* (2023 – 30.000 sqm), The Nexus (2024 – 34.000 sqm), The Sun Tower (2024 – 67.573 sqm), e.Town 6 (2024 – 35.000 sqm), UOA Tower II (2025 – 45.806 sqm)
Companies wishing to expand with large demand tend to choose the South of HCMC, especially those in the e-commerce, insurance, and technology industries, thanks to the new high-quality supply in this area. In 2022, the South of Ho Chi Minh City will dominate in terms of new supply. From 2023 onwards, this position will belong to the East, an area expecting abundant Grade A supply in the near future.
This future high-quality supply in Thu Thiem area with good traffic connections to the city center will create favorable conditions for the Eastern area to become a magnet attracting reputable companies with large demand.
Some trends are accelerating in the office market in Ho Chi Minh City:
Renovations and upgrades: Older buildings in prime locations have now begun the process of renovation/refurbishment to improve building quality and retain tenants.
Office design for humanity: The office is no longer just a place to work. The concept of a human-centered office has been garnering more attention to help improve the working experience of employees.
Raising standards of sustainability: Sustainability becomes a key value as more and more developers are securing green certifications such as LEED and applying ESG standards ( environmental, social, and governance) to their office assets.
