HCMC Office Market Overview for Q3 2024
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New Grade A office buildings outperform market
According to Knight Frank, the world’s largest privately owned real estate consultancy, the HCMC office market saw a growth of supply in Q3 2024, with around 50,300 sqm of new Grade B office leasing space.
As of Q3 2024, the market-wide asking rent for Grade A office buildings increased as new Grade A buildings such as The Nexus and The Hallmark have reached to 80% occupancy and increase asking rents. The average monthly Grade A rent in the market was USD 59.3 per sqm (up 1.6% quarter-over-quarter and 2.0% year-over-year). There was a moderate increase in the asking rents of Grade B projects to around USD 34.9 per sqm per month (up 0.5% quarter-over-quarter and 2.6% year-over-year) as a result of increased asking rents at two new buildings, namely ThaiSquare The Merit and e.town 6.
In Q3 2024, new lease in the HCMC office market were announced at new Grade A office buildings. During the quarter, Knight Frank observed that the number of large new enquiries was still robust compared to the prior year, which represents a clearer sign of good office leasing demand in HCMC. During Q3 2024, some major transactions were recorded from IT/Technology companies, with relatively large leasing spaces ranging from 3,000 to 10,000 sqm NLA at buildings such as OfficeHaus, The Nexus and The Hallmark.
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 HCMC 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.
Looking ahead to 2025, the presence of Marina Central Tower will become one of the highlights of the HCMC office market, becoming a new landmark location for the city. Knight Frank highlights that due to delays in legal procedures and permitting for the last 24 months, limited supply will arrive through 2025 which may make the market more balanced going into 2026.
