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HCMC to see soaring office demand in next four years

Released at: 11:30, 26/09/2018

HCMC to see soaring office demand in next four years

Photo: Dreamplex

IT, e-commerce and co-working to be key sectors driving occupancy, according to JLL.

by Hong Nhung

As Southeast Asian economies expand, office demand, particularly from technology, e-commerce, and co-working space companies, is expected to rise by an estimated 6 per cent annually between 2018 and 2021, with Ho Chi Minh City seeing a rate of 10 per cent in the period, according to JLL Vietnam.

High demand in HCMC and Hanoi

As at the end of the second quarter of 2018, total stock in Ho Chi Minh City’s office market increased to 1,945,000 sq m, with overall Grade A and B occupancy rates standing at a high of above 95 per cent. The overall rental rate is expected to continue its upwards trend with support from healthy demand and increased quality in future supply. 

A large volume of high-quality Grade B supply is also projected to be completed by 2020 and will likely put pressure on Grade A in the future, especially long-standing Grade A projects with deteriorating construction quality. 

In Hanoi, demand for Grade A and B office space in 2018-2019 will increase on the back of positive economic growth. Higher occupancy rates were observed in both as new set-up and relocation purposes continue to be the main drivers of office demand.

“Vietnam is considered one of the fastest-growing e-commerce and flexible space markets in the region,” said Mr. Stephen Wyatt, Country Head of Vietnam, JLL. “This rising trend will have a positive impact on the office market as companies, both foreign and local, will be looking for a suitable place to set up operations in this promising economy.”

Based on JLL’s latest outlook report for the second half of this year, “Southeast Asia set for further outperformance”, office take-up in the region has accelerated over the last six quarters as demand continued to surprise on the upside, notably in Manila, Singapore and Jakarta.

“Technology, e-commerce and flexible space operators were key demand drivers,” said Ms. Regina Lim, Head of Capital Markets Research, Southeast Asia, at JLL. “Looking forward to 2018-2022, we expect office take-up in Southeast Asia to stay strong, growing at 6 per cent annually, amid GDP growth of 5 per cent per annum.”

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