According to research by real estate consultancy Knight Frank, in the last quarter, office rental prices at some new high-end projects in the city center such as The Nexus and The Hallmark began to increase after reaching an occupancy rate of up to 80%. Specifically, high-end offices (class A) are having an average rental price of nearly 60 USD (equivalent to 1.5 million VND) per square meter per month, up 1.6% compared to the previous quarter and 2% compared to the same period in 2023.

For the mid-range segment (class B), rental prices are also 0.5% higher than the previous quarter and 2.6% higher than the same period, up to nearly 35 USD (about 875,000 VND) per square meter per month. The increase in class B offices is largely due to two new projects, ThaiSquare The Merit and E.Town 6, adjusting rental prices for vacant areas.

Real estate in the central area of ​​Ho Chi Minh City (District 1). Photo: Quynh Tran

In the past three months, the Ho Chi Minh City office market has also witnessed many new lease contracts signed in Grade A buildings. Most of the transactions came from customers in the information technology and high-tech industries with large leased areas, averaging from 3,000-10,000 m2, focusing on OfficeHaus, The Nexus and The Hallmark buildings.

"Demand for new office space is increasing and is more stable than last year, with the average occupancy rate of the entire market reaching 88-90%. This helps landlords confidently increase rental prices," said Mr. Leo Nguyen, Director of Strategy Department of Knight Frank Vietnam.

According to data from Savills Vietnam, in the last quarter, the average office rental price in Ho Chi Minh City, including both the central and non-central areas, increased by 6% compared to the previous year, at about VND812,000 per m2. Most of the price adjustments recorded were from new Grade A projects that entered the market at the beginning of this year.

The positive growth in occupancy rates is the driving force for Grade A offices to make strong price adjustments. Specifically, the occupancy rate recorded in Grade A offices increased by 5% in the last quarter, remaining at 89%. The finance, banking, insurance and real estate sector continued to lead with 39% of the transaction market share, followed by the technology sector with 31% and manufacturing at 13%. 75% of tenants in the last quarter were foreign companies, mainly from the US, Korea and Japan, while domestic companies accounted for only 25%.

In addition to the positive occupancy rate of new buildings, the situation is somewhat opposite to some old office buildings in Ho Chi Minh City. These old offices are quite vacant and have a high return rate, making it difficult to approach new tenants. Savills noted that up to 73% of office leasing transactions in the third quarter were for the purpose of moving from old buildings to projects with better quality.

Mr. Leo Nguyen explained that this shift is due to new projects meeting the criteria of green certification, common living space, a trend that is being favored by international and domestic tenants. In addition, new projects are also actively offering many incentives for large-scale tenants. Meanwhile, old projects are almost unable to meet criteria such as greening, common space, limited rental area, not suitable for the trend of large enterprises, so they gradually lose competitiveness.

Forecasting the upcoming market developments, Mr. Leo Nguyen said that competition for both landlords and tenants will increase. Office building owners must maintain attractive rental prices, adjust policies to retain customers, in the context of many new projects with higher quality and lower rental prices. The market in the coming months will see a large difference between asking rents and actual rents. This trend will continue until 2025, in the context of new offices coming into operation, especially in non-central areas.

However, Knight Frank experts also emphasized that due to many delays in the legal and licensing process over the past 2 years, next year, even if there is an increase in office supply, it will be limited in the central area and will only improve in the suburbs.

Similarly, Ms. Giang Huynh, Director of Market Research SM22, predicted that from now until 2025, new supply in the central area will remain scarce and it will not be until 2027 that the city will have an additional 196,412 m2 of floor space from 15 projects put into operation.

Green certification is a concern for high-end office projects in Ho Chi Minh City when 63% of the high-end and mid-range supply about to open focus on meeting these standards. "The huge pressure on old projects is forcing landlords to recalculate policies and rental prices in the coming years," she said.

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