Financial, insurance and real estate enterprises (FIRE) are leading in the consumption of office real estate in Hanoi compared to other industries, accounting for a major proportion (29%) of the total leased area of Grade A and B office buildings.
92% of office space is filled
Report of the real estate market (real estate) of offices, apartment for lease in Hanoi in the first 6 months of 2019 of Savills Vietnam Co., Ltd. (Savills) shows that the total supply of offices in Hanoi reached 1.8 million m2, an increase of 2% q-o-q and 9% y-o-y. The average rent was US $ 20 / sqm / month, up 1% q-o-q and 3% y-o-y. Occupancy rate reached 92%, up 1 percentage point QoQ and stable year by year.
Commenting on the demand for Hanoi office real estate in the future, Savills said that the simplification of regulations in the insurance industry has shown a positive impact on the industry with an increase in revenue last year at 20. %, indirectly reflects the increased demand for workspaces in this industry.
In addition, fintech (financial technology) has emerged as a promising new economic sector, driven by the relatively low penetration rate in the banking sector in Vietnam. Financial – banking businesses are therefore expected to have many developments, leading to a huge demand for office space in Hanoi.
In addition, the information and communication technology enterprises are also growing very fast, ranked third in terms of leasing area, currently accounting for 18%, an increase of 2 percentage points compared to 2017 and will continue. Continuing to need more office space in the future.
Forecasts from experts show that Vietnam’s economy will continue to grow in the next 3 years, with Southeast Asia’s leading GDP growth rate. This comes from positive economic indicators in the first half of 2019, which will support the sustainable development of the real estate market.
F.I.R.E Enterprise ranks first in terms of consumption
Savills’ recent report also stated that Vietnam’s economy is changing strongly, especially in the field of trade. Although businesses in finance, insurance and real estate (F.I.R.E) are lagging behind regional countries, they are growing rapidly and sustainably; F.I.R.E businesses are leading in the sales of office real estate in Hanoi compared to other industries, accounting for the main proportion (29%) of the total leased area of Grade A and B office buildings.
According to Savills, from 2017 to now, the ratio between Vietnamese and foreign tenants in the A&B segment has not changed much, accounting for 43% and 57%, respectively. However, foreign tenants tend to prefer high-end spaces with higher rents. As of the first 6 months of 2019, 68% of the rented space in Grade A buildings is occupied by foreign tenants.
Savills comments that the quality of Grade A offices is not much, the current Grade A buildings in the CBD are all old and lack modern facilities. High-end offices have a strong attraction to foreign tenants, so interest in Grade A is expected to continue to grow amid strong developments in FDI and M&A.
Meanwhile, demand for Grade B offices is expected to remain high due to more affordable rents and reasonable office quality compared to rents. Accordingly, the Grade A and B office market is active in the coming years, especially in the urban areas and the West of the city.
Mr. Tran Ngoc Thang – General Director of Hanoi Office, a business specializing in leasing virtual office – shared office in Hanoi, said that in the first 9 months of the year, the office leasing market in Hanoi was operating quite well thanks to the The growth of domestic and foreign enterprises … Especially, technology enterprises, start-ups are developing quite strongly, this group of enterprises accounts for the majority of the rental rate of office buildings in the time. over time.
It is forecasted that in the second half of 2019, Hanoi office market will have about 79,000 m² launched by developers but mostly located in the inner city; By 2020, there will be approximately 260,000 m2 expected to be opened and the average rent is expected to increase. With abundant supply, Grade A and B office properties are forecast to continue to be vibrant, with rents expected to increase by 7% over the next 2-3 years.
However, according to Mr. Thang, whether A or B, quality is still a key factor that attracts both domestic and foreign visitors. Accordingly, in order to attract tenants, real estate businesses need to research the areas of customers in need, where can attract tenants … That will be the problem that investors will have to consider. to achieve the highest efficiency./.