Office Rental Prices Increases Slightly
Office occupancy rates have returned to pre-pandemic levels, with office rental prices rising slightly. The following are the figures reported on that.
Details of current office rental prices
Specifically, the rent of Grade A office space in the first quarter of 2022 increased by 0.2% over the same period last year and 0.56% compared to the previous quarter. The increase in rents was largely due to a tight supply in the market, with Grade A and B vacancy rates only 10% citywide. The supply shortfall is forecast to last until 2023.
The increase is modest, but investors who can hand over high-class office space in the next 18 to 24 months will certainly reap great results.
This position forecast that occupancy will be maintained at over 90% and rents will increase by 15-20% by the end of 2023. However, there will be an oversupply after that. Therefore, we will witness a transformation from a dominant market for developers to a market that favors tenants.
Grade A office space across the city currently has an average rental price of USD 55.31 per sqm, the highest in central districts at USD 62.54 per sqm, while in the South Saigon area it is 48 percent lower, about approx. 32.78 USD per square meter. In the Grade B segment, the city-wide average price is 34.03 USD per square meter. Which, the price in the central districts is 43.37 USD per m2 and in the surrounding area is about 33.84 USD per m2.
Tenants who should look for more economical options can consider commercial areas in the South. Meanwhile, Thu Duc City is forecast to create a revolution in rents in the future when the Thu Thiem area is fully developed. Currently, the rent for the Grade B office here is 30.08 USD per square meter.
Office rental price forecast in the next 2 years
In the next two years, Ho Chi Minh City will have about 87,480 m2 more Grade A office space and 136,137 m2 of Grade B office space. From 2024 onwards, the city is expected to add about 388,350 m2 of Grade A office space. A and B will most likely be ready only after 2024.
Looking at future supply, in 2025, it is expected that there will be a lot more Grade A office space for lease with about 351,480 m2. This will bring the total area of high-end office space for lease to nearly 700,000 m2, an increase of about 50% of the market size.
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