Hanoi office market operated well in the first quarter of 2020

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In the first quarter, total office supply in Hanoi was around 1,380,000 sq.m, unchanged compared to the fourth quarter in 2019.

Both average asking rent of Grade A and Grade B buildings renovated compared to previous quarter, at US $ 26.2 and $ 14.3 per sq.m per month, respectively, excluding value added tax (VAT) and service charge, according to Vietnam News.

In terms of vacancy rates, both grades stayed at healthy levels of below 10 per cent. Grade A’s vacancy rate reached 6.4 per cent, dropping by 2.9 percentage points (ppts) year-on-year while Grade B vacancy lowered to 8.8 per cent, down by 0.5 ppts year-on-year.

Global real estate company Cushman & Wakefield thinks that the office market in Hanoi may have opportunities after the COVID-19 pandemic. Accordingly, the way Vietnam copes effectively with this crisis will encourage greater investment in the domestic market.

Although not as heavily impacted as other sectors, the office sector started to observe some early tent from the pandemic, according to CBRE.

Current tenants are requesting landlords to reduce rent by 20-50 per cent due to their worse business performance during the pandemic, said Do Van Anh, CBRE Vietnam manager.

In case the pandemic extends to the end of September 2020, vacancies are expected to increase by 5-15 per cent due to the resizing and closing of tenants ’offices, according to Vietnam News.

Cushman & Wakefield does not expect the Hanoi market to "suffer". At the end of 2019, the company reviewed Hanoi's supply forecast and as a result predicted that rents will decline slightly in 2020 by 10-15% across the market.

According to CBRE, the outbreak of COVID-19 could reshape the office sector. Tenants would focus more on the agility of the office to adapt to unexpected changes in the business environment.

Cushman & Wakefield also believes that the Hanoi office market may have opportunities after the COVID-19 pandemic. "After the pandemic, how Vietnam effectively copes with this crisis will encourage greater investment in the market. domestically, and the acceleration of domestic manufacturing and service industries will be driven by multinational companies, according to Vietnam Finance.

In particular, Hanoi will be an attractive destination for these businesses as it has a central location and rapidly improving infrastructure to support production and export. All are potential drivers for higher office demand and faster growth. Some large office supply projects on the Ha Noi real estate market are still under construction to complete at the end this year as scheduled.

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