With national economic growth among the highest in Asia and new supply scarce, Hanoi’s office rental market is to experience shortages and rising prices, experts say.
Real estate consultant Savills Vietnam says the supply shortage in Hanoi’s Grade A office segment in terms of both quality and quantity means that the average rent in the city is likely to keep rising.
A Savills report says Q1 2020 recorded an increase in Grade A office rent while that of Grade B almost remained the same. In previous quarters, Grade B office rentals were on the rise. The report attributed the new development to the scarcity of Grade A office space and the high occupancy rate the segment enjoys.
Hanoi’s office rental market has stayed stable for the last two years with an average occupancy of 93 percent. However, the supply for Grade A office segment remains modest with only around 500,000 sqm of floor area out of the total of 1.8 million sqm, according to Savills.
A report by property service firm CBRE also notes that rent for the Grade A office segment in Hanoi rose by 0.6 percent in Q1 2020 over Q4 2019 and by 5.8 percent over Q1 2019.
Analysts have said the lack of choice in this segment is evident, with most Grade A buildings now old and having outdated facilities.
Given that the impacts of the Covid-19 pandemic are unlikely to dent Vietnam’s fairly positive economic prospects, the current situation in Hanoi’s office rental market is unlikely to change.
The Asian Development Bank (ADB) has forecast a 4.8 percent GDP growth for Vietnam this year, higher than other countries in the region. This has been attributed to timely intervention from the government and the central bank, with policies and financial support to mitigate the economic impact of the pandemic and its success so far in containing the disease.
Fitch Solutions, a unit of credit ratings Fitch Group, in early July forecasted Vietnam’s economy would expand 3 percent in 2020, a revision from its previous forecast of 2.8 percent.
The country has gone 82 days without community transmission of Covid-19, with only 28 active cases as 340 patients have recovered and no deaths recorded.
Savills Vietnam expects rent for Grade A offices in Hanoi to keep increasing at seven percent a year over the next three years.
Therefore, it will be a wise decision for companies to find office space at the earliest, in the pre-opening phase of an office complex, analysts said.
One of the projects that will offer Grade A office space very soon is Capital Place, invested by Singapore’s CapitaLand.
Taking the lead with LEED
The Capital Place twin tower project, which will offer more than, 93,000 sqm of international Grade A office space for lease, is the first office building in Hanoi to achieve the prestigious LEED Gold Certification, a globally recognized symbol of environmentally friendly, sustainable buildings.
In the heart of the capital city, it offers a verdant setting where office workers can relax and recharge their batteries.
Its developers say Capital Place’s twin towers take inspiration from the Thang Long dragon soaring magnificently across the sky – a symbol of Vietnam’s cultural heritage that also represents the strength of its people.
Towering above Lieu Giai and Van Cao streets, the 37-storied towers are located in the heart of Ba Dinh District, one of the most bustling business areas of Hanoi, close to embassies of Japan and Australia.
It is ideally located, just 30 minutes from the Noi Bai International Airport, 10 minutes to Hanoi Old Quarter and the West Lake area. Capital Place will also be the first commercial project in Hanoi within walking distance of a metro line (Kim Ma station) in future. The location will help enterprises save travel time given the context of traffic congestion in the capital city.
Across the two towers, 32 high-speed elevators will function at 6m/s, assigned to individual zones to reduce waiting time for guests. The Capital Place’s leasable office spaces feature one of the largest column-free floor areas to help optimize space and design efficiency. With standard acoustic raised floors and inter-floor connectivity, it offers a smart and efficient solution for multi-floor offices.
Capital Place was awarded The Best Office Development in Asia at the Asia PropertyGuru Awards 2019 in Bangkok. The building also received several other prestigious awards at the Vietnam Property Guru Awards 2019: Best Office Development, Best Office Architectural Design, Best Universal Design Development, and highly commended for Best Green Development.