return icon

Green offices remain key theme in HCM City commercial real estate

A flight to quality will remain a key theme in the HCM City office market in 2023 as both foreign and domestic companies are setting ambitious net-zero targets to comply with environmental, social and corporate governance (ESG) regulations.

The HCM City office market performance in quarter four of 2022. — Photo Courtesy CBRE Vietnam

In a recent report, CBRE said that in 2023, the HCM City office market will welcome over 200,000sq.m of new supply, including the first two Grade A projects in Thu Thiem new urban area and the first WELL-certified project in HCM City, providing occupants with more opportunities to relocate to newer, ESG-compliant buildings.

Thanh Pham, associate director, research and consulting department, CBRE Vietnam, said: “In 2023, HCM City will introduce at least four new office buildings with green certificates. For developers, setting a sustainability strategy and developing a roadmap to achieve milestones are essential to attracting major anchor tenants. There is solid stronger demand for green buildings and green leases.”

Sharing the same view, Savills Vietnam predicts that “developers are increasingly conscious of future-proofing properties and are starting to deliver green products. While occupier awareness remains low, this will likely change rapidly as ESG becomes fundamental to business.”

According to Savills, green offices in 2022 were 20 per cent of the leasable stock.

Future projects are racing to obtain green certificates to satisfy ESG commitments, which will support a supply increase, the company said.

Savills predicted that by 2025, there will be an additional 103,900sq.m net leasing area of green offices from The METT and The Hallmark in 2023 and The Nexus.

“Robust leasing reflects health demand. Growing ESG commitments will drive green and sustainable initiatives,” said Vo Thi Khanh Trang, associate director of research, Savills HCM City.

Given the robust pipeline and the predicted upcoming economic recession, the average vacancy is forecasted to increase to 21.5 per cent in 2023, CBRE said.

The elevated vacancy will weigh on rental prices, with Grade A rents decreasing by 4 per cent in 2023. Grade B rents will be in a more stable condition, with the rental rate expected to fluctuate around the current rate, and the vacancy rate will increase in 2023 but will soon bounce back in 2024.

In contrast, flexible office space will be a safe bet if companies have to look for expansion, the company predicted.

In 2022, the office supply in HCM City increased by only 2 per cent, with three new projects and over 40,000sq.m of net leasing area.

In the last quarter, no new building was launched, mainly because of the delay in constructing new buildings. The recent investigation into a developer’s misconduct has shown in a slowdown in the construction progress of future pipelines, especially the Grade A – CBD projects.

On a positive note, thanks to limited available space, the HCM City office market had a remarkable recovery from the COVID-19 impact in the first nine months, with total net absorption improving from 55,000sq.m in 2021 to 75,000sq.m in 2022.

According to CBRE, the average vacancy rate was only 7.8 per cent, 2.3 percentage points lower than previous year. Consequently, Grade A and B's average asking rent increased by 7.4 per cent and 2.2 per cent, year-on-year, to US$45.9 per sq.m per month and $26.0 per sq.m per month, respectively.

Nevertheless, in the forth quarter, the HCM City office market started to feel the heat from the macro-economic headwinds. Net absorption started to slow down from 44,000sq.m in the third quarter to only 8,000sq.m in the fourth quarter.

The total net absorption of 2022 was approximately 75,000sq.m, equal to only 69 per cent of the pre-pandemic level in 2019.

CBRE expects expansionary demand to remain muted in the first half of 2023 as corporate revenue growth slows. Most companies will adopt a wait-and-see mode, focusing on short-term lease renewals. — VNS


Achilles heel in tourism

Vietnam’s tourism industry has made only meager strides in diversifying its products despite years of growth.

The most addictive dish on Ha Giang plateau

Ha Giang attracts tourists not only for its majestic natural landscape and honest ethnic people but also for its bold, regional specialties that cannot be found anywhere else.

Liquidity needs to be ensured: Central bank

The Governor of the State Bank of Vietnam (SBV) sent important messages about monetary policies at a meeting with businesses held by SBV and HCM City People’s Committee late last week.

Firms hesitate to access loans due to weak consumption demand

The State Bank of Vietnam last week cut its policy rates for the third time this year to prop up economic growth.

Banks experience significant increases in non-performing loans

Given the challenging economic environment, the performance of numerous banks is rather bleak, particularly due to the mounting bad debt levels.


Work on Cat Bi Airport’s Terminal T2 to start in Q4

Vietnam should consider announcing the end of COVID-19: NA deputy

At the ongoing fifth session of the 15th National Assembly (NA) held on May 29, Nguyen Lan Hieu of the NA Delegation of Binh Dinh province suggested that the end of COVID-19 should be announced.

Cut on automobile registration fees to facilitate auto industry

The Ministry of Industry and Trade supporting the reduction of automobile registration fees is considered a positive effect to the auto industry in the context of the automobile market facing many difficulties.


Vietnam leaves good impressions at multi-ethnic festival in Czech Republic

Vietnam to build center for search and rescue in Spratly Islands

Deputy Prime Minister Tran Luu Quang has approved a project to improve the capacity of incident and natural disaster response and search and rescue to 2030, with a vision to 2045.

Male model finishes as third runner-up at World Fitness Supermodel

Ngo Hoang Linh, the Vietnamese representative at World Fitness Supermodel 2023, was awarded the third runner-up title during the male pageant’s grand final held on May 27 in Thailand.

Old Vietnamese publications in romanised script on display in Paris

An exhibition showcasing old Vietnamese publications in Chu Quoc ngu (romanised Vietnamese script) is underway in Paris, France.

HCMC police raze black-credit companies with illicit profits of over US$176mln

The Ho Chi Minh City Department of Public Security yesterday prosecuted nine people for usury in civil transactions.

Entertainment and cultural events of the week (May 29-June 4/2023)

Upcoming entertainment and cultural events in Vietnam's major cities on May 29-June 4.

More cooperation needed to develop rare earth industry in Vietnam

The applications for rare-earth element products have developed strongly in recent decades, especially in the field of agriculture in which they are used to create clean, safe, and effective agricultural products.