Hanoi: Office and retail rental segments maintain upward trend in Q2/2019

20-Jul-2019 Intellasia | Hanoi Times | 6:02 AM Print This Post

Asking rent of both office and retail space keep rising in the second quarter 2019.

In the second quarter (Q2) this year, both office and retail markets in Hanoi experienced healthy performance with rising rent in all segments, a recent report of CBRE has shown.

Asking rents of Grade A buildings in this quarter posted an increase of 5.3 percent on year, achieving $26.4/square metre (sq.m)/month (exclusive of VAT and service charge) while the rate for Grade B rose 4.6 percent on year, reaching $14.3/sq.m/month.

Meanwhile, the rent for retail space in central business district (CBD) picked up slightly to average $100.7/sq.m/month, up 1.6 percent on year and 0.7 percent on quarter during Q2, CBRE said in the report.

The vacancy rates of Grade A declined by 1.7 percentage points (ppts) to 8.2 percent while the figures for Grade B increased by 2.6 ppts reaching 10.6 percent despite significant new launch during the quarter.

In terms of supply, two Grade B buildings entered the market namely FLC Twin Towers and Leadvisors Tower providing around 29,000 sq.m and 20,000 sq.m each. Both buildings in the West area make this submarket continue to be the major office supply hub of Hanoi with 50 percent of the total office stock as of Q2/2019.

The supply for 2019-2020 would reach approximately 260,000 sq.m. Given new office buildings in major office clusters either in West or midtown, rental rates are expected to continue upward trend in both grades.

The trend for the second half (H2)/2019 would be flexible workspace which is expected to meet strong demand for build-to-suit model, CBRE forecast.

In terms of demand, Hanoi office market saw relatively strong demand in Q2, primarily from local IT/Tech and flexible office providers with net absorption of 21,500 sq.m.

Among industries, IT/Technology sector was recognised as a key demand driver, accounting for 27 percent of the total leasing inquiries to CBRE in the first half (H1) of 2019 thanks to rapid expansion of existing tech firms and demand for new office by new Japanese and US tech firms.

Retail

Ground floor rents in the largest retail supply cluster namely midtown and the West increased to $31.0/sq.m/month in Q2, up 6.2 percent on year, as the market continued to see more high-quality supply from reputable developers in this area.

Vacancy in midtown and the West stood at 8.3 percent during Q2, down 5.6 ppts on year and 1.1 percent on quarter.

Meanwhile, ground floor rents in other non-CBD area grew moderately by 3.4 percent on year to $25/sq.m/month whereas vacancy up by 2.7 ppts on year to 9.4 percent with the openings of two new projects by Sun Group, Sun Plaza Ancora in Q1 and Sun Plaza Thuy Khue in Q2.

Average asking rents in this area will continue to post positive growth in the coming year as no new supply in CBD is expected to open in 2019.

The vacancy will continue to stay as low as below 2 percent.

The total retail supply in Q2 increased by approximately 65,700 sq.m to over 930,000 sq.m with two new projects namely Vincom Plaza Skylake and Vincom centre Tran Duy Hung located in the major retail cluster of Hanoi midtown and the West accounting for more than 60 percent of total supply in the market.

Looking into H2/2019, two new retail projects are expected to come online with total scale of 80,800 sm, including Aeon Mall Ha Dong and FLC Twin Towers, reaffirming midtown and the West as a major retail cluster.

In terms of demand, new shopping malls should be expected to have modern design and focus on customers’ experience while bringing technology into delivery services and online platform.

While various F&B chains continued to outperform and keep expanding in the local market, supermarkets continued to see the consolidation trend with the exit of French supermarket chain Auchan, who sold its portfolio to locally owned Saigon Co.op.

Earlier last year, Vingroup also acquired Fivimart chain from Aeon group, making it the supermarket leader in Hanoi.

http://www.hanoitimes.vn/economy/real-estate/2019/07/81e0d999/hanoi-office-and-retail-rental-segments-maintain-upward-trend-in-q2-2019/

 


Category: Business, Vietnam

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