Hanoi's office market to perk up in 2015: CBRE

The market for leasing offices in Hanoi is expected to brighten in 2015 due to expectations of a continued economic recovery, according to CBRE Vietnam Co Ltd, a foreign property consulting service provider in Vietnam.

"In the short term, improved macro-economic conditions should positively impact net absorption, but not necessarily rental growth," a representative of the CBRE Vietnam said in Hanoi on December 4th.

Central business district (CBD) locations are still preferred for renting office space, but not in older office buildings that have not been renovated and fire-proofed, the representative said.

Offices for lease in Hanoi. Photo: vneconomy.vn

Commercial tenants now see opportunities to upgrade from landed property to professional office buildings, as rents continue to become more affordable and landlords offer more attractive incentives.

"Flexible leasing terms, high quality services and new attractive office design are still the keys to attracting and retaining tenants," the representative said.

"In 2015, we don't project any new grade A supplies, and we expect to see positive net absorption as FDI and economic indicators increase," he added.

Rents are likely to stabilise in mid-town and the CBD, but older CBD buildings and new market entrants in the west will feel pressure from increased rental costs.

At the same time, grade B supplies continue to come available, with a total net leasable area of 257,000 square metres to launch in 12 projects in 2015, most notably at Handico Tower, HUD Tower and Diamond Flower Tower.

Further, the growth rate of net absorption is expected to be slower than that of the new supply, while vacancy rates in grade B buildings will remain high.

"Delays in construction of several projects from time to time, such as Apex Tower and Mo Market, make the picture less grim, however, supply still outweighs demand, so we will continue to see pressure on projects in the West and even in older CBD buildings as opportunities grow in Midtown," according to the official.

CBRE Vietnam also said CBRE recently performed a survey of tall and very tall buildings in the region. According to the survey, while NYC still leads the world with 152 "supertall" buildings, Asia has surpassed the rest of the world in total numbers, despite starting decades later than other areas, with some 1800 in 2015, compared to 800 in the Americas, 200 in the Middle East and 100 in Europe.

As of September, occupancy rate at the Lotte Center Hanoi's has reached 25 percent, with 75 percent of the total 45,000-square metres of office area in the building remaining available.

According to CBRE Vietnam, the occupancy rate is quite successful for a new office building that has only opened within the past few months. The rental costs in the building are set at USD 37 per sq.m., considered a medium price for grade A office space.

Lotte Center Hanoi is a multi-functional complex, including shopping centre, hotel, high-end apartments and grade A office area. It is located in Ba Dinh district, Hanoi, having been built with a total investment of USD 400 million.