Prospects Remain Bright
Vietnam’s economy showed signs of a slowdown, but its longer term prospects remained positive, which will help to drive future office occupancy. GDP growth in Q1 2017 was 5.1%, but is projected to hit 6.3% for the full year. Investment remained strong. Total FDI reached over US$12 billion in the first 5 months of 2017, up 10.4% year-on-year. Most of the FDI came from Asian investors such as those from Japan, Korean, China, Singapore, and Hong Kong.
Supply Rises at an Average of 6% per Annum
Though no new buildings were completed in Q2 2017, overall supply is on a steady upward trend. For the past seven years, supply has been rising at an average of 6% per annum. In recent quarters, steady supply has been met with marginal increases in occupancy. In the short term, two Grade A and two Grade B buildings are expected to be completed, which will drag down the overall occupancy rate.
Rents Extend Upward Trend
Average asking rents have been on an upward trend since 2014. In Q2 2017, average rent remained stable compared with the first quarter, but values were slightly higher year-on-year due to limited available space offered by projects in prime locations. In the near future, office rental is expected to decline slightly due to the completion of new buildings.
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