Bright Economic Prospects
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.
Steady Upward Trend in Supply
Q2 2017 saw the new completion of one new Grade B project in Tan Binh District, adding 65 units to the supply pool. The market currently comprises of over 760 units from eight Grade A buildings and 2,725 units from 26 Grade B buildings. This brings supply up by 2% quarter-on-quarter and 11% year-on-year.. While Grade A buildings achieved high occupancy rates at 91%, this is down 2ppts quarter-on-quarter but up 5ppts year-on-year. Grade B buildings recorded lower occupancy rates at 88%. This is unchanged quarter-onquarter but is 5ppts lower year-on-year.
Increasing Trend in Average Rents
Average rent of both grades was stable quarter-on-quarter, but saw an increase by 4% year-on–year. This is primarily due to the higher rents from recent new entrants. The Central Business District (CBD) continues to be top of mind location-wise based on accessibility and the types of facilities available, with occupancies remaining high at approximately 93% despite 30% to 40% higher rental rates compared to areas outside of the CBD area.
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