Retail: New CBD Supply Meets Strong Demand

Retail stock was 1,160,000 m2, increasing 10% quarter-on-quarter (QoQ) and 22% year-on-year (YoY) due to new supply of 131,500m2 and withdrawal of 26,500m2.

The average gross rent increased 4% QoQ, mostly from the good performances of the reopened Saigon Centre and the newly opened Aeon Mall Binh Tan shopping centres. The average occupancy was 93%, stable QoQ and YoY. Shopping centre occupancy increased 1 ppt QoQ, retail podium decreased -3 ppts and department store was unchanged.

The new CBD supply was quickly absorbed despite the high rent, reflecting strong demand for space in a fresh and prestigious retail project. The repositioning of Union Square – a high-end project, revealed the fiercely competitive nature of the CBD.

Office: Scarcer Vacancy, Higher Rent

In Q3/2016, one small scale Grade C project entered the market while a Grade B building withdrew for renovations. Office stock was 1,580,000 m2, stable QoQ and increasingly scarce.

Overall performance continued to improve due to the lack of any new supply. Average occupancy was up 1 ppt QoQ and 5 ppts YoY, reaching 98 percent. Average rent increased 1% QoQ and 5% YoY.

New take-up was predominantly drawn from Grade B and C projects, accounting for 97% of all newly leased office space. Grade A was the best performer with increased rents of 4% QoQ to VND1,070,000/m2/month (US$48/m2/month).

For more information, click 11102016 – Savills Vietnam report on HCMC real estate market Q32016- EN and 11102016 – Savills Việt Nam báo cáo tình hình thị trường BĐS tp HCM Q32016- VN