Cushman & Wakefield report notes Vietnam's development growth helping office space for lease segment.
Vietnam is fast becoming the go-to place for manufacturing, setting the foundation for stronger growth of ancillary industries in Ho Chi Minh City and Hanoi, according to Cushman & Wakefield (C&W)’s Asia Pacific 2015-2016 forecasts.
Notably, growth in the IT, finance, insurance, pharmaceutical/life science and fast-moving consumer goods sectors is propping up leasing activity.
“There is expected to be around 715,000 sq m of office space across all grades coming onto the Hanoi market in the next two years, thus more opportunities for tenants when choosing office space with a reasonable rental rate,” commented Mr. Alex Crane, General Manager of C&W Vietnam.
In Ho Chi Minh City, he went on, there is expected to be over 100,000 sq m new office space, providing more choice for tenants. “Due to competition among landlords in attracting tenants there will be more flexible terms to support tenants than before,” he said.
According to the report, development activity continues to rise more rapidly in both cities, which should provide ample space opportunities for their expanding tenant rosters.
“Growing availabilities will also continue to fuel a flight to quality in Ho Chi Minh City, with tenants still opting to locate in both the CBD and fringe areas as opposed to decentralized locations given favorable rental rates,” the report stated.
In Hanoi, tenants will remain drawn to the lower rates offered in the mid-town and west sub-markets, while high-quality space in the CBD, still in short supply, will continue to retain the best tenants.
“Longer term, the outlook calls for a gradual improvement in the business environment as the government steps up reforms that should open up more opportunities across various industries,” the report added.