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Savills: Prime office space a relative bargain

Released at: 17:17, 14/11/2017

Savills: Prime office space a relative bargain

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Vietnam's prime office space still inexpensive regionally, according to latest Savills report.

by Linh San

Vietnam offers prime office space at a relatively low cost, according to Ms. Hoang Dieu Trang, Senior Manager, Commercial and Residential Leasing, at Savills Hanoi. “Savills Asia Pacific Prime Benchmark 2H/2017 shows Hanoi and Ho Chi Minh City occupancy costs are $38.8 per sq m and $52.2 per sq m, respectively,” she said. “Being considerably lower than Taipei, Sydney, Singapore, Seoul, Shanghai, and Hong Kong, among others, certainly helps confirm Vietnam’s competitive advantage in the eyes of global occupiers.”

She added that with low vacancy rates in many Grade A buildings and limited new supply of prime office space, rents are likely to increase over the next two to three years.

“Co-working space is a recently emerging trend and, similar to the early stages of the concept in Hong Kong, is still fairly small here,” she explained. “However, growing cooperation between international developers and local co-working office providers is expected to increase the scale and quality of shared office space, which will help facilitate and nurture growth in the sub-segment.”

Savills has announced its prime office cost index for the third quarter of 2017, with Hong Kong remaining the most expensive prime office market in the world for occupiers.

Global occupancy cost volatility increased during the third quarter compared to a stable second quarter. Face rent increases drove up recorded costs in Paris, Frankfurt, Amsterdam, and Brussels, as “post-Brexit” requirements materialized and leases were executed by occupiers in these markets. A stronger Euro also helped increase occupancy costs as recorded by the index.

Asian markets were less volatile, but continue to occupy six of the Top 10 positions in the index, making the region the most expensive for global companies. Markets showed no discernible uniformity across the region. Tokyo, Singapore, and Seoul all recorded increases in occupancy costs as Mumbai and Shanghai recorded decreases. Overall, the impact of exchange rate volatility on recorded occupancy costs for the region was relatively low compared to prior quarters.

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