Savills Vietnam has just released its latest report on Ho Chi Minh City's office market, which indicates that foreign businesses are increasingly expanding their market share in A-class buildings for lease in Saigon.
This study reveals that a total of nine A Grade A buildings are located in the heart of Saigon's capital city, Singapore, Hong Kong, Japan, Korea, Germany and Slovakia. Investors from the Asian region hold more market share or dominate the market than Europeans.
Within a few kilometers of Ben Thanh market, foreign businesses have almost occupied the grade A office buildings in the most favorable location of the city, overwhelming the number of high-rise buildings of the local enterprises. geography. This phenomenon is a great attention when placed in the context of the office space market in Saigon is scarce supply of Grade A, the price hike pushed to the highest in nearly half a decade.
For example, Alpha King, a Hong Kong-based, 100% foreign-owned company, has announced a strategy to develop a 35-storey Grade A office project. Completed in 2020. The project is located in front of Tran Hung Dao Street, District 1, is named as one of the golden locations of the central core of Saigon, just a few metro stations of the first metro. minute walk, near Ben Thanh Market and Nguyen Hue Walking Street.
Upon completion, the building will add 72,000 m2 of office space to Sai Gon office in the context of this market is scarce supply and continuously being squandered in the last two years.
At the same time, the owner of the Slovakian office of Friendship Tower, located in front of Le Duan street, District 1, HCMC, was started construction in May 2018, is expected to debut. by 2020. The 21-storey project has a floor area of about 19,000 square meters of office space, opposite the US Consulate and the French Embassy.
If Alpha King and Slovakia are just entering the market, promising to contribute nearly 100,000 square meters of Grade A office space by 2020, existing high-end office buildings and segments will be related to the remaining foreign capital at Ho Chi Minh City is in the peak business.
At present, the occupancy rate of Grade A office space in Saigon always exceeds 95%, which is considered as the record for nearly half a decade and the price of Grade A office space is also high. in the price range of 50 - 70 USD per m2 per month.
Because of positive movements of this market, M & A activities (M & A) or acquisition of Grade A office buildings have been fully utilized. In early 2018, Nomura Real Estate Company based in Shinjuku (Tokyo) announced the purchase of a 24% stake in Sun Wah Tower, located in front of the Nguyen Hue pedestrian street, also in the central core of District 1. , HCMC.
Savills Vietnam Chief Executive Officer, Ngoc Khuong said that foreign investors' interest in office buildings in Ho Chi Minh City, especially in the A-segment, contributed to the increase in the market. There are exciting developments.
Mr. Khuong commented that in the last 5 years, the success of the real estate market in Vietnam, including office space for lease, has been considered.
Competitive position of the industry has also been demonstrated through the flow of foreign direct investment (FDI) and resonance with M & A activities which tend to change positively and grow impressively. The stability of the macro economy, the growth of the middle class also help Vietnam become a destination for foreign investors and attract interest in all segments.
The expert analyzes that, for Grade A offices, the participation of foreign investors is dominated by the high demand for investment capital for development projects - weaknesses that most domestic enterprises can not meet. . This explains why there are many joint ventures (the proportion of foreign capital is very high) are jointly developed high-grade office buildings and recently appeared also investors with 100% foreign capital enter the market.
In addition, the fact that the land fund has a more favorable location in the central area of Ho Chi Minh City leads to the supply of grade A office projects is always limited to urge foreign investors to capture market share. This.
In addition, the development of Grade A projects also shows the vision of foreign investors, they tend to welcome the large demand from foreign renters and domestic enterprises.
Mr. Khuong said that the integration of Vietnam's economy with the region and the world also made the demand for office leasing in Ho Chi Minh City unprecedented and unprecedented growth, thus creating a sustainable and profitable cash flow. This is one of the important reasons that international corporations are boldly invested in grade A office buildings in Saigon in recent years and next year
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