Office rental in Hanoi experienced upward trend in the second quarter (Q2) 2019 due to stable demand and limited supply, JLL said in the latest report.
Grade A office enjoyed the highest upswing with a growth of 4.1% on quarter and 5.7% on year. Grade B segment, however posted a fall of 2.8% due to lower-than-average rent in new buildings in non-CBD (Central Business District). But the overall market rent unchanged compared to the same period last year partly thanks to the increase in previous quarters.
In CBD area, average rent in the sub-area recorded significant improvement of 3.9% on quarter and 3.5% on year owing to limited supply.
As of end Q2/2019, the total supply of Hanoi office stood at approximately 1,986,000 sq.m, with Grade B contributing up to 60% of the total stock, according to JLL report.
The occupancy rate of Hanoi office felt slightly to 92.3% due to the opening of new buildings with roughly 21,500 square meters (sq.m) of office space absorbed during the quarter. Nearly two-thirds came from Grade B section.
Leasing activity was mainly involved in Grade B buildings, especially those in the outer parts of the city, driven by the insufficient supply in the CBD area. One of the most notable deals was recorded in Truong Thinh Building in Cau Giay with 1,100 sq.m taken by a single tenant.
During the quarter, Hanoi office market welcomed a new Grade A building in CBD, it’s Thai Holding Tower in Hoan Kiem with 25,000 sq.m.
Meanwhile, after two quarters with no new supply, Grade B segment recorded 30,600 sq.m newly added to the basket, of that the majority located in the non-CBD area.
JLL predicted for the second half of 2019 that the office market is expecting more completions, all of which are located in non-central districts. The buildings are concentrated on Cau Giay and Nam Tu Liem districts, the two rising office clusters of Hanoi.
For that reason, the rent of those in non-CBD area remains stable or increase insignificantly. However, the buildings in the City Centre may still enjoy a better rise, which in turn continues to help the rental rate to inch up.