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Tony Milton MRICS

BSc (Hons) Est Man
MRICS
APREA (CREIF)

Hanoi Offices
Friday, 27 February 2009

OFFICE MARKET

 

Hanoi and Ho Chi Minh City are report­ed to have the highest office and accommodation leasing costs for foreigners in ASEAN countries in a recent annual report in early 2010 by Japan External Trade Organisa­tion. The rent rate was Hong Kong ($72.8), Mumbai ($70.8) and Shanghai ($64.8), Singapore with $46.4 and Bangkok with $19.8, Seoul ($49.8) or New Delhi ($35.8) and Beijing ($57.2). Hanoi ranked expensive with the rent of $42 per square metre.


Supply


Most of the Grade A office buildings came on stream before 2000 and the total lettable stock of Grade A office space stood at about 85,000 sqm for many years. However, things have changed since @2010 with dozens of new office developments completed and underway, especially in sub-urban locations like around the new National Assembly and Sports Stadium in My Dinh.


It is projected that an additional 170,000sqm of office space will be launched into the market in 2010, following an additional 116,000sqm in 2009, with nearly 1.9m sqm of office space of all grades from around 120 projects expected to be ready over the next 4 years. However, some 95% of the new space will be outside the central business district (CBD), mainly in secondary and suburban districts, with the largest supply in Tu Liem and Cau Giay districts.


Office tenants are increasingly moving to the west of the capital, enticed by lower rents and beater infrastructure. Most office tenants are currently occupying buildings in the central business districts of Hoan Kiem, Ba Dinh and Hai Ba Trung. However, as rents in these areas stay high, tenants are looking to cut costs, moving to the more western areas of Cau Giay and Tu Liem districts. The full occupancy of the 27fl CEO Tower within 3 months of its open­ing in late 2009, and the Viglacera Tower illustrate this trend with My Dinh quickly becoming a new commercial centre. Local and foreign developers have pursued this trend with the construction of projects like the CMC Tower, the Grand Plaza Hanoi, and the Indochina Plaza Hanoi, Keangnam Hanoi Land­mark Tower and Crowne Plaza coming online.

 





 


 





 


Demand


Demand for office accommodation in Hanoi comes mostly from multi-national companies that either wish to sell products and services in the North or wish to be near central government, such as oil companies, diplomats, NGOs, international organisations and large local companies.


Demand in the short term for new Grade A and B office accommodation is expected to come principally from international schools and domestic and overseas financial compa­nies that are seeking large spaces. The creation of a dual market in Hoan Kiem and the western districts and the increasing rivalry between landlords is likely to put further downward pres­sure on rentals.


Demand for office accommodation in Hanoi comes mostly from multi-national companies, diplomatic missions. NGOs, international organisations and large local companies. Demand in the short term for new Grade A and B office accommodation is expected to come principally from companies relocating to or newly establishing in Hanoi or from local `breakaway' companies.

 

Rental Rates & Vacancy

 
Rental rates rose sharply from @2005-2008 as a reflection of the gross imbalance between the modest amount of the existing supply and continual (albeit modest) increases in demand. Rents leveled off in 2008 and have generally been slowly falling since as more and more stock appears - especially around My Dinh.


The tightening of Grade A and B office supply witnessed in the Hanoi over the last few years was partially due to the emergence of local Vietnamese companies, conscious of the benefits that a prime office address brings to the corporate image.


Average rents have reduced continu­ously since 2008 from around $60-$40sqm for Grade A offices and $35-$20 for Grade B space. As more tenants jump to cheaper buildings in “sub-prime” locations, rents will inevitably continue to fall, at a faster pace, though many landlords will increasingly seek to preserve “headline” quoting rents by offering ever more generous incentive, typically rent free periods.


There is now about 610,000sqm of office space in Ha Noi. Average occupancy across all grades is about 85% and the average rent for all grades and districts around US$27/sqm mth.


Vacancy in Hanoi market totals around 80,000sqm but will probably exceed 150,000sqm by the end 2010, forcing rents down.


Rental rates rose sharply in 2006 reflecting the gross imbalance between the modest amount of the existing supply and continual (albeit modest) increases in demand. Rents increased strongly again in 2007 but leveled off in 2008 and are now falling as more stock appears - especially around My Dinh.








  

 

 

 

 

  

 

SUMMARY  OF  EXISTING  INTERNATIONAL  STANDARD  PROPERTIES
 
63 Ly Thai To
·         Address :                   63 Ly Thai To, Hoan Kiem
·         Opened :                    1998
·         Leasable Area :        6,336sqm
 
Central Building
·         Address :                   31 Hai Ba Trung, Hoan Kiem
·         Opened :                    1997
·         Leasable Area :        3,409sqm
 
Daeha Business Center
·         Address :                   360 Kim Ma
·         Opened :                    1996
·         Leasable Area :        15,554sqm
·         Floors :                       16
·         Parking :                    N/A
 
Hanoi Towers
·         Address :                   49 Hai Ba Trung, Hoan Kiem
·         Opened :                    1997
·         Leasable Area :        9,184sqm
 
International Center
·         Address :                   17 Ngo Quyen, Hoan Kiem
·         Opened :                    1995
·         Leasable Area :        6,100sqm
 
Opera Business Center
·         Address :                   6b Tran Tien, Hoan Kiem
·         Opened :                    2007
·         Leasable Area :        2,800sqm
 
Pacific Place
·         Address :                   83B Ly Thuong Kiet, Hoan Kiem
·         Opened :                    2007
·         Leasable Area :        17,230sqm
·         Floors :                       19
·         Parking :                    5 floors
 
Press Club
·         Address :                   59a Ly Thai To, Hoan Kiem
·         Opened :                    1997
·         Leasable Area :        1,250sqm
 
Sun City
·         Address :                   13 Hai Ba Trung, Hoan Kiem
·         Opened :                    2008
·         Leasable Area :        5,670sqm
 
Sun Red River
·         Address :                   23 Phan Chu Trinh, Hoan Kiem
·         Opened :                    1999
·         Leasable Area :        13,459sqm
 
Vietcombank Tower                                       
·         Address :                   198 Tran Quang Khai
·         Opened :                    2001
·         Leasable Area :        19,800sqm
·         Floors :                       22
·         Parking :                    2 floors
 
Asia Tower
·         Address :                   6 Nha Tho, Hoan Kiem
·         Opened :                    2008
·         Leasable Area :        2,600sqm
 
BIDV Tower                                            
·         Address :                   194 Tran Quang Khai, Hoan Kiem
·         Opened :                    2009
·         Leasable Area :        23,580sqm (12,580sqm available)
·         Floors :                       25
·         Parking :                    2 floors
 
Capital Tower
·         Address :                   109 Tran Hung Dao
·         Opened :                    2009
·         Leasable Area :        21,089sqm
·         Floors :                       23
·         Parking :                    3 floors
 
Hanoi Cental Building
·         Address :                   44b Ly Thuong Kiet, Hoan Kiem
·         Opened :                    1997
·         Leasable Area :        8,500sqm
 
HITC Building
·         Address :                   239 Xuan Thuy, Cau Giay
·         Opened :                    1995
·         Leasable Area :        11,145sqm
 
Ocean Park
·         Address :                   1 Giai Phong, Dong Da
·         Opened :                    2004
·         Leasable Area :        17,692sqm
 
Tung Shing Square
·         Address :                   2 Ngo Quyen, Hoan Kiem
·         Opened :                    1996
·         Leasable Area :        8,687sqm
·         Floors :                       13
·         Parking :                    N/A
 
Vincom City Towers
·         Address :                   191 Ba Trieu, Hai Ba Trung
·         Opened :                    2004
·         Leasable Area :        14,270sqm
·         Floors :                       21
·         Parking :                    2 floors
 
Viglacera Building
·         Address :                   Me Tri, Tu Liem
·         Opened :                    2007
·         Leasable Area :        12,495sqm
 
VIT Tower
·         Address :                   519 Kim Ma, Ba Dinh
·         Opened :                    2007
·         Leasable Area :        15,000sqm
 
Viet Tower
·         Address :                   1 Thai Ha, Dong Da
·         Opened :                    2008
·         Leasable Area :        12,000sqm
 
North Asia Tower
·         Address :                   9 Dao Duy Anh, Dong Da
·         Opened :                    2007
·         Leasable Area :        9,562sqm
 
Vinaconex Tower
·         Address :                   34 Lang Ha, Dong Da
·         Opened :                    2009
·         Leasable Area :        18,074sqm
 
Handiresco Building
·         Address :                   521 Kim Ma, Ba Dinh
·         Opened :                    2009
·         Leasable Area :        21,000sqm
 
CEO Tower
·         Address :                   Pham Hung
·         Opened :                    2009
·         Leasable Area :        13,000sqm
·         Floors :                       27 & 2 floors Parking
 
CMC Tower
·         Address :                   Vuong Hau
·         Opened :                    2009
·         Leasable Area :        19,760sqm
·         Floors :                       19 & 2 floors Parking
 
DEVELOPMENT  PIPELINE
 
Charmvit Grand Plaza – Grade A
·         Address :                   Tran Duy Hung
·         Opened :                    2010 – Q3
·         Leasable Area :        53,443sqm
·         Floors :                       27
·         Parking :                    2 floors
 
Sentinel Place – Grade A
·         Address :                   41 Ly Thai To
·         Opened :                    2010 – Q3
·         Leasable Area :        6,500sqm
·         Floors :                       9
·         Parking :                    3 floors
 
Crown Complex – Grade B
·         Address :                   Le Duc To, Tu Liem
·         Opened :                    2010 – Q3
·         Leasable Area :        12,700sqm
 
Song Da Twin Towers – Grade B
·         Address :                   Duong Pham Hung, Tu Liem
·         Opened :                    2010 – Q4
·         Leasable Area :        38,190sqm
 
HFC Lang Yen Building – Grade B
·         Address :                   21 Tran Khanh Du, Hai Ba Trung
·         Opened :                    2010 – Q4
·         Leasable Area :        16,901sqm
 
Keangnam Hanoi Landmark Tower – Grade A
·         Address :                   Pham Hung, Tu Liem
·         Opened :                    2011
·         Leasable Area :        89,870sqm
·         Floors :                       70
·         Parking :                    2 floors
 
Pearl Phuong Nam Towers, Thanh Xuan – Grade A
·         Address :                   105 Truong Chinh
·         Opened :                    2011
·         Leasable Area :        65,250sqm
 
MIPEC Tower – Grade A
·         Address :                   229 Tay Son, Dong Da
·         Opened :                    2011
·         Leasable Area :        29,146sqm
 
Hanoi International Plaza – Grade A
·         Address :                   239 Xuan Thuy, Cau Giay
·         Opened :                    2012
·         Leasable Area :        17,700sqm
 
International Financial Tower – Grade A
·         Address :                   220 Tran Duy Hung, Cau Giay
·         Opened :                    2012
·         Leasable Area :        50,000sqm
 
Habico Tower – Grade A
·         Address :                   288 Pham Van Dong, Tu Liem
·         Opened :                    2012
·         Leasable Area :        53,936sqm
 
HUD Tower – Grade A
·         Address :                   Duong Le Van Luong, Thanh Xuan
·         Opened :                    2012
·         Leasable Area :        70,855sqm
 
Lotte Center Hanoi – Grade A
·         Address :                   Nga tu Lieu Giai va Dao Tan, Ba Dinh
·         Opened :                    2012
·         Leasable Area :        40,000sqm
 
Handico Tower – Grade B
·         Address :                   Duong Pham Hung, Tu Liem
·         Opened :                    2012
·         Leasable Area :        17,403sqm
 
Diamond Flower Tower – Grade B
·         Address :                   Duong Le Van Luong, Thanh Xuan
·         Opened :                    2012
·         Leasable Area :        19,935sqm
 
Last Updated ( Thursday, 15 July 2010 )
 
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