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HCMC Office Market Highlights Summary

Core Content Overview

The document provides a comprehensive analysis of the Ho Chi Minh City (HCMC) office market in Q3 2022, alongside an overview of Vietnam's macroeconomic performance and market supply and demand trends.

Vietnam Macroeconomics

Vietnam's economy showed resilience in Q3 2022, with growth in GDP, Foreign Direct Investment (FDI), and Index of Industrial Production (IIP), despite a stable Consumer Price Index (CPI) and inflation rate.

• GDP: Reached US$101.4 Billion in Q3 2022.
• FDI: Disbursed FDI for 9M 2022 increased by 18.2% y-o-y, but there was a -14.5% q-o-q decline in Q3 2022 due to geopolitical instability.
• Inflation: For 9M 2022, inflation rose by 1.9% y-o-y, with a 4.0% projection for 2022F by the Central Bank.
• Economic Growth Projections:
  • World Bank: 5.3% by 2022F
  • ADB: 6.5% by 2022F
  • IMF: 7.0% by 2022F

The top FDI contributors are also mentioned, though specific names are not listed in the text.

HCMC Office Market Performance

The office market in HCMC is expected to experience a rent fluctuation across different grades and sub-markets:

• Grade A rents: Are expected to peak at US$58 per m² per month in the short term, then stabilise at US$57 per m² per month through 2023, and drop in 2024 with the influx of new supply.
• Grade B rents: Are projected to fall to US$27 per m² per month in 2024, as vacancy rates increase for both grades.

The market dynamics are visualised in charts that show rents and vacancy rates by grade and by sub-market.

HCMC Office Market Supply

The supply of office spaces in HCMC is segmented into several sub-markets, with varying levels of new developments:

• Q3 2022: One Grade B project came online.
• Next quarter: More Grade B supply is expected in the Non-CBD sub-market.
• 2023: Thu Duc City will welcome significant supply for both Grade A and Grade B.
• 2024: A massive Grade A supply is expected in the CBD.

The CBD is defined as the area within District 1 surrounded by specific streets. The CBD-fringe includes Districts 1, 3, 4, 5, and Binh Thanh. The Non-CBD covers a wide range of districts, including Districts 6, 8, 10, 11, 12, Tan Binh, Phu Nhuan, Tan Phu, Nha Be, Binh Chanh, and Can Gio. Saigon South is limited to District 7, and Thu Duc City includes Districts 2, 9, and Thu Duc.

HCMC Office Market Demand

The demand in the HCMC office market is characterised by:

• Major transactions spread across various industries.
• Relocation needs are the dominant leasing purpose.
• Leasing sizes are primarily 1,000 m² and above.

The document includes charts that illustrate major transactions by industry, by leasing purpose, and by leasing size.

Key Contacts

• Leo Nguyen – Occupier Strategy & Solutions Director

  • Email: leo.nguyen@knightfrank.com
  • Phone: +84 90 579 8788

• Linh Hoang – Research Associate

  • Email: linh.hoang@knightfrank.com
  • Phone: +84 90 678 7530