Green offices remain key theme in HCM City commercial real estate

A flight to quality will remain a key theme in the HCM City office market in 2023 as both foreign and domestic companies are setting ambitious net-zero targets to comply with environmental, social and corporate governance (ESG) regulations, experts said.
Green offices remain key theme in HCM City commercial real estate ảnh 1The HCM City office market performance in Q4 2022. (Photo courtesy of CBRE Vietnam)
HCM City (VNS/VNA) - A flight to quality will remain a keytheme in the HCM City office market in 2023 as both foreign and domesticcompanies are setting ambitious net-zero targetsto comply with environmental, social and corporate governance(ESG) regulations, experts said.

In a recent report, CBRE said that in 2023, the HCM City office marketwill welcome over 200,000sq.m of new supply, including the first two GradeA projects in Thu Thiem new urban area and the first WELL-certifiedproject in HCM City, providing occupants with more opportunities torelocate to newer, ESG-compliant buildings.

Thanh Pham, associate director, research and consulting department, CBREVietnam, said: “In 2023, HCM City will introduce at least four new officebuildings with green certificates. For developers, setting a sustainabilitystrategy and developing a roadmap to achieve milestones are essential toattracting major anchor tenants. There is solid stronger demand for greenbuildings and green leases.”

Sharing the same view, Savills Vietnam predicts that “developers are increasinglyconscious of future-proofing properties and are starting to deliver greenproducts. While occupier awareness remains low, this will likely change rapidlyas ESG becomes fundamental to business.”

According to Savills, green offices in 2022 were 20% of the leasablestock. 

Future projects are racing to obtain green certificates to satisfy ESGcommitments, which will support a supply increase, the company said.
Savills predicted that by 2025, there will be an additional103,900sq.m net leasing area of green offices from The METT and The Hallmark in2023 and The Nexus.

“Robust leasing reflects health demand. Growing ESG commitments will drivegreen and sustainable initiatives,” said Vo Thi Khanh Trang, associatedirector of research, Savills HCM City.

Given the robust pipeline and the predicted upcoming economic recession, theaverage vacancy is forecasted to increase to 21.5% in 2023, CBREsaid. 

The elevated vacancy will weigh on rental prices, with Grade A rentsdecreasing by 4% in 2023. Grade B rents will be in a more stablecondition, with the rental rate expected to fluctuate around the current rate,and the vacancy rate will increase in 2023 but will soon bounce back in2024. 

In contrast, flexible office space will be a safe bet if companies have to lookfor expansion, the company predicted.

In 2022, the office supply in HCM City increased by only 2%, with three newprojects and over 40,000sq.m of net leasing area. 

In the last quarter, no new building was launched, mainly because of the delayin constructing new buildings. The recent investigation into a developer’smisconduct has shown in a slowdown in the construction progress offuture pipelines, especially the Grade A – CBD projects.

On a positive note, thanks to limited available space, theHCM City office market had a remarkable recovery from the COVID-19impact in the first nine months, with total net absorption improving from55,000sq.m in 2021 to 75,000sq.m in 2022. 

According to CBRE, the average vacancy rate was only 7.8%, 2.3 percentagepoints lower than previous year. Consequently, Grade A and B's average askingrent increased by 7.4% and 2.2%, year-on-year, to 45.9 USD per sq.m permonth and 26 USD per sq.m per month, respectively.

Nevertheless, in the forth quarter, the HCM City office market started to feelthe heat from the macro-economic headwinds. Net absorption started to slowdown from 44,000sq.m in the third quarter to only 8,000sq.m in the fourthquarter. 

The total net absorption of 2022 was approximately 75,000sq.m, equal to only 69% ofthe pre-pandemic level in 2019. 
CBRE expects expansionary demand to remain muted in the first halfof 2023 as corporate revenue growth slows. Most companies will adopt await-and-see mode, focusing on short-term lease renewals./.
VNA

See more

Industrial factories in Tan Uyen city, the southern province of Binh Duong (Photo: VNA)

Investors upbeat about Vietnam’s industrial property market

Investors are bullish on Vietnam's industrial property market growth on the back of the nation's strategic location, sound infrastructure, and increasing demand for industrial space, particularly industrial parks that meet green standards, according to market research.

Vietnamese Ambassador to Belgium and head of the Vietnamese Delegation to the EU Nguyen Van Thao addresses the forum (Photo: VNA)

Forum connects Vietnamese, Belgian busineses

The Vietnam-Belgian business forum took place in Brussels on October 23, offering a chance for enterprises of the two countries to introduce their products and explore new cooperation opportunities.

The expos cover over 6,000 sq.m, drawing over 210 exhibitors from 10 countries and territories. (Photo: VNA)

Hanoi hosts textile & garment, fabric garment accessories expos

The Vietnam Hanoi Textile & Garment Industry and Fabric Garment Accessories Expos 2024 (HanoiTex & HanoiFabric 2024) is taking place in Hanoi on October 23 – 25 as part of a series of international exhibitions on Vietnam's textile and garment industry.

Representatives from Vietnamese and Lao agencies, localities and businesses at the opening ceremony of the Vietnam-Laos trade fair 2024 in Xiengkhouang province. (Photo: VNA)

Vietnam, Laos step up trade, tourism promotion

A Vietnam-Laos trade fair was kicked off in Phonsavanh township in Xiengkhouang province of Laos on October 23 as part of activities to celebrate the 75th anniversary of the traditional day of Vietnamese volunteer soldiers and experts in Laos (October 30, 1949 – 2024).

Illustrative photo (Photo: chinhphu.vn)

Vietnamese goods enter US through global supply chain

The Saigon Co.op Distribution Company Limited (SCD) - a member of the Ho Chi Minh City Union of Trade Cooperatives (Saigon Co.op), and STC Natural Vina Company on October 23 held a hand-over ceremony for goods that will be exported to the US.

Vietnam’s lobsters have clawed their way back onto Chinese menus after a suspension. (Photo: VNA)

Vietnam’s lobsters claw back prominence in China

Vietnam’s lobster export to the Chinese market in January-September rose 33 folds year-on-year on the back of lower prices and stronger trade ties between the two nations, the South China Morning Post said on October 22.