Positive net absorption persists

• In Q3 2024, the demand for Grade A office space in the CBD exhibited resilience despite ongoing macroeconomic uncertainty, with a net absorption of around 3,000 sqm.
• The increased absorption in the non-CBD market was due to new leases in Taisei Square Hanoi and Lotte Mall West Lake, contributing around 10,600 sqm of absorption. This underscored rising demand for quality office space outside the traditional CBD.

Non-CBD records new Grade A supply in the West area

• LEED-certified Taisei Square Hanoi opened in Q3 2024 and became the first Grade A green-certified building in the West (non-CBD area). The high pre-leasing rate in this building demonstrated the market’s appreciation for green buildings in the Grade A office market.
• With the addition of new supply, Grade A office vacancy in the non-CBD temporarily rose from 14.5% to 19.0%. Meanwhile, the CBD vacancy fell from 26.5% to 25.7% due to stable supply and consistent demand for prime CBD locations.

Rents in the CBD remain constant despite rising market competition

• During Q3 2024, the Grade A net effective rent in the CBD submarket remained stable at USD 32.7 per sqm, per month. This steady growth was a result of landlords’ attempts to uphold consistent rents in the face of macroeconomic uncertainty.
• Meanwhile, non-CBD submarket rents remained relatively stable, up marginally by 0.3% q-o-q to USD 23.6 per sqm, per month, mostly due to the addition of a new completion in the West area. Rents were almost stable on a project basis.

Outlook: The market is expected to remain resilient with steady demand across submarkets

• With no additional completions expected by end-2024, supply will stay at 558,253 sqm NLA. In 2025, Tien Bo Plaza and Gelex 29 Ly Thai To will enter the market, adding 29,000 sqm NLA to the CBD, while Oriental Square in West Lake will add 18,000 sqm NLA in the non-CBD.
• Buildings pursue green certifications to enhance competitiveness amid rising sustainable space demand. Modest CBD rent growth is expected as new completions stabilise. Non-CBD rents will rise with new supply, but growth will be limited by rising future supply.