Positive net absorption is recorded in Q2 2024

• Hanoi’s Grade A office leasing market showed signs of a recovery, headed by the CBD, with positive net absorption of around 3,500 sqm.
• Non-CBD had a lower net absorption rate of about 500 sqm. The lack of demand stability indicates that the region is still in the process of establishing itself. Demand is expected to accelerate as the area develops more cohesively in the near term.

CBD records new Grade A supply

• In Q2 2024, the Grand Terra project in the CBD was officially put into operation, with around 14,000 sqm of space for lease. As a result, the total Grade A office supply in the CBD increased to 367,090 sqm.
• With the addition of new supply, Grade A office vacancy in the CBD grew marginally from 24.6% to 26.5%. Meanwhile, the non-CBD vacancy fell from 14.7% to 14.5% due to stable supply and ongoing, albeit not yet stable, demand to absorb the space.

Rents remain constant despite increased market competition

• In Q2 2024, Grade A office rent in the CBD remained stable, up slightly by 0.2% to USD 32.7 per sqm, per month. Stable rents, despite increasing supply and economic difficulties, showed landlord confidence in the likely recovery of the market.
• The investment market remained resilient in Q2 2024, with a 0.43% q-o-q capital value increase to USD 5,514 per sqm. This reflected investor confidence in long-term growth and a focus on high-quality assets with stable cash flows.

Outlook: Hanoi’s Grade A office market to sustain recovery with stable demand

• By end-2024, Grade A supply in the CBD will stand at 367,090 sqm, while non-CBD will reach 242,863 sqm with two new projects. New buildings opt for green certifications to enhance competitiveness in the face of rising demand for sustainable space.
• The CBD can expect modest rent growth, driven by expected rent increases following the stabilisation of new completions. Non-CBD rents should rise with new supply. Yet, rent growth on project basis will be limited due to increasing future supply.