With office rents rising constantly for several years, HCMC has moved into the top 20 Asia-Pacific office rent markets. Grade-A office rents in Ho Chi Minh City have reached a five-year peak of $936 per square meter a year, according to property service firm JLL. The HCMC market has come under the spotlight in a premium office rent report for the Asia-Pacific region just released by the US-based global company.
The report said that HCMC, an emerging market, saw annual gross premium office rents rising to $635 per square meter, a year-on-year increase of nearly seven percent, placing the city in the list of top 20 office rent markets in the Asia-Pacific region.
It highlighted the case one unnamed building in the inner city, where a record rent level of $936 per square meter a year was registered, a peak unseen for many years.
JLL assumes that the HCMC office market is heating up with increasing investment inflow from many multinational firms.
The US firm added that the total supply of office space in HCMC has increased to two million square meters, a five-fold hike compared to Bangkok. The scarcity of premium office space in HCMC has constantly pushed up rents.
Financial corporations are willing to pay for high-end office space in HCMC, while banking and financial firms were keen on premium office space, topping the list of 72 key tenant categories.
Meanwhile, JLL said in the Global Premium Office Rent Tracker Q4 2018 that Ho Chi Minh City and Manila, the two more affordable cities in Southeast Asia, are attracting significant corporate interest, along with European cities like Amsterdam, Berlin and Warsaw.
The firm said that growth in occupation costs is likely to slow down in 2019 as new supply comes through; however, while rental growth is expected to decelerate, there are very few major markets where a downward correction is projected for 2019. In fact, the delivery of new premium buildings will set fresh rental benchmarks in several markets, it predicts.
Total occupancy costs are calculated by combining the net effective rent with additional costs, including service charges and taxes.
JLL’s Global Premium Office Rent Tracker 2018 compares occupancy costs for premium office buildings across the world’s leading real estate markets. This fourth edition includes 72 office submarkets across 61 cities.
The report includes the key elements of occupancy costs – net effective rent, service charges and government tax on rent – all standardized to enable true international comparisons.