Savills Vietnam forecast that 2018 will witness the rise of office-for-lease market in HCM City, especially in the segment of office located in central districts of the city.
Having an office in District 1, right in the central business district beside Saigon River is considered by many companies as one of the top criteria for brand building
Market in thirst for Grade A office apartments
Over recent years, strong FDI inflow into the country, the signing of many key trade agreements, huge opportunities for global integration and the robust growth of Vietnam’s tourism have given rise to an increasing number of representative offices of foreign companies and expats in Vietnam, and a rising demand for high-end offices for lease, according to Savills Vietnam. Office buildings put into operation in 2017 have been quickly occupied with the average occupancy as high as 95%.
Particularly, Ho Chi Minh City is in thirst for Grade A offices and officetels which have moderate areas yet base in prime location close to administrative organizations, banks, enterprises, etc. As the city has a specific mechanism for economic development, it fosters a growing community of small and medium-sized enterprises (SMEs) or online businesses and start-ups with limited employees. Moreover, starting this year, the city will move around 2,000 private businesses having offices in condo buildings out of such developments. This creates huge demand in office-for-lease segment.
Given such positive signals from the market, investments in office buildings or officetels for lease with areas of 25-40 sqm targeting SMEs will be a lucrative channel in 2018 as well as the following years.
C.T Plaza Wall Street officetel apartments boasts the unique location facing the two facades of Vo Van Kiet and Pho Duc Chinh streets
Investing in office-for-lease: Stable profit, proliferating value
Quite a number of office-for-lease products have been launched recently and still more are on the way in upcoming years. However, it’s forecast that demand still exceeds supply as not all of these products can totally satisfy customers’ diversified needs in terms of location, amenities, leasing rate, return on investment, etc.
Every businessman knows that “location makes success”, and an office located in the heart of District 1 – the central business district of the city – on the side of Saigon River remains one of the top criteria for brand building to many companies. Positioned in the so-called “Wall Street of Saigon” in District 1, C.T Plaza Wall Street office apartments boasts the unique location facing the two facades of Vo Van Kiet and Pho Duc Chinh streets. Especially, different from normal houses for lease or street houses, CT Plaza Wall Street offers a full array of built-in amenities designed in line with international standards.
Office rent or cost of investment is another key factor to consider after location. With an initial investment of around VND3 billion, not too high compared to investment for apartments in the city’s center, investors can own an officetel right in the heart of the city that can make monthly profit of $1.000 – $1.200. With the same amount of money, they could only find apartments in adjacent areas for lease at a monthly rate of just $500 – $600. Office for lease bring about a long-tem, stable income. A Savills report shows that the profit margin in the office segment in Ho Chi Minh City reached 8.5% in 2017. This indicates that investment in office-for-lease sector yields more stable profits than other channels like stock, gold or bank savings.
To enterprises, it’s worth to pay office rents around $1.000 – $1.200 to own superior, unique amenities of the so-called “Wall Street of Saigon”. Moreover, they can enjoy unmeasurable intangible values when it comes to PR for the company’s brand and location.
Investors who own officetels in such prime location can rest assured that the value of their property will multiply after time. Leasing rate will also be continuously adjusted following marker demands. Office rents in HCMC could increase 20% in some Grade A properties this year and keep rising year during 2018-2020, according to Cushman & Wakefield report which was published in early 2018. This means individual and corporate investors need to make careful consideration before deciding whether to rent or to own the properties in order to ensure profits.
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