1 million m2 of office land in the suburbs of Hanoi waiting for construction

Recently, Ms. Van Nguyen, JLL Vietnam’s Northern Market Manager forecasted that office buildings in Hanoi in the coming period will be concentrated in the suburbs due to the limited central land fund. The development of industrial zones, satellite urban areas, and commercial projects around Hanoi will be the driving force for this trend.

According to JLL’s source, there are corporations real estate Currently, a large company has a land bank of up to 1 million m2 of offices in suburban areas with a vision to 2030. If these projects are implemented and implemented, in the next decade, office density will be greatly expanded. geographically“, she emphasized.

Over the past decade, the market has grown explosively, with many major shifts in both supply and openness, she said.

Specifically, before 2010, the total supply was only about 677,000 m2, mainly concentrated in Hoan Kiem district and neighboring border areas. However, after that, investors began to pay attention to the western areas of the city such as Cau Giay and Nam Tu Liem districts, especially the period 2010-2013 witnessed a boom in these places.

The shift to the West with strong supply has cooled rents from an average of 47-48 USD/m2/month for Grade A segment, down to 25 USD/m2/month in the first quarter of 2015. From here, tenants have many options, increasing the total absorption of the market in 5 years from 2010-2015 by 4.3 times, reaching 771,000 m2.

1 million m2 of office land in the suburbs of Hanoi waiting for construction - 1

Office density in Hanoi market is forecasted to be stretched geographically in the next 10 years. Photo: Quynh Trang.

However, after 2015, the supply gradually slowed down when investors were more cautious about the fear of bottom falling rents. JLL data recorded a record occupancy rate of 96.1% for the Grade A segment in the fourth quarter of 2018.

At the same time, the limitations of transport infrastructure from the West to the center have contributed to a more even distribution of the market in the central area, Ba Dinh, Dong Da and the West.

The supply of the whole market as of the fourth quarter of 2020 has increased by more than 3.2 times compared to the time before 2010, reaching approximately 2.2 million m2. Based on the construction progress of current projects, JLL said that the Hanoi market will receive 42,247 m2 from 2 Grade A projects and 141,546 m2 from 5 Grade B projects this year.

According to an expert at JLL, buildings in suburban areas will need to set attractive rents to attract companies that are in need of large rental areas from the inner city. At the same time, they must also focus on improving the quality of the premises, possibly following the trend of green building development, to enhance the tenant’s experience.

JLL’s report for the first quarter of 2022 shows that most of the office rental requests in the first three months of this year in the Hanoi market are concentrated in Grade B buildings outside the central area thanks to affordable rents.

Meanwhile, CBRE’s transaction statistics show that the West and Ba Dinh and Dong Da areas are the most searched. Area for rent is popular in medium and large offices, in the range of 300-1,000 m2.

It is worth mentioning that the number of requests for leasing and surveying locations that CBRE received and carried out in the first quarter of 2022 increased by more than 30% compared to the previous quarter and by more than 100% over the same period, in which the transaction expanded New office and rental accounts for more than 70%, showing the prospects of the post-pandemic market.

However, according to Ms. Van Nguyen, projects in the suburbs can only be successful if the infrastructure is improved and moving from the inner city to the suburbs does not take too much time.

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