Hanoi is the leading city in the world in terms of office yields, increasing rents

For the third time, Hanoi ranked first in the world in terms of Grade A office yields in the central area with an interest rate of 8.57%. Meanwhile, Ho Chi Minh City ranked 2nd but dropped to 4th place...


For the third time, Hanoi ranked first in the world in terms of Grade A office yields in the central area with an interest rate of 8.57%. (Illustration)


According to Savills's global office yield report, Hanoi is the leading city in the world in office yields with a market yield of 8.57%. Followed by Manila, Adelaide, Ho Chi Minh City and Perth, respectively, reached the global top 5. Savills said that this is the third time since January 2017, Hanoi ranked first in the world class A office productivity in the central area with an interest rate of 8.57%. Ho Chi Minh City, once ranked 2nd in Savills' report, dropped to 4th place with market yield at 7.36%.


Commenting on the investment prospects of Vietnamese cities, Ms. Hoang Nguyet Minh, Savills Hanoi Investment Manager said that the high interest rate shows a quite attractive correlation of income from renting space. compared to the market capitalization value. Therefore, the fact that Hanoi and Ho Chi Minh City are having the highest rates in the world shows a very promising prospect of rent and rental capacity in these two markets.


Ho Chi Minh City currently has the best performance in the last 5 years, with average rent increasing by 8% year-on-year and occupancy rate reaching 97%. Meanwhile, Hanoi recorded a 3% increase in rent by year in Q4 / 2018 and a stable occupancy rate of 95%; Grade A office segment in non-central area has improved operation situation.


“It is understandable that these two markets have attracted the attention of foreign investors, especially those from Singapore, Japan and Korea. Demand is high but the number of transactions made in 2018 is very limited due to limited number of projects for sale. One notable transaction is that Nomura Real Estate in January 2018 bought 24% ownership of the Sun Wah Tower, a Grade A office building in Ho Chi Minh City, ”said Savills representative.


According to Savills research department, due to limited supply of office space, leading investors to compete on the purchase price of projects, pushing market yields lower. It can be said that the office market in Vietnam belongs to the seller, in other words if you own an office real estate project, this is a good time to sell.


In the past 5 years, real estate is the preferred investment channel with the total investment capital increased over many segments. According to Savills' global research team, the office is the segment that attracts the largest amount of investment - about 340 billion USD worldwide during the second half of 2017 to the second half of 2018.


According to Minh Thu