Hanoi to welcome two new Grade A office projects in Q4 2022 

This brings the total leasable area to 598,400sqm by the end of the year.

JLL says the Hanoi office market is expected to remain muted in 3Q22 before welcoming Techcombank and Lancaster Luminaire in the CBD area in 4Q22, bringing the total NLA of Grade A offices to 598,400 sqm by end-2022. 

According to the analyst, given the expected high rent in new supply and the rising asking price in Capital Place, the market average net effective rent is anticipated to increase by 8.8% y-o-y by end-2022.

Here’s more from JLL:

Although net absorption in the Grade A market is expected to improve, the vacancy rate is expected to rise to 17.8% by end-2022 due to the new supply. Tenants with strong business plans that are relevant to the new market conditions, such as banking, e-commerce and real estate, are likely to continue to be demand drivers.

Net absorption surges in 2Q22 as the market recovers

Net absorption increased in 2Q22, reaching 10,100 sqm as businesses resumed activities amid the new normal, and lease transaction numbers recover.

The majority of new enquiries came from the Ba Dinh and Cau Giay districts, which are home to a number of buildings with high vacancy rates. One of the most notable transactions was recorded in Capital Place, where a tenant in the banking system leased 1,200 sqm. Banking and e-commerce were the main market drivers in 2Q22, as these are the sectors that could recover quickly after the epidemic.

No new Grade A supply recorded

In 2Q22, there was no new supply of Grade A offices. The market is expected to stay muted until 4Q22, as two boutique Grade A buildings are scheduled to open by end-2022.

The vacancy rate in Hanoi’s Grade A office market in 2Q22 is 17%, down by 1.8% q-o-q and by 2.3% y-o-y, mostly thanks to the strong take-up in Capital Place, PVI and Lotte Center buildings. In addition, most long-standing buildings maintained their occupancy level.

Rents increase compared to 1Q22

In 2Q22, net effective rent in Hanoi Grade A Office reached USD 28.0 sqm per month, an increase of 4.2% q-o-q and 4.4% y-o-y. This increase was due to the high asking rent in Capital Place, the only Grade A office building in Hanoi’s centre to receive a LEED Certificate. Meanwhile, other buildings maintained stable rental rates in order to fill the remaining vacancy.

Capital values increased by 9.7% y-o-y in 2Q22, while yields compressed further to 7.4% as investors remained optimistic about the long-term market outlook and looked for investment opportunities.

Note: Hanoi Office refers to Hanoi's Grade A office market.