Ho Chi Minh City enters the ‘Top 20” Asia Pacific office rental markets

According the latest report from global property service company, Jones Lang LaSalle, Grade-A office rents in Ho Chi Minh City have reached a five-year peak of $635 per square meter a year. 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 7%, which places the city in the list of top 20 office rent markets in the Asia-Pacific region.

JLL says that the HCMC office market is heating up with increased investments from multinational firms and 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. The report notes that banking and financial firms were keen on premium office space, topping the list of 72 key tenant categories, and are willing to pay high rent fees.

The JLL report says that Ho Chi Minh City and Manila are the two more affordable cities in Southeast Asia and are attracting significant corporate interest. The company projects 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.

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 comparison of international markets. Total occupancy costs are calculated by combining the net effective rent with additional costs, including service charges and taxes.