In Q4/2024, Viet Nam’s office market has seen strong demand and evolving trends due to stable expansion. Savills Q4/2024 Market Brief comprehensively analyses office supply, demand, rental trends, and occupancy rates in Ho Chi Minh City (HCMC) and Ha Noi. This report provides valuable insights into the latest market developments and future projections.

1/ HCMC Office Market

1.1/ Supply is shifting away from central areas

Total stock remained stable quarter-on-quarter (QoQ) at over 2.8 million sq m NLA, reflecting a 5% year-on-year (YoY) growth. While Grade A and B stock remained unchanged, Grade C experienced fluctuations as three new projects entered the market, balancing the closure of two projects due to conversion.

Throughout 2024, 133,000 sq m NLA from 11 new projects was introduced:

• 65% of new supply came from non-CBD areas.
• Non-CBD stock, holding 51% of the market, surpassed CBD.

1.2/ Rising demand for high-quality office spaces

Occupancy improved by 1 percentage point (ppt) QoQ to 89%, driven by significant deals in the Information and Communication Technology (ICT) and Finance, Insurance, and Real Estate (FIRE) sectors. Grade A and B led the market, with occupancy increasing by 1 ppt QoQ to nearly 90%.

Despite an annual take-up of over 100,000 sq m, overall occupancy in 2024 declined by 2 ppts YoY to 89% due to the influx of new supply. Over the past decade, average rents have shown an upward trend, reaching VND 816,000/sq m/month in 2024, with all grades experiencing an average annual growth of 2-3%.

1.3/ Office Transactions in HCMC

In 2024, the ICT sector dominated HCMC office transactions, overtaking FIRE as the largest occupier. Major deals were concentrated in key districts, with foreign tenants driving demand and relocation being the primary transaction driver.

• The ICT sector accounted for 26% of total office transactions, surpassing FIRE.
• Large transactions, averaging 1,500 sq m, were mainly recorded in District 1, Tan Binh, and District 2.
• Foreign tenants played a significant role in driving office demand.
• Relocation accounted for 68% of newly transacted office space.

Despite premium rents, key sectors prioritised higher-quality office spaces. However, decentralisation remained a key trend for FIRE tenants, while ICT and distribution firms maintained their presence in established areas.

• FIRE, ICT, and distribution sectors favoured high-quality buildings.
• FIRE tenants continued to decentralise, particularly toward Thu Thiem NUA.
• ICT and distribution tenants remained in well-established business locations.
• Manufacturing tenants sought non-CBD buildings of similar quality but with lower rental costs.

1.4/ HCMC Office Market Outlook in 2025

In 2025, the total stock is projected to increase by 4% YoY, with over 110,000 sq m NLA introduced from seven new projects and one re-entry. Marina Central Tower, a Grade A development, will account for 60% of the new supply.

The CBD will accommodate 92% of the total upcoming supply. Looking ahead to 2027, 16 projects are expected to add over 223,000 sq m NLA, with approximately 70% of the new Grade A and B supply aiming for green certifications.

2/ Ha Noi Office Market

2.1/ Supply increased

By the end of 2024, total office stock reached 2.34 million sq m NLA across 192 projects, reflecting a 9% QoQ and 10% YoY increase. Six new projects drove this growth:

• 03 Grade A developments: BRG Diamond Park Plaza, Grand Terra, and Heritage West Lake
• 03 Grade B buildings: HUD Tower, My Dinh Pearl, and Vinacomim Tower.

Grade B remained the dominant segment, accounting for 49% of total stock. Supply in both the Secondary and Western areas contributed 41% each. Since 2020, the overall market supply has expanded by 4% annually, with:

• Grade A growing by 4% pa
• Grade B growing by 5% pa
• Grade C by 1% pa

2.2/ Occupancy dropped with new supply

In Q4/2024, gross rents increased by 2% QoQ and YoY, showing steady demand for office in Ha Noi.

• Grade A rents remained stable QoQ but saw a 1% YoY decline.
• Grade B rents increased slightly by 1% QoQ, reflecting moderate growth.
• Grade C experienced the highest rental growth, rising 2% YoY.

Overall, occupancy dropped by 5 ppts QoQ and YoY to 82%. However, different grades showed varying trends:

• Grade C achieved the highest occupancy at 92%, with a 1 ppt increase QoQ and YoY.
• Grade A occupancy fell sharply by 7 ppts QoQ and 6 ppts YoY to 79%.
• Grade B also dropped by 5 ppts QoQ and 6 ppts YoY, ending at 79%.

Despite an increase in new supply, quarterly take-up remained positive across all grades. Notably, Grade A office has consistently recorded positive absorption since 2010, highlighting continued demand for premium rental properties in Ha Noi.

2.3/ Relocations to non-CBD

Relocations comprised 71% of leased space, with 51% of tenants moving to Secondary areas and 49% to the West. ICT tenants dominated demand, occupying 50% of total leased space, followed by healthcare and medicine tenants, which accounted for 21%.

2.4/ Ha Noi Office Market Outlook in 2025

By 2027, an additional 265,000 sq m is expected from 11 projects. Grade A developments will dominate, contributing 92% of the upcoming supply from nine projects, while the remaining 8% will come from two Grade B projects.

Key developments anticipated in 2025 include Tien Bo Plaza, 29 Ly Thai To, The Marc 88, and Oriental Square. Beyond 2027, an estimated 864,500 sq m of additional supply is projected from 28 projects, with 64% expected to be Grade A.