Vietnam has proved again to be the market offering the most attractive office yields in the world, according to the latest Savills Office Yield Spectrum 2H 2017 report.

Transaction volumes by overseas investors increased by between 1 per cent and 39 per cent in the first half of 2017 year-on-year, remaining in positive territory.

The global search for yield has traditionally been one of the main reasons behind investment in the Asia-Pacific office sector.

The Top 2 markets offering the highest yields in the world remained Vietnam’s gateway cities: Hanoi at No. 1 position with an 8.65 per cent yield and Ho Chi Minh City at No. 2 position, with 7.86 per cent.

“Vietnam’s office market has shown excellent performance, particularly in Grade A, with occupancy rates reaching over 95 per cent in the CBDs of the two cities,” said Mr. Neil MacGregor, Managing Director of Savills Vietnam.

“In light of various integration opportunities, economic reforms, and booming economic growth in the past few years, Vietnam’s economy has welcomed consistently increasing flows of foreign direct investment (FDI) into the country which, in turn, has helped secure sustainable growth,” he added.

In fact, Vietnam office market in Vietnam has been proven to be outstanding. Ho Chi Minh City, the country’s commercial hub, is one of the top five markets for investment and development in the world, according to this year’s Emerging Trends in Real Estate® Asia Pacific 2018 report, a real estate forecast jointly published by the Urban Land Institute (ULI) and PwC.

Ho Chi Minh City (fifth in investment, second in development) – With an economic trajectory thought to be similar to an early-day China, Vietnam is seeing large regional developers and an increasing number of private equity funds betting it will offer up a repeat of the Mainland China experience in terms of property price inflation.

Leading buy/hold/sell ratings for the various asset classes are as follows:

Office – buy Ho Chi Minh City, sell Taipei.
Residential – buy Ho Chi Minh City, sell Seoul.
Retail – buy Ho Chi Minh City, sell Taipei.
Industrial/distribution – buy Shenzhen, sell Taipei.

According to 《Asia Times》, Vietnam housing and office prices have been rising for three years and these two property segments will continue to attract most investment. Office rents in Ho Chi Minh City are expected to leap by 6.19% in 2018, the fastest rate in Asia. Sydney (6.5%) and Melbourne (6.2%) lead Asia-Pacific forecasts.

Rents for A grade offices averaged US$465 a square meter in the second quarter, making Ho Chi Minh City more expensive than Jakarta (US$270), Bangkok (US$226) and Kuala Lumpur (US$126). Hong Kong (US$1,925 per sqm) is still the priciest Asian city, ahead of Beijing (US$994 per sqm) and Shanghai (US$830 per sqm).

As Vietnam’s economy thrives, the market will continue to see further interest in all real estate sectors, with a focus on office and hospitality, driven by increasing FDI, booming tourism and, more recently, industrial and logistics real estate developments.

Source: VietNamNet , PwC , Asia Times