Increased foreign interest in Hanoi office buildings

Grade A offices in Hanoi have displayed potential opportunities for foreign investors, says Savills Vietnam

Cityscape of Hanoi, Vietnam. LTPhotography/Shutterstock

Hanoi is currently one of Vietnam’s most dynamic office markets, along with the restricted number of vacant spaces and high demand that are driving rents up, reported Việt Nam News. The most recent Savills report revealed that other real estate sectors have experienced a significant decline during the pandemic, while the office market has remained quite stable.

Market performance is expected to improve due to increased competitiveness, tariff commitments, economic growth, and intensified foreign direct investments (FDI). The sustained trade war between US and China is also likely to push more multinationals to transfer their production activities to Vietnam.

Foreign investors are particularly intrigued in high-quality office buildings.

Savills Vietnam Associate Director of Investment, Hoàng Nguyệt Minh said, “there are core factors that make Hà Nội offices one of the most attractive segments for overseas investors looking for a position in Vietnamese real estate.”

The increased FDI and foreign investors will help develop office buildings to meet international standards, boosting occupancy when developments are established. Revenue from office buildings have also surged. Five-star hotel profits have risen by 30 percent, three- and four-star hotels have climbed up by 50 percent, while offices in Hanoi is expected to reach up to 80 percent.

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Consequently, Hanoi is attracting international investors from countries like South Korea, Japan, and Singapore, added Minh.

The containment of COVID-19 has added appeal to Vietnam as an operational centre, strengthening investor confidence.

Director of Savills Hanoi, Matthew Powell stated, “compared to other cities in the region that have seen sharp occupancy drops, Hà Nội has remained an attractive and stable market. In ASEAN, Hà Nội office occupancy of 94 percent eased just -1 percent year-on-year to be just behind Singapore and HCM City. This shows the potential for strong post-pandemic recovery.”

For the long-term, office developers are focusing on raising operational, safety, and health standards, as well as effective management and environmentally friendly designs that will help investors accomplish success.