A logistic centre in HCM City. The Vietnamese property market is still attractive to investors thanks to strong fundamentals. — VNA/VNS Photo Hải Yên
Despite global uncertainties, Việt Nam, with its strong fundamentals, continues to remain resilient and attractive to foreign investors, as confirmed by the property research firm CBRE.
The robust fundamentals highlighted by CBRE include 6.4 per cent GDP growth, 14.5 per cent year-on-year export growth, stable inflation at 4 per cent, 8.8 million inbound visitors in the first half of the year, and a young and expanding population of 100 million.
CBRE's positive assessment of the Vietnamese market comes as a hopeful signal within Asia. According to the company’s 2024 Asia Pacific Real Estate Market Outlook Mid-year Review, a rebound of Asia Pacific’s commercial real estate investment activity remains on hold due to delayed interest rate cuts and continuous repricing activity.
Nonetheless, CBRE anticipated a slight increase of 3 per cent in investment volume for 2024. Japan remains a key variable as cross-border capital has slightly decreased, and investors are searching for markets with higher return potential.
“While investors continue to focus on active markets such as Japan and India, repricing in countries like Australia, New Zealand and Korea is largely done,” said Dr. Henry Chin, global head of Investor thought Leadership and head of Research, Asia Pacific for CBRE.
“We expect further repricing activities in Mainland China, Singapore and Hong Kong SAR in order to see an uptick in investor interest,” he said.
“For investors, the key lies in strategising according to the current stage of each key sector in the North, Central, and Southern regions of Việt Nam, while adapting to the broader structural shifts unfolding worldwide. We continue to see a strong appetite among foreign investors to enter the market, with a focus in particular on the industrial and logistics space, the hospitality market as the world re-opens post-pandemic, and the core asset classes driven by the country's unique supply and demand dynamics,” he added.
CBRE reports that the regional office market is influenced by supply levels, resulting in a high regional vacancy rate of 19 per cent in the first half of 2024.
Việt Nam is following a similar trend, with an increase in Grade A spaces. Due to softening demand, older or high-vacancy buildings offer attractive incentives like extended rent-free periods or fit-out allowances.
“Cost remains a key factor in renewal and relocation decisions. High fit-out costs have led many occupiers to renew leases, while some are opting for relocations to achieve cost savings and re-outfit space to enhance workplace experience,” said Ada Choi, head of Occupier Research and head of Data Intelligence and Management, Research, Asia Pacific, for CBRE. “The flight to quality will continue as occupiers seek premium spaces in prime locations.”
CBRE observed an expansion in key retail sectors like food and beverage and sports goods, with a decrease in vacancy rates. The flight to prime-quality spaces in premium locations continues as occupiers seek premium environments.
The HCM City and Hà Nội central business districts reported record double-digit growth in the first half of the year, propelled by surging demand from international brands and limited space availability.
The APAC region saw normalised logistics demand in the first half of 2024, with lease renewals preferred over relocations due to high rents and fit-out expenses. Despite a modest increase in leasing activity in the latter half of the year, full-year leasing volume is expected to be lower than in 2023.
In Việt Nam, ready-built warehouse occupancy rates have improved, but rental growth remains moderate at a rate of 2 per cent to 3 per cent annually due to robust new supply.
The hotel markets across the region, except in the Maldives, experienced year-over-year increases in Revenue per Available Room performance through June 2024. Stable Average Daily Rates were driven by an 80 basis point rise in average occupancy levels as airline travel rebounds.
Việt Nam's hotel market demonstrated positive signs, with both Hà Nội and HCM City recording higher revenue per available room compared to the same period last year. — VNS