The flexible office market in Vietnam’s Ho Chi Minh City comprising co-working and serviced offices is among the fastest growing in the Asia Pacific
At a meeting with the media to report on the city property market in the first half of the year, CBRE executive said, Ho Chi Minh City was one of the top three flexible office markets in the Asia Pacific.
Of its total office space, flexible office accounted for 2 per cent at the beginning of this year, and would increase to 5 per cent by the end of this year, it said.
According to a report on VNS, the development of the market is owed to the diverse range of business models in Vietnam.
“The market had grown strongly and would further accelerate in future” said a representative of batdongsan.com.vn, an online channel providing information about the real estate market in Vietnam.
It was no more a preserve of small companies with large foreign players having made an entry, he said, citing the example of the multinational Regus, which had opened 10 offices in the country.
“The development of co-working space is an unavoidable trend since office space supply in big cities like Hanoi and Ho Chi Minh City cannot meet demand. Besides, co-working is suitable for Vietnamese companies, who are mostly small and medium-sized enterprises. The market would continue to grow in terms of quality as well as size” he said. “Companies would not only offer space in old places but also in grade A and grade B office buildings” he added.
Speaking to the media, a Savills executive said that, the co-working segment in Ho Chi Minh City had grown at 90 per cent a year for the last two years and had around 37,000sq.m to rent, mostly in the central area. This growth was impressive compared with other markets in the region like Singapore and Hong Kong.
The market now has many famous foreign brand names like WeWork, Up, Dreamplex, Regus, Compass and Kloud.
The market would continue to develop strongly thanks to demand from local and foreign companies who want to cut cost or are in the first stages of studying the market, he said.
The status of the market can be clearly seen from the performance of the companies in the industry.
A start-up offering co-working space, Toong is now a successful company which has been growing and growing. Duong Do, CEO and founder of Toong said: “All offices the company has in Vietnam achieved high occupation rates of 85-100 per cent six weeks after opening.” Dương said his company was planning to offer another 60,00sq.m of space in Vietnam, 50,000sq.m in HCM City by 2020.
“Our clients are from 36 sectors. They are individual clients and companies with up to 200 workers, both newly-established and long-standing.” The short supply of traditional office space is also cited as a major reason for the industry’s growth.
CBRE said the Ho Chi Minh City office market saw no new supply in the second quarter of 2019 in either grade. Due to limited supply in the first half rents for both grades A and B continued to increase but at a moderate pace, especially grade A.