Gap emerging between supply and demand for office real estate

Over the past two years, even amid the pandemic, real estate still posted positive results with thousands of successful transactions, experts told the “Identifying new factors in the office rental market” live talk show held by VnEconomy and Vietnam Economic Times on November 1.

According to the Vietnam Association of Realtors (VARS), there are about 150,000 newly-established businesses in Vietnam each year. Many existing businesses faced difficulties in 2020 and 2021 and had to withdraw from the market, but the number of new businesses was high and this group had significant demand for office real estate.

The need for office real estate in Hanoi is about 10 million sq m, while the official supply is only 3 to 4 million sq m. Many small and medium-sized enterprises (SMEs) have had to choose cheaper office segments such as residential housing or commercial areas in apartment buildings.

Generally, supply in this segment is lower than demand in both Hanoi and Ho Chi Minh City, especially in Grade A office space, according to Mr. Nguyen Van Dinh, Deputy Secretary General of the Vietnam National Real Estate Association (VNRea) and President of VARS.

Many rental models such as officetel, condotel, and shophouse have emerged in Vietnam, but the potential for development is uncertain as their legal framework is inadequate, he added.

In order to keep pace with market development and especially modern trends, the Ministry of Construction should collect opinions on revising the Law on Real Estate Business, including some product lines and some specific product segments, he suggested. If the law is not amended soon, there should at least be instructions issued.

Mr. Dinh also said that to develop office projects for rent, investors need to pay attention to planning and location and adopt a customer-centered approach.