The co-working office model potential market in Vietnam
The office market in Vietnam’s major cities has witnessed strong growth of "the co-working office" model. At present, this model is not only booming in two major cities, Hanoi and HCMC, but also spreading to Da Nang, Hai Phong, Ba Ria-Vung Tau and other large city still continue development.
"The co-working office segment targets two kinds of occupiers, small-sized companies and freelancers. In these spaces, individuals sit interleavely and work independently while still sharing their work and ideas together. By choosing co-working offices, businesses and self-employed workers can save on cost, as the office rent includes all service charges such as power, water, security, cleaning, Internet and office equipment".
The co-working office model was born to replace traditional office spaces that are not flexible enough to fit the needs of small-sized businesses. Previously, small businesses in Vietnam set up their offices in apartments. But this practice is no longer allowed, and the restriction has created a huge demand for co-working space.
For small-sized businesses, co-working is a cost-saving solution compared to leasing traditional offices, because traditional office spaces are usually larger than their space demands. In addition, co-working also attracts freelancers because this model allows them to work independently in a private space or meet, discuss and share ideas with peers. "The booming co-working office model in Vietnam" is due to fluctuations of the economy and changes in working behaviours.
Recession always encourages the start-up trend, leading to a boom in small and medium-sized enterprises and creating a culture of entrepreneurship. According to the General Statistics Office, SMEs account for 97 percent of enterprises established in Vietnam over the past 15 years and employ about 50 percent of the workforce. In the first seven months of 2017, the number of established businesses hit 72,953, up 13.8 percent over the same period last year. In addition, creativity and flexibility are two criteria highly appreciated in society nowadays. The co-working office model is consistent with these criteria.
The co-working office model continues to attract investment in Vietnam’s major cities. This model is gradually being integrated into other types of real estate such as retail spaces and hotels. At trade centres and hotels, many developers have built spaces for co-working offices, rather than just focus on retail space or accommodation. Demand for co-working office space keeps increasing while supply is limited. Therefore, according to "Song Chau (SCBI) Office", in the future, this model will grow as a potential market in Vietnam.
Song Chau (SCBI) Office.
"As the economy had a stellar performance in 2017, Vietnam’s real estate investment scene continues to attract more and more interest from foreign investors and developers across all sectors. Vietnam’s real estate market is entering 2018 with a positive sentiment, despite some skepticisms about oversupply in the upscale residential sector, especially on secondary and rental markets."
"Q1 2018, an estimated 1,280 units of "serviced apartment" supply will enter the market by the end of 2018. In spite of the fact that landlords have enjoyed favorable market conditions with high occupancy rates and steadily increasing rental rates, Ho Chi Minh City serviced apartment market has seen increased competition from new buy-to-let apartments."
In 2018, the East and South will continue to be hotspots of the market with more new launches condominium / apartment. Within the next three years, office and retail market will be more competitive as a large amount of supply from community retail podium will be launched. Rental growth will increase at a slower pace as existing supply will remedy their rents more strategically while vacancy rate will surge up momentarily before dropping down
2017 witnessed the "office market bustling with new supply and healthy absorption." 2018 onwards will witness the market coming up with better supply albeit at a slower pace than 2017. "Rental growth will increase at a slower pace as existing supply will remedy their rents more strategically while vacancy rate will surge up momentarily before dropping down just as quick as the market will continue its healthy absorption momentum with new supply"
"United States President Donald Trump signed Republicans’ massive $1.5 trillion tax overhaul into law on Friday, cementing the biggest legislative victory of his first year in office, and also approved a short-term spending bill that averts a possible government shutdown. Tax plan shows two things can be true at once"
"Vietnam continue attracting foreign investors in 2018 and next ten years". Apart from subjective factors, in terms of objective factors; domestic market with the size of significant "population compared with other countries, young and dynamic population, middle class is increasing, urbanization grows fast pace will be make force the demand not only for housing market, also retail market, office building, etc."
With the narrow land fund in Ho Chi Minh City present, daily traffic jam; "office rentals and other service are rising" will be make burden for business, that is the reason why the tenant looking out form Ho Chi Minh City centre. "Thu Thiem" county town will be one of new centers in the future.
Ho Chi Minh City market is shortage of middle range real estate "mid-end apartment", the investors tend to expand neighbour county. Mid-end apartment prices and absorption of the projects always the market leader because of its high liquidity
Vietnam is one of the economies with the fastest growth rate in Southeast Asia. Some investors said that "the office rental fee in Ho Chi Minh City, Vietnam" is now higher than it is in Bangkok, reflecting "the shortage of supply in the market with the main cause of difficulties in obtaining land for development projects"
Asian office markets were less volatile but continued to take 6 of the top 10 positions in the index, the "office for lease" prices in Ho Chi Minh City still considerably lower than Taiwan, Sydney, Singapore, Seoul, Shanghai, Thailand and HongKong