Vietnam evaluated as the world's most attractive office yields
The latest Savills’ World Office Yield Spectrum 2H 2017 reported that Vietnam offers the most attractive office yield in the world.
The report, which compared 54 major office markets across, Asia, Europe, the United States and Australia, confirmed that Hanoi and Ho Chi Minh City posted the highest yields at 8.65 and 7.86 percent. Savills Vietnam’s Managing Director Neil MacGregor said that Vietnam’s office market had shown excellent performance, with occupancy rates exceeding 95 percent in central business districts in the two cities. In contrast, Taipei and Hong Kong were placed at the bottom of the ranking with about 2 and 2.4 percent yields.
According to Savills, for three years running, optimism has dominated the Asian office sector as cheap money has continued to flood local markets and rents and capital values have continued to rise. The increasing capital inflows have resulted in cap rate compression to decade lows but buoyant demand has led to more new prime office completions and vacancy rates are beginning to creep up.
Investors have generally adopted a positive outlook for local office markets, their confidence bolstered by strong economic growth expectations. The most active markets have been China, followed by Japan and Hong Kong.
However, limited stock for sale in prime areas has meant investors have increasingly turned their attention to development projects in secondary locations. The number of foreigners buying real estate products in Vietnam has increased, but the domestic property market needs policies to attract more foreign investment, according to experts.
Nguyen Trong Ninh, Director of the Housing and Real Estate Market Management Department under the Ministry of Construction, said a policy on licensing foreigners buying and owning houses in Vietnam was issued in 2008.
Following two years of implementing the amended Law on Housing, the domestic property market has developed in the positive direction in the segment of selling real estate products to foreign buyers, and foreigners have supported the proposals, according to reports from localities sent to the construction ministry.
As a state management agency in the field of housing, the Ministry of Construction said in the current period, regulations on housing and policies related to housing in Vietnam for foreign individuals and organisations had been open, including subject, conditions on ownership and the number of houses that can be owned by foreign buyers.
Meanwhile, regulations on the number of houses that foreign organisations and individuals can own in buildings and housing projects are in accordance with the actual conditions of Vietnam and international regulations.
Nguyen Khanh Duy, Savills Vietnam’s HCM City residential sales director, said a limit on the number of apartments owned by foreigners was very important to minimise and prevent negative impact on domestic socio-economic development.
Markets attracting foreign buyers include HCM City, Hanoi and Da Nang, according to Savills Vietnam. However, there are a small number of red books or land use rights certificates that were licensed to foreign organisations and individuals buying houses in Vietnam.
The number is lower in comparison with the high demand from foreign buyers because foreigners are not yet clear about legal procedures in Vietnam, while State administrative offices in some localities are not familiar with regulation related to foreigners.
For large investors, to find suitable property projects, they often choose to work with an international consulting firm that has a network of offices and branches in many countries to ensure that all questions related to legal and trading procedures will be explained satisfactorily. Sometimes, they do not need to pay more money for consulting services.
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