Vietnam offers world's most attractive office yields

Illustrative image (Photo: VNA)

Vietnam offers the most attractive office yield in the world, according to the latest Savills’ World Office Yield Spectrum 2H 2017 report.

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.

Source: VNA