Vietnam's property market will experience rising demand next year from economic growth, urbanization and companies' expansion, according to CB Richard Ellis Group Inc.
An oversupply in major metropolitan areas from "rapid" development will be "just a short-term issue," Richard Leech, Hanoi-based executive director at the local unit of the world's biggest real-estate services firm, said in an interview.
Vietnam is preparing a "rapid and sustainable" development strategy that will lead to average gross domestic product growth of 7 percent to 8 percent a year from 2011 to 2020, Prime Minister Nguyen Tan Dung said in Hanoi on Aug. 18.
In the capital Hanoi and the financial hub of Ho Chi Minh City, there is "urbanization, population increase and wealth distribution -- everything you need for a growing economy," Leech said.
There are some good-quality buildings coming onto the market next year, including Keangnam Hanoi Landmark Tower and Indochina Plaza Hanoi, said Leech.
The building of South Korea's Keangnam Enterprises Ltd. will become Vietnam's tallest when completed.
The tallest skyscraper is the 68-story Bitexco Financial Tower opened by Binh Minh Import-Export Production & Trade Co. on Oct. 31.
"We have seen probably a bottoming out of the office market, with the rentals starting to improve again," Leech said.
"There's a lot more interest from both the international community and those new startup Vietnamese companies, with the banking, energy and software sectors taking up a lot of good- quality office space," he added.
Net absorption of grade A and B office space in Hanoi, which measures the newly-leased areas after deducting vacated space, almost doubled to about 21,000 square meters (226,044 square feet) in the third quarter, from the previous three-month period, CBRE said in a report posted on its website on Oct. 13.
Some companies are buying office space on a long-term basis, some for as long as 50 years, rather than renting short term, to hedge against inflation and cycles in the property market, and to help with licensing issue by showing their commitment to the country, Leech said.