Vietnam’s Ho Chi Minh City and Hanoi are the second most affordable in Asia Pacific in terms of office fit out cost among 32 countries surveyed, just after India’s, according to property services firm Cushman & Wakefield.
Cushman & Wakefield’s 2023 Asia Pacific Office Fit Out Cost Guide, released on Tuesday, shows that persistent inflation, tight labor markets, and ongoing supply chain delays have increased average fit out costs across the region.
The average cost in HCMC and Hanoi, according to the report, is $63 and $64 per square foot, respectively. In several of the Indian cities surveyed, the common level is $60, but $64 in Delhi and $68 in Mumbai. The cost in Indonesia’s Jakarta is $72; while those in Kuala Lumpur, Bangkok, and Manila are $83, $85, and $92. China’s Shanghai and Guangzhou have it at $114 and $115, the study shows.
“In Vietnam, we’re seeing longer lead times due to manufacturing and supply chain issues from China and other supply countries,” said Riaz Khan, Cushman & Wakefield’s head of project & development services in Southeast Asia.
“Pricing remains competitive, but chairs and tables imported from China increased by more than 21% because of new taxation. Audio and visual products have been taking more than 10 weeks for lead time because of the global lack of chips,” he said.
For the Vietnamese office market, Trang Bui, country head of Cushman & Wakefield Vietnam, said: “The government has recently raised the standards of fire prevention and fighting in construction. Meanwhile, office lease transactions in recent years have happened mainly in existing buildings, due to the scarcity of new office supply that has achieved the new fire protection standards, which makes the completion time even longer than before.”
Cushman & Wakefield’s Asia Pacific head of project & development services, Tom Gibson, said despite higher costs and constraints on capital expenditure, the conversation with occupiers remained focused on the changing working environment.
“How much space do I need, and what is it going to look like?” he said. “Finding the balance between working from home and having people in the office, and how the right design can facilitate that, is still the number one conversation in most markets.”
Gibson said general economic volatility had slowed occupiers’ decision-making as capital expenditure across all sectors came under closer scrutiny. But he said the flight to quality being witnessed in leasing transactions was also being reflected in fit out decisions.
“Occupiers are looking at how they can optimize their spending. They see real estate as an essential expense and so they are looking to use their real estate to improve the employee experience.”