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RETAIL MARKET HEATS UP AGAIN
As retail recovers after the pandemic, rents in major-city shopping centers are expected to rise markedly.
According to Vietnam's Ministry of Construction, occupancy in shopping centers and major supermarkets edged up from the first quarter of 2022 and remained high at around 90–95%. Developers offered incentives to bring retailers back, particularly around the New Year and Lunar New Year holidays.
Demand rises after the pandemic
Street-front stores have gradually reopened, and closures and transfers are less common than in previous quarters. Average retail rents rose slightly in the first quarter of 2022 from the fourth quarter of 2021, although they remained below pre-pandemic levels.
The Vietnam Association of Realtors (VARS) said retail-property supply grew slowly over the preceding three years while demand from brands of all sizes steadily recovered.
In Hanoi, ground-floor retail rents rose about 5% quarter on quarter in the first quarter of 2022, with stable occupancy. Large tenants likewise led demand in Ho Chi Minh City.
VARS forecast Ho Chi Minh City retail rents would grow 1.5–3.5% over the following year. Hanoi, where the pandemic's effect on rents was less pronounced, was expected to see a smaller rise of around 1–1.5%.
Savills also expected large domestic and foreign tenants to enter the market as the economy recovered.
New international brands including Columbia, Arabica, Ain & Tulpe and 6ixty8ight, along with brands that deferred entry in 2021 such as Bath & Body Works, Prima Donna and Sports Direct, planned to open stores in Vietnam. Ho Chi Minh City and Hanoi remained the preferred destinations for new tenants.
Opportunities for retail property to break through
VARS experts said the retail market was gradually recovering, pointing to a positive outlook for retail property, especially in major cities. Vietnam's total retail sales in April rose 12.1% from a year earlier, compared with a 3.8% decline in 2021 due to the pandemic.
Major domestic and international retailers, including MM Mega Market, AEON Mall, Central Retail, Saigon Co.op, Winmart and Mobile World, were expanding store networks compared with the end of 2021, adding to demand for premises.
A prominent Japanese fashion retailer recently opened a store of more than 3,000 m² in central District 1, Ho Chi Minh City—one of Uniqlo's largest stores in Vietnam.
VARS said global retail leaders were seizing the sector's recovery while rents were only starting to rise, securing good sites for long-term strategies. These moves clearly signaled Vietnam's retail recovery after the long pandemic freeze.
In a November 2021 CBRE survey of major Asian brands' 2022 expansion plans, 65% wanted to open more stores and 50% wanted better locations. More than half sought city-center shopping malls; 48% wanted sites on main streets.
Vietnamese retail's rebound reflects more than higher average and disposable income: shopping habits have also shifted. Consumers increasingly seek experiences in addition to everyday goods, especially after lengthy pandemic restrictions.
VARS said this creates an opportunity for retail property to provide experiences that e-commerce cannot. Rents, particularly in major-city shopping centers, were expected to rise markedly.
Global retailers were likewise moving quickly to secure strong locations while rent increases were still modest, positioning themselves for long-term growth in Vietnam.
Source: Pham Hang, batdongsan.enternews.vn
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