Retail property sales climb in two main cities, but not rents

Thien Thanh Sanitaryware joint company



Retail property sales climb in two main cities, but not rents

 

 

The retail property segment in the two major cities of Hanoi and Ho Chi Minh City saw recovery in occupancy but not in rent, Savills Vietnam said.

In its quarterly report on the two cities, the consulting firm said in Hanoi, the occupancy was 84 percent, stable quarter-on-quarter (q-o-q) and up 7.2 percentage points year-on-year (y-o-y). Meanwhile, the average rent was 841,000 VND (38.7 USD) per sq.m per month, decreasing 0.9 percent q-o-q and 10 percent y-o-y.

In the first half of 2015, Hanoi's retail sales were approximately 210 trillion VND (9.63 billion USD), increasing 10.3 percent y-o-y.

Without inflation, the real growth rate was 9.6 percent y-o-y. With free-trade agreement participation and the expected signing of the Trans-Pacific Partnership in 2015, the competition between domestic and foreign retailers would continue, Savills Vietnam said.

In the second quarter, Hanoi's retail supply was approximately 950,000sq.m, increasing by 3 percent y-o-y.

In the second half of this year, approximately 353,000sq.m from 16 projects will enter the market. Two notable projects are Vincom Nguyen Chi Thanh and Aeon Mall Long Bien, which will provide more than 165,000sq.m.

Meanwhile, the retail property segment in HCM City showed positive signs in the year's second quarter, with average occupancy rising by seven percentage points to reach 92 percent, Savills Vietnam said.

The average rent decreased by one percent q-o-q to touch 1.3 million VND (59 USD) per square metre per month. Shopping malls and department stores' occupancy rates have been stable since the previous quarter at 92 percent and 97 percent, respectively.

The rent for department stores increased by three percent year-on-year, but decreased by two percent in shopping centres and retail podiums.

In the first half of the year, HCM City retail sales increased by 11.8 percent y-o-y to touch 256 trillion VND (11.75 billion USD), significantly higher than the 7.7 percent rate a year earlier and higher than the national figure of 10.2 percent.

The growing population and middle class in HCM City are driving the growth in retail demand.
In Q2, two new shopping malls and one new supermarket entered the market, increasing the total retail stock by five percent q-o-q to reach 940,000sq.m.

The retail market is expected to expand faster in secondary and suburban areas than in the central business district due to upgrades in infrastructure and new residential projects.

According to the second report in the series, Asia Pacific Consumer Survey - How We Like to Shop Online, released last week by CBRE, online shopping has overtaken bricks-and-mortar retail as the most popular method of purchase in certain Asian markets.

Consumers in the 18-24 age group — known as ‘Generation Z' — are also set to play an influential role in the regional retail market in the coming years. As a result of factors such as these, landlords and retailers would need to be proactive in order to remain competitive, the survey reported.

The ability to compare products without having to physically visit individual stores is another key factor for the region's consumers when shopping online. This trend is more prominent in emerging markets such as Vietnam, China and India, where quality shopping centres or shops are often located far from each other.

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