Customers prefer to rent shops in small alleys, dislike houses on the street.

Recently, a new trend is taking place in the Hanoi rental housing market, which is that customers are shifting to looking for frontages in small alleys, instead of preferring street-front areas like before.

Ms. Tran Bich Thuy (Hai Ba Trung district), a long-time clothing trader in Hanoi, said that before the COVID-19 pandemic, she rented the first floor of a street-front house in Doi Can (Ba Dinh district) to sell fashion clothes at a rental price of 35 million VND/month.

But business was sluggish after the pandemic, and the monthly profit was not enough to cover the rent. Therefore, she had to transfer the street-front store to find another business location.

“ Customer consumption trends have changed a lot since COVID-19. They are more accustomed to shopping online than buying directly. Therefore, even though my store is located right on the street, there are still very few customers.

After considering and calculating, I decided to find a small shop in an alley on Ngoc Ha Street to rent. The rent is only about 7 million VND/month, so business is much less difficult. Because I switched to selling online, the shop is only for customers who want to come and try it directly and is a place to import and store goods ," Ms. Thuy said.

Customers increasingly prefer to rent shops in small alleys. (Illustration photo: VNN)

A recent survey by Batdongsan.com.vn also noted that retail premises located in small alleys in Hanoi still have very high occupancy rates, concentrated in the price segment of 3-10 million VND/month. In some areas, supply cannot meet demand.

In addition, the rental price has also increased slightly. For example, some business premises in Cau Giay district located in small alleys of Dich Vong, Quan Hoa, Mai Dich, Nghia Tan, Trung Kinh... with an area of 20-40m2, have a rental price of 6.5 - 10 million VND/month.

In Nam Tu Liem district, the rental price is about 4 - 6 million VND/month for an area of 12 - 25m2, an increase of about 10% compared to the end of last year.

In Thanh Xuan district, shops located in small alleys currently have rental prices of 5-10 million VND/month.

Mr. Tran Minh Phuc, a broker specializing in retail space in Hanoi, shared that the gloomy business situation along with consumers' online shopping habits have made many street-front houses no longer attractive to tenants because the profits cannot cover the rental costs.

Meanwhile, shops in small alleys are the optimal choice at the present time because the rental price is only 1/5, 1/10 of street-front houses, but the efficiency is quite good because many people only need a space for a shop sign, a place to store goods and a space to take photos for sale.

“ Since the beginning of the year, every month I have been a broker for dozens of retail spaces for rent in alleys. There are times when there are many customers but little supply, customers have to wait or find another broker, ” said Mr. Phuc.

Ms. Pham Minh Huong, Sales Director of Lucky Land Real Estate Office, shared that retail premises in alleys are easier to rent, customer demand is larger and more stable, but supply is quite limited. Meanwhile, despite possessing a "golden" location, many business premises and townhouses in Hanoi still have difficulty finding tenants. These premises often have a high average rental price of 40 - 60 million VND/m2, which is not suitable for the current difficult economic times.

Explaining this, Ms. Hoang Nguyet Minh, Senior Director, Commercial Leasing Department, Savills Hanoi, said that changes in spending structure also partly affect the retail industry.

According to the 2023 Vietnam consumer behavior report by McKinsey & Company, Vietnamese consumers tend to reduce spending on most product categories, except for some core product categories such as: groceries, gasoline, personal health products, high-experience and advanced quality products.

“ The shift from spending on personal preferences to basic spending clearly dampens the retail industry’s prospects. In particular, the fashion, cosmetics, entertainment and fitness segments are the most heavily affected. It is the adverse factors from the economy that make consumers think about their financial goals and optimize spending on more practical items, ” the analyst said.

Ngoc Vy

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