Retail space returns to its golden age

Walking around the shopping malls and shophouses in urban areas as well as the central streets of Ho Chi Minh City recently, many premises have begun to be filled, and rental prices have also increased due to competition from investors. This segment, although suffering from long-term difficulties and recovering late, is forecast to continue to be vibrant thanks to the economic recovery as well as the increasing number of international visitors.

High occupancy rate

According to the General Department of Tourism, total retail and service revenue in the first 6 months of 2022 increased by 27.3% over the same period last year, reaching about 117 billion USD. The number of international visitors increased 7 times to 600,000 people. Notably, international brands saw opportunities when they continuously "attacked" large commercial centers after more than 2 years of "freezing" due to the pandemic.

A space in the center of Ho Chi Minh City has been rented after a period of vacancy. Photo: AN NA

According to statistics from Cushman & Wakefield in the second quarter, the vacancy rate of retail space in Ho Chi Minh City is gradually decreasing, currently only about 5.1% in the central area and 12% in the non-central area. According to CBRE Vietnam, the vacancy rate in Hanoi has also decreased to nearly 10% in the central area and nearly 16% in the non-central area.

In Ho Chi Minh City, some retailers of famous brands continue to renew contracts with shopping malls. Specifically, Uniqlo signed many new agreements with shopping malls to open new stores in the period of 2022-2023. Muji also opened a fourth store at Cresent Mall (District 7). AEON is expanding its scale to 100 MaxValu stores by the end of 2025 and increasing 6 shopping malls to 16 in the near future.

Domestic businesses are also competing to expand their "areas" of operation, such as Nova Group opening a series of restaurants and cafes with many brands under the Nova F&B system.

At Vinhomes Central Park urban area (Binh Thanh district), SSI Securities Company has reserved the entire frontage of Park 2 building to make a transaction office. This is one of the first units in the securities industry to set up a transaction office here next to several large banks that have been present for many years. This has made residents in the area very satisfied because it is more convenient for trading and investment activities.

Also according to the reporter of Nguoi Lao Dong Newspaper, the main roads in the center of Ho Chi Minh City such as Dong Khoi, Ngo Duc Ke, Mac Thi Buoi... were still deserted and quiet a few months ago, but now a series of shops and stores are being renovated and redesigned to prepare for opening.

Mr. Nam Phong, owner of Home Saigon restaurant in the Western Quarter - Bui Vien (District 1), said that after a few months of reopening, the restaurant has been crowded with customers, he had to increase the number of service staff to meet the demand. "The number of customers is increasing, so everyone in the business here is happy, not only Bui Vien street but also the surrounding areas are bustling" - Mr. Nam Phong expressed.

Rent increase

As demand and occupancy rates increase, rental prices have also recovered significantly compared to a few months ago. Some restaurant and food shop tenants said they were happy because their leases still stated the old price, while if they had rented a new one, the price would have increased by at least 10%-15% compared to the same period last year.

The 6-month report of Jones Lang Lasalle Vietnam Real Estate Consulting Company shows that the average retail rental price in Ho Chi Minh City is about 41.7 USD/m2/month, up 12.2% over the same period last year. Meanwhile, in Hanoi, the net rental price at key commercial centers in the center and outside the center has now reached 63.6 USD/m2/month and 29.3 USD/m2/month. The main reason is that last year, the pandemic broke out and social distancing lasted, so many commercial center investors and retail space owners had policies to sharply reduce rental prices to support businesses.

A representative of Collier Vietnam Market Research Company assessed that the retail real estate segment has improved significantly since the second quarter of 2022 and continues to record many positive changes. After the pandemic, construction activities have accelerated, expected to bring abundant supply to the retail space market in the coming time. Retail space rental prices across the country will also increase significantly in the coming time.

Ho Chi Minh City's retail market is also considered the busiest in the country with the new Nova Market supermarket chain project. The average rental price is currently up to 105 USD/m2/month in the city center, expected to increase by 3%-5% from now until 2023. In Hanoi, the new retail model "Life-Design Mall" appearing at Vincom Mega Mall Smart City has added 68,000 m2 of leasable area to the market.

Rental prices in Hanoi are also expected to increase by 1%-1.5%. In Da Nang, no new supply has been recorded, but rental prices still tend to increase slightly compared to the previous quarter thanks to the opening of tourism.

Office rents return to pre-pandemic levels

Colliers Vietnam's market research report also shows that the office market in Ho Chi Minh City has been vibrant again since the second quarter of 2022. Demand for Grade A office space has increased sharply, leading to a number of buildings having no more vacant space. Average rental prices in both Grade A and B have returned to pre-pandemic levels. Also in the second quarter, two new projects, CMC Creative Space (District 7) and The Hallmark (Thu Duc City), have added more than 81,000 square meters of floor space to the office market.

While the Hanoi office market has not recorded new supply for many consecutive quarters, most office buildings have maintained occupancy rates above 75%. In the next 1-2 years, Hanoi will have many new office buildings in both Grade A and B. "Contrary to the general sentiment that the demand for flexible workspace will increase after the pandemic, in Vietnam, the demand for traditional office types is dominant" - Ms. Nhung Vu, Deputy Director of Office Services at Colliers Vietnam, assessed.

Source: https://nld.com.vn/kinh-te/mat-bang-ban-le-tro-lai-thoi-hoang-kim-20220815211408731.htm