DNVN - Although in a period of strong development with much growth potential, the high-end retail real estate market in Vietnam is also facing many short-term challenges related to scale, quality and experience.
According to the Vietnam Association of Realtors (VARS), the high-end retail real estate market in Vietnam is in a period of strong development with great growth potential, especially in centrally-run cities. Projects of shopping malls and high-end retail stores are continuously expanding, attracting the attention of both domestic and foreign investors.
The scale of Vietnam's retail industry is forecast by the Ministry of Industry and Trade to increase to 350 billion USD by 2025, contributing 59% of the total budget. Along with the development of the retail industry, Vietnam is also emerging as an attractive destination for high-end retail real estate investors with a fast growth rate compared to other countries in the region.
The luxury retail real estate market in Vietnam is expected to continue to grow strongly in the long term, with annual rental prices continuing to grow at double digits. One of the most important factors driving the luxury retail real estate market in Vietnam is the stable and rapid economic growth.
The size of Vietnam's retail industry is forecast to increase to 350 billion USD by 2025.
In particular, along with the socio-economic development process, the habits of Vietnamese consumers, especially the young generation, have changed, increasingly oriented towards high-end shopping experiences. This change creates great demand for high-end retail real estate projects, contributing to promoting the development of this field.
Rising demand, coupled with growing investment in urban and commercial infrastructure, has also made Vietnam an attractive market for many international retail brands. Many high-end brands from the fashion, cosmetics, home appliances, and high-end food industries have landed in Vietnam, especially in major cities such as Hanoi and Ho Chi Minh City.
The investment and business environment, especially in the real estate sector, is increasingly improved with many policies to attract investment as well as credit support and tax incentives for retail real estate development projects, especially projects focusing on the high-end segment. A series of high-end commercial centers are developed to meet the advanced standards of this sector.
However, this market also faces some challenges in the short term. Accordingly, despite its rapid growth, Vietnam's retail space is still modest in terms of scale, quality and experience.
The total retail space in Vietnam, especially high-end shopping malls, is still relatively modest compared to other countries in the region such as Thailand, Singapore, Malaysia, etc. This requires Vietnam to continue investing in infrastructure, expanding the supply of high-quality space and improving the shopping experience for consumers.
The slow growth in supply of high-end retail space while the demand from international brands and trademarks is constantly increasing has caused rental prices in central areas in Ho Chi Minh City and Hanoi to increase, creating great pressure on high-end retailers.
Volatility in the global economy, inflation and rising raw material costs can affect the expansion potential of high-end retail real estate projects.
“High inflation could reduce consumer purchasing power, affecting high-end retail sales. The cost of building and operating high-end shopping malls will also increase, putting pressure on real estate developers.
At the same time, the instability of the international financial market also makes international investors more cautious in expanding their investment scale in the high-end segment," VARS commented.
Hoai Anh
Source: https://doanhnghiepvn.vn/kinh-te/bat-dong-san/thi-truong-bat-dong-san-ban-le-cao-cap-tang-truong-nhanh-nhung-nhieu-thach-thuc/20240922092612183
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