Retail space rents expected to fall

Despite the stable development of the retail industry, owners of buildings offering retail space in downtown HCMC are expected to cut their rents to maintain old clients as well as attract new ones, said a market researcher.

An increasing inflation rate and a slowdown in retail business and service sectors are the two main reasons driving retail premises rentals down, according to CB Richard Ellis Vietnam Co., Ltd (CBRE).

Retail space contracts which were signed a year or two ago had good rental prices because retailers then were optimistic about future prospects while the inflation rate wasn’t as high as now, said Marc Townsend, director of CBRE.

However, in the first half of 2011, the total retail sales of goods and services after inflation was deducted rose by only 5.7% over the same period last year, a modest growth rate compared to last year’s growth rate of 16.4%.

“Lower purchasing power and high rents of premises both burden retailers”, Townsend reckoned.

Thus, most large retail centers in downtown areas must offer favorable rents, he said.

The rent downtrend is becoming clearer given strong supply in the time ahead.

Eden A, for instance, will be put into operation in 2012’s second quarter which can provide 30,000 square meters of floor space. At present, Bitexco Financial Tower is offering 8,000 square meters for lease with prices ranging between US$78-124 per square meter.

Outside the downtown area, retail supply will also be abundant when the Crescent Mall in Phu My Hung Urban Area, with a total area of 45,000 square meters, comes into operation by the year-end.

HCMC now has 352,800 square meters of retail space. The average rent is US$125 per square meter in central business districts (CBD) and US$33 per square meter in non-CBD areas.

Source thesaigontimes.vn

Tags: Vietnam Retail space rents