Trading retail premises can bring huge profit

Many investors now rush to purchase retail premises, because this is considered a very profitable business: one dong in investment capital can bring four dong in profit.

Previously, retail premises were leased only for short periods of time, two or three years. Tenants constantly faced risks, because the leasing fee could increase every two or three years. Besides, they always had to compete with other retailers in order to obtain the right to extend the leasing contract. Nowadays, retail premises can be leased for 49-50 years with fixed leasing fee, which allows tenants to save money, and in the meantime the stable leasing fees will also allow retailers to anticipate their expenses.

Having realized the high demand for retail premises, investors are rushing to inject money into the sector. That explains why the areas reserved for leasing at big shopping malls in Hanoi have been enjoying large retailers.

At Charmvit Tower, every square metre of retail premises is priced at over $4000, while the long term leasing fee applied by Hang Da Market in the centre of Hanoi is between $6000 and $10,000 per square metre. Investors are offering to sell the retail premises at N05 building at nearly 100 million dong per square metre.

Meanwhile, the leasing fees applied by other shopping malls are hovering around $55.5 per square metre per month, and the shopping malls in the non-central areas have a leasing fee of $36 per square metre per month.

Metropole Arcade Hotel at No 15 Ngo Quyen Street now holds the record in leasing fees. The 650 square metre retail premises leases at $150 per square metre per month. Most of the retailers here are the well known brand names.

Vincom City Tower also has relatively high rental, at $135 per square metre per month. Meanwhile, Vincom Galleries-Vincom Park Place at No 114 Mai Hac De is leasing at $95 per square metre.

Trang Tien Plaza in the centre of Hanoi, which is located on a “golden land” offers 14,000 square metre of retail premises at $80 per square metre per month. However, there could be some changes in the prices in the time to come, because this is considered the most advantageous positions for retailers in Hanoi.

According to Hoang Tuan, Director of Vietland, a real estate trading floor, domestic and foreign investment funds are seeking to purchase retail premises, and then they provide the premises to smaller investors.

Hoang Duc Chinh from IDJ financial investment said that the trend of selling retail premises has been developing in the last several years. Some months ago, IDJ distributed all the retail premises at Charmvit shopping mall to small investors at $4000 per square metre. Meanwhile, the premises were being offered on the market at nearly $9000 per square metre.

Richard Leech, Managing Director of CB Richard Ellis, said that the demand for doing shopping at modern shopping malls has been increasing, which is the main factor that heats up the retail premises market in Vietnam. The occupied ratios in HCM City and Hanoi are 95 percent and 83 percent, respectively. It is expected that the leasing fee of retail premises will increase in the time to come, even though the supply is abundant.-VnMedia

Tags: vietnam retail industry, Vietnam retail market