Demand grows for retail space

Demand for retail space increased in the first quarter of this year and was expected to grow in the coming time, according to foreign property service company CB Richard Ellis Viet Nam Company Ltd (CBRE).

Despite no new stock being made available in the first quarter, the retail market remained strong, with non-central business district shopping centres mainly occupied and central business district (CBD) space remaining fully occupied, the company said.

“Demand for modern retail space continues to rise, as many established foreign retailers have had to expand their locations into renovated shop houses along high-traffic, main roads across Ha Noi,” said Richard Leech, CBRE Executive Director.

“The average vacancy rate dropped by 3.4 per cent quarter-on-quarter inside the CBD,” he said.

Retail sales increased considerably in the first quarter, by 26.5 per cent, showing the strength of consumer demand. Despite little change in the overall rental levels, ground floor rents in prime locations have reached record levels, the company said.

Within the central business districts, due to limited supply, rentals may continue to see average rent prices increase by 1.37 per cent in the first quarter of this year to $55 per sq.m per month compared with the last quarter of 2009, however a different story exists outside of the CBD where supply continues to grow, it said.

Outside the CBD, rental rates declined 2.25 per cent from last quarter of 2009 to roughly $35 per sq.m per month in the first quarter of this year.

In line with this drop in rents, the vacancy rate in the non-CBD regions fell to 25 per cent in the first quarter of 2010 (from 31 per cent in the last quarter of 2009) as more tenants moved in to the Garden and Syrena buildings. Parkson and Big C remained at full occupancy levels, showing their strength in the market thanks to key anchor tenants and strong branding and promotions.

Leech said the next few quarters would see the emergence of many non-CBD retail projects such as Bac Ha Plaza, Grand Plaza, Xuan Thuy Tower and Sky City Towers with the Pico Mall (Mipec Building) coming at the end of this year.

Only the Grand Plaza, Bac Ha Plaza and Pico Mall are true shopping centres, he said, with the rest providing just basic retail platforms.

“Overall, Ha Noi’s market continues to attract both foreign and domestic retailers hoping to expand their brands in Viet Nam,” he said.

To meet increasing demand for retail space, new developments in non-CBD districts will continue to exceed supply in addition to that in the CBD, he said.

Over the next two years a series of major projects including the Indochina Plaza Ha Noi, Savico Plaza, Ciputra Ha Noi Mall, Keangnam Ha Noi Landmark Tower and Mo Market Shopping Centre will be completed.

Viet Nam News

Tags: vietnam real estate market, Vietnam retail market, Vietnam retail space