Hanoi’s retail space market to grow

Hanoi’s retail space market is forecasted to grow in coming years. Meanwhile, the office space market will be under pressure on price due to strongly increasing supply, according to the latest report on Hanoi’s real estate market overview in 2010 and investment trends in 2011 announced by Colliers International.

During the first 11 months this year, the capital city’s total retails sales and services saw a growth of 25 percent year-on-year.

But, the new supplies focus mainly on new urban zones while tenants are more interested in Central Bussiness District – CBD where almost all the floor space is filled.

The total number of high-ranking retail space given recently is relatively little including 16,000 square metres of Grand Plaza and Hang Da (7,000 sqm). In two coming years, the total number will increase with the supply from many big projects such as Ciputra Mall, Royal City, Pico Mall, and Usilk City.

A clear trend namely the combination between traditional markets and modern trade centre will be built more in the future.

There will be many big brands in the world to Vietnam via the franchise as well as expanding business activities.

The rental at downtown areas is from $40-150 depending on location, dramatically rising against 2009. Meanwhile, the rental in outskirt areas remains stable.

In 2003, the supply is forecasted to reach 1.2 million square metres of floor area when large projects go into operations like Savico Plaza, Mo Market Plaza, Lotte, Pico Mall, Keangnam Landmark, Usilk City, Royal City and Ciputra mall.

This new supply is mainly outside the central area, of which Pico Mall and Royal City are the most notable because of its location close to the inner city and this is also the destination of domestic and foreign investors.

As forecasted, in next five years, the retail space will grow strongly, however, the safety of the market is still guaranteed because there is no supply excess whereas market demand is huge.

The high-class retail space rents are generally around $100-150 per square metre depending on locations and the retail space rents for grade B will be about $50-80 per sqm depending on locations.

As for office space area:

In 2010, the average rent for Grade A office will continue to fall by 4.5 percent over the same period last year. The Grade B office vacancy ratio will increase by 2.5 percent year-on-year to stand at 15.5 percent.

Some new projects will provide more office area to the market such as Chamvit Group (45,000 sqm of floor), Capital Tower (23,000 sqm of floor).

In the period 2011 – 2012, the supply of new office in Hanoi is expected to double the current supply, and this will cause a supply excess in the next two years, and it will create pressures on rents.

As for housing market:

Colliers’s forecast also showed that there will be about 30,000 apartments under construction in Ha Dong and Thanh Xuan district within next 3-5 years.

By the end of 2009, the housing market went smoothly but at the beginning of 2010, it saw a slowdown.

The land price in Hanoi increased 15-30 percent in Q3 2010.

In 2010, the market received about 3,500 apartments (already in use) including medium and high classes, bringing the total current figure to over 13,000 units. – CafeF

Tags: Hanoi retail space market