Retail rents seen most expensive in HCMC

Limited supply plus strong demand for retail spaces have driven up rents in HCMC whose retail market has seen rents in prime locations the most expensive compared to other cities in the country, said CB Richard Ellis Vietnam (CBRE).Richard Leech, executive director of CBRE, said in a market presentation held at the five-star hotel InterContinental Asiana Saigon in downtown HCMC on Thursday that rentals in the central business districts (CBD) remains steady thanks to strong demand.

The HCMC retail market has recorded an average occupancy rate of around 95% and average prime rents in the CBD are around US$99 per square meter per month. For some exceptions, the market has witnessed the highest rents of up to US$250 per square meter a month in prime locations in Grade A buildings in the city.

Meanwhile, rents in retail properties out of the CBD average out at around US$46.5 per square meter a month.

Leech reviewed that the retail market in the country saw another year of consecutive growth in retail sales, around 18%, highlighting the continued strength of local demand for goods and services.

The market witnessed numerous mid-end and high-end brands entering Vietnam in the last year, such as Naf Naf, Morgan de Toi, Mexx, Hard Rock Café and Debenhans among others. However, some large scale international brand operators such as Tesco or Wal-Mart remain on the sidelines.

According to the research company, there are 22 shopping centers and department stores in HCMC with 256,000 square meters of gross floor space, and the retail market is expected to see some 130,000 square meters of retail spaces supplied this year, with half in the CBD area.

Vincom Center alone, which is located on Le Thanh Ton Street and is expected to be launched on April 30 this year, will provide the market some 53,700 square meters. In another project, Bitexco Financial Tower is set to open by October this year with some 20,000 square meters for retail spaces.

The research company revealed that some 80% of the total space in the Vincom Center project has been leased with rents at some prime locations at US$200 per square meter per month.

Meanwhile in the capital city of Hanoi, the retail market has seen average rents in the CBD at US$80 per square meter per month, and the highest rents have hit US$146 per square meter per month. Average rents in retail spaces in non-CBD are around US$35 per square meter per month.

Leech explained that growing young population and accelerating urbanization are the reason why retailers continue to consider Vietnam an attractive retail destination.

Tags: vietnam real estate market