Suburbs the new frontier retailers

Ho Chi Minh City neighbourhoods are becoming the new retail frontier as developers look to tap shopping-savvy suburban residents.

According to property consulting firm Savills Vietnam’s report for 2010’s second quarter, the central business districts are still the most desirable areas for retail developers and retailers. However, suburban areas are also becoming increasingly attractive.

The city recorded four new retail properties in 2010’s second quarter, including Vincom Centre Shopping Mall in District 1, Lotte Mart Phu Tho, Maximark Ba Thang Hai and Co-opmart Phu Tho in the Districts 10 and 11, bringing approximately 112,700 square metres of retail space to the market.

Mark Farquhar, Savills’ national retail director, said: “From retail development perspectives, Districts 1, 2 and 3 will be always popular as they are established destinations already and so central with many people coming in during the week for businesses-doing and tourism experiences. But similarly, there will be opportunities for developers to create what we call retail hubs in other districts.

“Therefore, neighbourhood retail centres are going to do well and locations like Districts 2, 5, 7, 10 and 11 will provide the mass market consumers with affordable shopping experiences and easier accesses,” Farquhar stressed.

“Regarding District 7, the area will surely become a luxury retail hub. The launching of the Paragon shopping mall in mid 2009 was too early for the market and the mall’s absence of customers so far is more for timing issues than anything else,” he said.

He said there would be many luxury retailers in the area and more luxury retail centres would come online such as the Crescent in Phu My Hung to be launched early next year.

At present, there are six department stores, 19 shopping centres, six retail podiums, 61 supermarkets and three wholesale markets in the city with a total area of approximately 602,000sqm, according to Savills Vietnam.

Approximately 100,000sqm of new supply is expected to enter the market in 2010. The year 2012 and onward will be years to see more than 429,000sqm of new supply are expected to enter the market with further expansion into suburban districts. Notably District 7 is expected to record more than 37 per cent of the new supply in the next few years.

“We started to see next generation of shopping malls coming online in outlying areas following many reputable investors of Maple Tree, SSG, GuocoLand and E&C being either planning to do retail properties or launching shopping centres in District 2, District 7 and Binh Duong province,” added Farquhar. – VIR

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