The retail property segment in the two major cities of Ha Noi and HCM City saw recovery in occupancy but not in rent, Savills Viet Nam said.
In its quarterly report on the two cities, the consulting firm said in Ha Noi, the occupancy was 84 per cent, stable quarter-on-quarter (q-o-q) and up 7.2 percentage points year-on-year (y-o-y). Meanwhile, the average rent was VND841,000 (US$38.7) per sq.m per month, decreasing 0.9 per cent q-o-q and 10 per cent y-o-y.
Department store occupancy increased by one percentage point q-o-q, while shopping centre occupancy remained stable q-o-q. In the first half of 2015, Ha Noi’s retail sales were approximately VND210 trillion ($9.63 billion), increasing 10.3 per cent y-o-y.
Without inflation, the real growth rate was 9.6 per cent y-o-y. With free-trade agreement participation and the expected signing of the Trans-Pacific Partnership in 2015, the competition between domestic and foreign retailers would continue, Savills Viet Nam said.
In the second quarter, Ha Noi’s retail supply was approximately 950,000sq.m, increasing by 3 per cent y-o-y.
In the second half of this year, approximately 353,000sq.m from 16 projects will enter the market. Two notable projects are Vincom Nguyen Chi Thanh and Aeon Mall Long Bien, which will provide more than 165,000sq.m. Meanwhile, the retail property segment in HCM City showed positive signs in the year’s second quarter, with average occupancy rising by seven percentage points to reach 92 per cent, Savills Viet Nam said.
The average rent decreased by one per cent q-o-q to touch VND1.3 million ($59) per square metre per month. Shopping malls and department stores’ occupancy rates have been stable since the previous quarter at 92 per cent and 97 per cent, respectively.
Department stores
Retail podium occupancy was at 82 per cent, down two percentage points q-o-q, but this decrease had no impact on the overall occupancy.
The average rent for department stores increased by one per cent to reach more than VND1.3 million, while it fell by two per cent to touch VND1.33 million in shopping malls.
The rent for department stores increased by three per cent year-on-year, but decreased by two per cent in shopping centres and retail podiums.
In the first half of the year, HCM City retail sales increased by 11.8 per cent y-o-y to touch VND256 trillion ($11.75 billion), significantly higher than the 7.7 per cent rate a year earlier and higher than the national figure of 10.2 per cent.
The growing population and middle class in HCM City are driving the growth in retail demand.
In Q2, two new shopping malls and one new supermarket entered the market, increasing the total retail stock by five per cent q-o-q to reach 940,000sq.m.
The retail market is expected to expand faster in secondary and suburban areas than in the central business district due to upgrades in infrastructure and new residential projects.
According to the second report in the series, Asia Pacific Consumer Survey – How We Like to Shop Online, released last week by CBRE, online shopping has overtaken bricks-and-mortar retail as the most popular method of purchase in certain Asian markets.
Consumers in the 18-24 age group — known as ‘Generation Z’ — are also set to play an influential role in the regional retail market in the coming years. As a result of factors such as these, landlords and retailers would need to be proactive in order to remain competitive, the survey reported.
“For emerging markets, given the lack of quality retail space — particularly in lower-tier cities — advances in technology and logistics networks mean that online retail is often the most efficient way for retailers to reach their customers,” Jonathan Hsu, head of Occupier Markets Research, CBRE Asia Pacific, said.
The ability to compare products without having to physically visit individual stores is another key factor for the region’s consumers when shopping online. This trend is more prominent in emerging markets such as Viet Nam, China and India, where quality shopping centres or shops are often located far from each other.