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Property

Hanoi retail space more affordable

Released at: 11:45, 07/01/2016

Hanoi retail space more affordable

Rentals at shopping centers likely to come down further in 2016.

by Hoang Thu

In addition to aggressive expansion plans by local and foreign retailers in Vietnam in 2015, one of the most noticeable trends was “affordability”, according to CBRE’s Hanoi Q4 2015 Review, released on January 6.

“The emergence of new ‘bazaars’, ‘outlets’, and low price supermarkets are all reinforcing the trend where consumers demand better value for money,” said Ms. Nguyen Hoai An, Associate Director at CBRE Vietnam.

Two new retail centers - Vincom Nguyen Chi Thanh and Aeon Mall Long Bien - were officially opened in the capital during the fourth quarter of 2015, adding a total of 152,500 sq m of gross floor area (GFA) (with 106,500 sq m net lettable area - NLA) to the market.

Both projects opened with high occupancy rates of more than 95 per cent. Aeon Mall Long Bien features a variety of entertainment facilities for different ages, including a cinema, an entertainment area for teenagers, a large-scale indoor playground for kids, and a number of dining options.

Vincom Nguyen Chi Thanh incorporates specialized fashion and cosmetic areas, a supermarket, F&B options, furniture stores, and a cinema. The two projects are “all- in-one” destinations for customers to combine shopping, entertainment, and dining.

Average vacancies at Hanoi’s retail centers fell from 15.2 per cent in the third quarter of 2015 to 10.7 per cent in the fourth quarter, thanks to high occupancy rates at recently opened projects and existing properties remaining stable.

Source: CBRE Vietnam, Q4 2015

In terms of rents, the CBD saw no significant change while non-CBD areas witnessed a slight increase of 3.7 per cent quarter-on-quarter, as rentals at Vincom Nguyen Chi Thanh were higher than the market average for such locations.

Source: CBRE Vietnam, Q4 2015

Outlook for 2016

Food & Beverage outlets recorded the strongest growth during 2015 and will continue to dominate the market in 2016. CBRE Vietnam reported that nearly 50 per cent of its enquiries for retail space belonged to the sector and that the enquiries were more for fast casual dining than high-end dining.

In 2016 new shopping centers will become affordable, targeting the middle class, so rentals may not be as high as those in the past.

Vingroup will continue to lead the market share of retail space with several upcoming projects, though all are outside of the CBD.

In the near future other projects developed by foreign players, including Gamuda and Ciputra, may offer rentals at market average levels or lower, also due to their non-prime locations.

Local retail developers are more and more aware of the importance of anchor tenants and have therefore begun looking for foreign anchor retailers to fill up retail space.

However, large leasing areas combined with strong negotiation power tends to help anchor tenants secure incentive rentals that are much lower than those offered to other tenants, according to the report.

“Turnover sharing schemes, in which landlords can share part of the operational risk with tenants, have been attractive for many retailers, particularly those who want to open additional stores in a new shopping center,” Ms. An added.

  • TAGS
  • Retail market
  • Hanoi
  • affordable
  • Food and Beverage outlets
  • CBRE's Hanoi Q4 2015 Review

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