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Hanoi retail supply unchanged in Q1

Released at: 08:00, 03/06/2017

Hanoi retail supply unchanged in Q1

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Average net asking rents across all segments sees slight fall of 4.7% q-o-q.

by Hong Nhung

The total retail stock in Hanoi remained stable in the first quarter of the year, with approximately 848,454 sq m net leasable area (NLA) from 51 projects, according to the latest report, “Hanoi Market Insights - Retail Sector”, released recently by Colliers International Vietnam.

Shopping malls dominate supply, accounting for 78 per cent of total stock and providing 664,290 sq m NLA in 18 projects. Although retail podiums in mixed-use developments have become more popular, their total net leasing area is small, at 106,117 sq m in 29 projects.

Department stores have the most modest leasing space, of 78,047 sq m in only four projects. While the CBD is a prime location for both local and international luxury fashion outlets, suburban districts are led by supermarkets, fast-fashion brands, food and beverage (F&B), and entertainment services.

Average net asking rents across all segments fell by 4.7 per cent quarter-on-quarter, to $33 per sq m per month, as landlords offered lower rates to fill vacant space. While department stores retained rates of $34.9 per sq m per month, retail podiums and shopping malls reduced their rents to $24 and $34.2, respectively.

Average occupancy rate improved 3ppts, reaching 83 per cent. Among the three segments, the occupancy rate at shopping malls improved significantly, by 3ppts, to 80 per cent, while those of retail podiums and department stores nominally increased by 1ppt, to 91 per cent and 94 per cent, respectively.

Vietnam’s capital will see more new entrants penetrating into the local market in the next few years. Some are well-known retailers in Ho Chi Minh City wishing to expand their market share in Hanoi while others are international players who want to open flagship stores in the country’s key cities.

This trend represents potential growth for retail assets, especially those that are proactive in restructuring and repositioning their layouts to meet the highly-sophisticated leasing requirements of foreign brands. Mature shopping malls should move to catch up with changes in space demand from new entrants, to remain profitable in the midst of severe competition.

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