Cushman & Wakefield report on best retail streets in the world sees Vietnam overtake Thailand.
Vietnam has surpassed Thailand to rank 32nd on a list of the 65 best main streets in the world, in Cushman & Wakefield’s 27th “Main Streets Across The World” report.
The report tracks over 500 of the top retail streets around the globe, ranking the most expensive in each country by their prime rental value and thus enabling analysis of the headline trends in retail real estate performance.
Ho Chi Minh City of Vietnam was ranked number 32 on the list of 65 main streets in the world, with rental costs of $1,447 per square foot per year in what is described as "Prime High Street", which includes Dong Khoi, Le Loi, Nguyen Hue, and Le Thanh Ton in District 1. Hong Kong leads in Asia, with $23,178, while Thailand’s best street has a rental cost of $1,212 per square foot per year.
The report showed that in Vietnam and Malaysia the growth of the retail market and the entrance of international brands is underpinned by rising average incomes as well as more stable economic conditions, which are providing a boost to retail sales. This is further bolstered by a growing e-commerce sector that is capturing a larger share of overall retail activity, although there remains an appetite for consumers to visit physical stores.
In Vietnam, the liberalization of the retail market in 2009 saw the entrance of a number of foreign brands and a wave of expansion efforts by domestic firms in an attempt to maintain a presence in the market. The most dynamic segments at the moment are food and beverages and consumer products.
According to Ms. Vo Thi Phuong Mai from the Retail Department at Cushman & Wakefield, within five to seven years approximately 1.5 million square meters of retail floor space will enter Ho Chi Minh City’s market, bringing the total surface area to 2.5 million square meters.
“The retail market will be vibrant, especially in the affordable and middle segment,” Ms. Mai said. “Powerful foreign retailers consider Vietnam to have potential in the region, with retail and consumer goods being the mainstream of M&A activities in the 2014-2015 period, accounting for 36 per cent of the total value of M&A in the country.”
She also pointed out that although its ranked number 32, Vietnam preparing to join a number of free trade agreements it will be a challenge for domestic retailers because rental costs will increase. Foreign retailers with strong financial resources will be able to afford to rent space in the most prime locations in the market.