CBRE report notes many retailers are planning to enter Vietnam in all segments.
After three quiet years Ho Chi Minh City’s retail market has seen signs of recovery, with more events taking place during the second quarter of this year, according to the latest quarterly report from CBRE.
The market saw new large-scale retail facilities such as SC VivoCity, developed by a joint venture between Mapletree Vietnam Management Consultancy from Singapore and the Saigon Co.op Investment Development JSC, and the retail podium of Times Square, with luxury furniture brands such as Cassina, Giorgetti, and B&B Italia.
According to CBRE there are increasing numbers of retailers planning to enter Vietnam across all segments, including Carolina Herrera, Stuart Weitzman, Dorothy Perkins, and MaxMara, among others.
Vingroup further expanded its footprint in the retail sector with plans to debut its four large retail formats under its subsidiary, VinDS Trading & Services: Beautyzone, Sportsworld, Shoecenter, and Fashion Megastore.
To anticipate the market’s next cycle, retail developers have accelerated project construction schedules, including The One and Saigon Centre Phase 2, according Ms. Duong Thuy Dung, Director of Research & Consulting at CBRE Vietnam.
“Along with the development of Metro Line No. 1, the retail market, especially along Nguyen Hue Street, is expected to change significantly over the next few years,” she said.
The Ho Chi Minh City Management Authority for Urban Railways recently proposed the City’s People’s Committee license a $326 million underground shopping center at Ben Thanh Station. “With 45,000 sq m gross floor area (GFA), this will be a breakthrough shopping center and the first retail format of its kind in Vietnam,” Ms. Dung said.
“Together with Saigon Centre, Tax Plaza, The One, and Union Square, when all are completed shoppers in Ho Chi Minh City can enjoy a shopping street like Sukhumvit Road in Bangkok or Orchard Road in Singapore,” she added.
Although average rents in the CBD continued to be stable in the first six months of 2015, according to CBRE’s leasing enquiries there were some ad-hoc transactions of up to $250 per sq m.
Average Asking Rent ($/ sq m/ month)
Source: CBRE Vietnam, Q2 2015
The market was busier compared with the last three quarters, when the highest transacted price was only $170 per sq m. The well-received opening of SC VivoCity has led to improving average non-CBD rents and the highest net absorption in the market for the last two years.
Chart 2: Vacancy Rate (%)
Source: CBRE Vietnam, Q2 2015
Decentralization has been stronger, in order to access the mass market. In the second half of the year there are expected to be an additional 170,000 sq m GFA coming online, of which Vincom Megamall (120,000 sq m GFA in District 2) and Vincom Quang Trung (27,000 sq m GFA in Go Vap district) are the two most significant.
- Ho Chi Minh City
- CBRE report
- quarter 2