Savills predicting good times to come for retail market throughout the year.
Ho Chi Minh City’s retail market is expected to reach a key turning point this year, with strong growth prospects in mid-level commercial centers, according to Mr. Neil MacGregor, Managing Director of Savills Vietnam.
He pointed out that consumer spending is increasing at a rapid rate when compared with other regional markets, resulting in a more sustainable model going forward.
International retailers are now excited to enter the local market following the announcement of various free trade agreements offering the prospect of reduced tariffs and simplified procedures.
Vietnam’s young population and rapidly growing middle class are two major factors driving retail market growth. These customers are now more aware of their spending power and are seeking modern and convenient retail environments.
“We are now seeing a growing number of such shopping centers, particularly in new residential areas like District 2, District 7, and Go Vap district, to meet this blooming demand,” he said.
In 2015 total retail sales of consumer goods and services in Vietnam increased 9.5 per cent compared to 2014, which was one of the highest rates globally. Many active merger and acquisitions (M&As) took place in the retail segment in 2015. Demand for business premises will therefore be quite high.
Mr. MacGregor also indicated that although local and international retailers are both seeking better quality shopping centers in prime locations the number of options remains limited.
Improving economic conditions have led to a rise in the fortunes of Vietnam’s property market, with urbanization, tourism, and retail development leading the way. Residential developers are now more focused on design, landscaping, and facilities as well as management services, as higher quality projects provide more confidence to buyers.
Vietnam is an attractive destination in the region. While other countries such as Indonesia and the Philippines are at the top of the market cycle, Vietnam is only around 12 months into a market recovery phase. Foreign developers and investors are showing greater interest in the country’s real estate market and Savills sees this trend continuing throughout this year and beyond.
- commercial centers