20:24 (GMT +7) - Thursday 21/11/2019

Property

JLL: Hanoi retail occupancy down, HCMC up

Released at: 08:16, 15/10/2019

JLL: Hanoi retail occupancy down, HCMC up

Photo: JLL Vietnam

Negative absorption seen in capital, according to latest JLL report.

by Ngoc Lan

Hanoi’s retail market recorded negative absorption during the third quarter of 2019, according to a quarterly report from JLL released on October 11.

The report noted that the occupancy rate in the quarter fell to 90.3 per cent as a number of shopping centers began renovations or changed strategies for their tenant mix, in addition to a few anchor tenants leaving, such as Auchan at the Mipec Riverside Shopping Center.

Retail space that had focused on building brand images and had adopted good leasing strategies still posted strong performance with high occupancy rates, while other malls were struggling to retain tenants. AEON Mall, Vincom Metropolis, and Vincom Tran Duy Hung, for example, all performed well and had less than 5 per cent vacant space for lease.

Total supply in Hanoi’s retail space remained stable in the third quarter with no new openings. Thanh Xuan and Hai Ba Trung districts held their first and second positions in terms of total retail space, with two VincomMega Malls in Royal City and Times City, respectively.

Hoan Kiem district, despite being in the heart of Hanoi, was far behind in terms of retail supply, and this trend is expected to continue in the future as new malls tend to require large development sites.

Hanoi’s retail market is likely to expand as there are new completions expected to come on stream in the fourth quarter of 2019 and next year. New malls are expected to bring in new concepts to establish themselves in consumer minds, and existing malls need to keep up with market trends to maintain stable performance.

Meanwhile, positive demand continued to be seen in Ho Chi Minh City’s retail market, with the overall occupancy rate being some 89 per cent. Performance at several centers that concluded tenant reshuffling and applied more flexible lease terms steadily improved.

The results recorded at these centers encourages others to begin their repositioning strategies and tenant reshuffling activities. International affordable / mid-end brands and local chain stores in the food and beverages (F&B), beauty and healthcare, fast fashion, and entertainment sectors posted solid performance and are preferred by most landlords as major drivers of footfall.

In an effort to induce customer spending, many tenants have started to cooperate with popular fintech apps such as Momo, Grab Pay by Moca, Vnpay, and others, to provide attractive promotions via e-wallet payments.

In the fourth quarter of this year, Crescent Mall Phase 2 will be put into operation, adding about 25,000 sq m gross floor area (GFA) to total stock. Other projects in the pipeline have been postponed because of slower than expected construction progress.

The F&B, fast fashion, and lifestyle sectors will continue to be key demand drivers in the market. International brands will still eye Vietnam’s market, thanks to its young demographic and the rise of its middle-income population.

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