Retail premises rent skyrocket as fashion brands flock to HCM City

The refurbishment of Vincom Center Dong Khoi raised the rent by 10-15%.

According to CBRE, there will be no new high-end supply sources in the third quarter of the year. 

There are 845,765 square meters of A-class retail premises available at 52 projects, the highest figure figure ever recorded in Vietnam. However, the figure is 1/10 of Bangkok and 1/15 of Singapore.

The retail market is getting hot as new brands are setting up shops, while existing brands expand their networks. 

H&M chose Vincom Center Dong Khoi for its first shop in Vietnam, covering an area of 3,000 square meters. The center also houses Pull & Bear, Stradivarius and Massimo Dutti.

In non-central areas, Thuan Kieu Plaza officially opened in the fourth quarter of the year. The ground is reserved for food and beverage brands such as KOI, Gong Cha, Maku, Buffalo Wild Wings and McDonald's. 

The street-front retail premises rent on Ngo Duc Ke street, called the ‘milk tea street’, soared to VND762.4 million per square meters as investors rushed to open milk tea shops.

It is expected that HCM City would have 500,000 square meters more of A-class retail premises by 2019. 

According to CBRE’s Duong Thuy Dung, the appearance of fast fashion and food & beverage brands have increased the retail premises rent in HCM City. 

More fashion brands are looking for premises with an area of 3,000 square meters or more and they will accept high rent. The most wanted premises are in district 1, located in front of streets or on the ground floors of high-end shopping malls.

However, the supply that can satisfy requirements in the central business district is very low.  A source said retailers now have to wait 2-3 years to be able to join the HCMC market.

According to the Vietnam Retailers Association, modern retailing in Vietnam has great potential as the industry now attracts 20-25% of Vietnamese consumers, lower than Thailand (46%), Malaysia (53%) and China (64%).

With value of US$110 billion in 2016 and expected value of US$180 billion by 2020, Vietnam is considered one of the 30 most attractive retail markets in the world.

According to the General Statistics Office (GSO), in the first five months of 2017, the wholesale and retail sector was the third most attractive business field for foreign direct investors with total registered investment capital of US$798 million, or 6.5% of total FDI (foreign direct investment) capital.