It is predicted that from now till the opening of the retailers market in 2009, retail business space will become even scarcer.

Attractive market

According to a report from CB Richard Ellis (Vietnam) Co. Ltd (CBRE), a real estate service provider in Vietnam, the country ranks second in Asia in economic growth after China and fourth in the world in retail investment attractiveness just behind India, Russia and China. The market scale in Vietnam is increasingly expanding with 9,266 traditional markets, 180,000 small shops and 250 supermarkets while people are gradually shifting from shopping in traditional markets to trading centres and supermarkets. As a member of the World Trade Organisation (WTO), Vietnam is now considered to be one of the most promising retailers markets for the major global retail groups of retailers.

CBRE said that the rapid development of the national economy has helped to rapidly increase people’s incomes and consumer power.

Retail spending in Vietnam rose from US$15 billion in 2000 to US$36 billion in 2006 and the figure is predicted to surpass the US$50 billion mark by 2010. However, Richard Leech, Executive Manager in charge of retail business service said the fast development of the Vietnamese retailers market would face great challenges as there is a serious shortage of retail business space, particularly in Hanoi and HCM City.

Business space fever

Deputy Head of the External Relations and Marketing Department of the Hanoi Trade Corporation, otherwise known as Hapro Le Thien Nga said retailers are running short of space to do business and even Hapro has had to upgrade its old premises to satisfy increasing consumer demands.

In addition, Hapro had the difficulty seeking and hiring shop space since it depends on market prices and prime location, said Mrs Nga.

HCM City currently has 13 trade centres, providing 140,000 m2 of retail business space with a rental rate of 99 percent. Meanwhile, Hanoi offers roughly 100,000 m2 at six trade centres, matching HCM City’s rental rate.

The average rents in the both biggest cities have increased sharply since 2002 at US$40/m2/ per month at the end of the third quarter of this year.

To cope with the situation, projects have been developed to provide more retail business space. However, it is proving difficult to meet the needs for retail business space as major projects such as Ciputra Mall, the Landmark in Hanoi and Satra, Saigon Pearl and Sports City in HCM City will only be completed in the next three or four years sometime after 2010.

The strong development of the retailers sector along with the boom in trade centres and supermarket is considered a boon for the national economy. Now, it is high time Vietnam opened its retail market but high rents for business space are challenging domestic retailers.