Retail space rental in HCMC falls

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Retail space rental in HCMC falls

Saigon Times - 1/15/2016 8:39:43 AM

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Despite a rising occupancy rate, retail space rental in HCMC dropped in the final quarter of 2015 due to mounting competition among investors in the sector and more supply, according to property service providers.

A report of Savills Vietnam showed the retail space occupancy rate averaged out at 94% in the city in quarter four of last year, up two percentage points over the previous quarter and a year earlier. Occupancy at shopping centers rose by three percentage points quarter-on-quarter, followed by department stores at one percentage point quarter-on-quarter, while that at retail podiums was unchanged.

However, the average gross rent fell by 6% against the same period last year and 10% over the year-earlier period. The decrease was caused by competitive rents at new shopping centers in the non-central business districts but those of department stores and retail podiums were stable.

The fourth quarter saw a new retail space supply of 84,400 square meters from five projects and total retail stock exceeding one million square meters, up 7% quarter-on-quarter and 16% year-on-year.

The firm said new shopping centers focus on food and beverage (F&B) services, accounting for more than 30% of total lettable floor area.

Commercial center projects up and running in quarter four included Pearl Plaza in Binh Thanh District, Vincom Thao Dien in District 2, and Emart in Go Vap District. Last month, South Korea’s Shinsegae Corporation opened its first hypermarket in Vietnam on more than three hectares in the outlying district of Go Vap.

CBRE Vietnam said F&B and fashion sectors have played a major role in attracting consumers to commercial centers, especially those in the downtown area.

Occupancy at commercial centers in the city was higher than 90% in the final quarter of last year but the rental was in decline, according to reports of property service providers.

Troy Griffiths, deputy managing director of Savills Vietnam, said rental at commercial centers dropped by 10% in quarter four compared to the same period in the previous year.

Griffiths said the decrease was attributable to the opening of more commercial centers with lower rents in the city’s outlying districts.

Jones Lang LaSalle Vietnam said competition among investors of retail space projects has intensified.

One square meter of retail space at projects in the downtown area costs US$70 a month while commercial centers in other parts of the city offer monthly rent of only US$39.

More retail stores will be in place in HCMC in the coming years. The city is expected to see 15 retail stores of French retailer AuchamSuper this year while Emart Vietnam is seeking to open the second Emart in the city in the outlying district of Tan Phu as part of a plan to have 10 stores in Vietnam by 2020.

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