Retail premises in HCM City’s CBD in high demand
Even though retail premises in the central business district (CBD) of Ho Chi Minh City are becoming more scarce and the rents are increasing, premises far from the center are still unpopular with new retailers.
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H&M on September 9 opened its first store, located on the ground floor of Vincom B Shopping Center in the central HCM City District 1.
A shop distributing the products of a luxury fashion brand from the UK was located there in the past.
Jones Lang LaSalle Vietnam’s CEO Stephen Wyatt said the strategy by fashion brands and retail chains to expand their networks will heat up the HCMC retail premises market.
In June 2017, 7-Eleven entered Vietnam. Nikkei reported that the Japanese retail brand plans to develop 100 shops in Vietnam after three years and 1,000 shops after 10 years of operation in Vietnam.
In the immediate time, the first shops will be opened in CBDs.
Recently, GS Retail set up a joint venture with Vietnam’s Son Kim Group which will run the GS25 convenience store chain in Vietnam.
A representative of Son Kim said the first GS25 shop would open in HCM City in December.
Trang Bui from JLL Vietnam said the occupancy rate in the Vietnamese retail premises market is relatively high. The rate at Saigon Trade Center and Vincom in district 1 is now 100%.
The gross rent at CBD shopping centers is US$73.4 per square meter per month, an increase of 1.8 percentage points quarterly.
The premises are mostly leased to foreign brands. In non-CBD areas, the gross rent is US$37.4, up by 0.2 percent point.
Nguyen Hong Trang, CEO of Son Kim Fashion, a subsidiary of Son Kim, noted that in the past, the demand was especially high for the retail premises on Dong Khoi street, but now, the premises on Nguyen Hue, Nguyen Trai and Hai Ba Trung streets are also in very high demand.
She noted that the premises rent has never soared so dramatically. “The rent has increased by 30%, or even 100% in some areas,” she said.
The expense on retail premises now account for 30-35% of enterprises’ total retail turnover, while it was 25% five years ago.
The brand director of a HCM City-based company said that shops in CBD just aim to help the company increase its presence and brand identity, and do not bring profit as the purchasing power cannot catch up with the increase in retail premises rent.
Meanwhile, investors of premises in other areas have to struggle to look for clients. In district 7, more than 22,000 square meters of retail premises at an apartment bloc are still not fully occupied, even after five years.
