Foreign retail brands flock to HCMC

Ho Chi Minh City's retail market welcomed a series of new foreign brands in various fields in the fourth quarter of 2022.

Among the newcomers were Le Silla (footwear) from Italy, Jo Manlone London (perfume), In-N-Out Burger (fast food) from the U.S., and Patek Philippe Geneve (watches) from Switzerland.

Japanese beverage brand %Arabica, fashion brands ADLV and Nerdy from South Korea, U.S. jewelry brand Tiffany & Co., and French perfume brand Memo Paris also opened their first Vietnam stores in HCMC.

Other brands included The Thai Cuisine, FÉE (cosmetics) from Japan, and Beauty in The Pot (food) from Singapore.

In addition, many brands have expanded their scale in Vietnam’s southern economic hub, including MUJI (household appliances), Onitsuka Tiger (footwear) and Matsumoto Kiyoshi (cosmetics) from Japan; Crystal Jade (restaurant) from Singapore; Emart (retail) from South Korea; L'Usine (beverages) from Malaysia; and Dockers (fashion) from the U.S.

However, the retail market also saw French fashion brand The Kooples close its stores in HCMC, withdrawing from Vietnam.

Scarce supply of retail space, rising rents

According to property services firm CBRE Vietnam, the market is showing a good recovery post pandemic. Data from the HCMC Department of Industry and Trade showed that the city’s total retail sales of consumer goods and services in 2022 reached over VND1 trillion ($46 billion), up 30.5% year-on-year. Of which, retail sales hit VND625.52 trillion, up 20.5%.

Regarding the retail space market, in the fourth quarter of 2022, Thiso Mall opened a branch in Thu Duc city's Thu Thiem New Urban Area and Sala Urban Area. The shopping mall consists of one basement and four floors, with 35,000 square meters for lease, raising the total retail space supply in HCMC to 1,096,628 square meters.

Thanh Pham, associate director of research and consulting services at CBRE Vietnam, said that the average vacancy rate of shopping centers in downtown HCMC was 6.5%, and all shopping malls in prime locations were almost full.

Retailers continue to seek high-quality premises in prime locations in the city center and along major thoroughfares. However, with economic difficulties and escalating costs, retailers will tend to be more cautious in their upcoming expansion plans, she noted.

In terms of new supply, in the next two years, HCMC is expected to have around 132,000 square meters, all in outlying areas. The supply of retail space in the city center has continued to shrink due to slow progress of future projects, such as Centennial, IFC One and One Central. Due to legal issues, the launch dates of these projects are forecast to be delayed until the end of 2024-2025 or beyond.

The Thu Thiem area has been shaped as a high-income urban area with great shopping, dining and entertainment services in the eastern part of HCMC. Thanks to improved connections with District 1 via Thu Thiem 2 Bridge, this area will become a new hub retail area for lease expected to approximate 135,000 square meters.

The CBRE expert said that the central HCMC will continue to lack supply, so the average rent of commercial centers is projected to go up 3-3.5% per year in the city center and 1-1.5% per year in outlying areas. “Due to limited new supply, retailers will seek more space in outlying areas for their pop-up stores,” she said.