Luxury boom drives competition for prime retail space in HCMC
Demand for luxury retail in Ho Chi Minh City has seen exponential growth, driven by positive growth momentum and the rise in the city's wealthy customer base, said Savills Vietnam analysts.
They noted that luxury retailers are keen on the market, actively seeking prime retail spaces in District 1, the central district.
Growing luxury demand
According to Statista, a German online platform that specializes in data gathering and visualization, the Vietnamese luxury goods market had revenue of $957.22 million in 2023. Revenue was primarily generated by products like perfumes and cosmetics, fashion, leather goods, and luxury watches and jewelry. The industry is forecast to generate revenue of $992.20 million in 2024, up 3.65% year-on-year.
The annual growth of luxury goods in Vietnam was forecast at 3.10% between 2024 and 2028, fueled by the country’s rising wealth, expanding middle and upper classes, and rising disposable incomes. This landscape has powered the demand for luxury products.
According to Savills's Q1/2024 real estate market report, several international luxury brands entered the Vietnamese market in recent months, including fashion, watch, and jewelry brands like Fendi, Cartier, and Loewe. This influx of luxury brands underscores the growing demand for high-end retail space in Vietnam's largest and most populous city.

A Cartier store at Rex Hotel in District 1, HCMC. Photo courtesy of Savills Vietnam.
A CBRE report also noted that two luxury fashion labels debuted in Vietnam in Q1, including Rene Caovilla at Union Square in HCMC and The Hour Glass Opera at 63 Ly Thai To street in Hanoi.
While the luxury goods market has seen an increase in online sales, these numbers remain relatively low. These transactions are forecast to deliver 8.6% of total revenue in 2024.
Luxury brands seek prime locations
Savills data reveals that F&B, sports, and cosmetics retailers led leasing activity across the region in the second half of 2023. Outdoor retailers are also expanding, while entertainment and experience-based brands are taking up more space in shopping centers.
A recent retail market report by Savills Asia Pacific shows that retail in the region is recovering, with rental rates improving on the back of strong economic prospects, rising retail sales, and a rebound in tourism.
In Vietnam, Tran Pham Phuong Quyen, senior manager of retail leasing services at Savills HCMC, notes that high-end brands want stores in core areas with existing concentration of luxury brands (luxury clusters). This reflects the strong appeal of these areas to potential luxury brand customers.
"However, retail spaces in existing luxury clusters are scarce, which results in high competition among brands," Quyen noted.
Quyen added that this phenomenon of seeking clustered locations in District 1 on main streets and locations reflects the retail cluster effect.
"When there are many brands and stores in the same area, the pull is greater, and footfall tends to be higher. These stores benefit from access to customers," Quyen said.
Savills experts comment that the development of new projects in non-central District 1 could pose a challenge because it takes time for new projects to build a reputation and attract customers. However, luxury brands often prefer to locate themselves in areas with an established customer base.
HCMC stable retail market
Savills's Q1/2024 market report states that retail activity in HCMC was stable with occupancy rates remaining unchanged at 92.5% quarter-on-quarter. Landlords have phased out rental discount programs. Leasing transactions totaled 1,688 square meters of floor space, with the suburban area contributing the largest take-up of 2,040 sqm, mainly from F&B tenants and the conversion of properties from office to retail use.
Expanding brands had a 67% share of total transactions; and deals exceeding 1,000 sqm of floor space accounted for 8%. By category, fashion had 50% of transactions, followed by F&B with 20%, and health and beauty with 15%.
According to Giang Huynh, deputy director of Savills Research & S22M, the HCMC retail market is on a strong growth trajectory driven by several positive factors, including rising income and population prospects, continuously improving retail quality, and economic development.
In the broader picture, Simon Smith, director of research & consultancy at Savills Asia Pacific, noted that the regional market has growth drivers in place. Asia Pacific GDP growth is forecast to reach nearly 4% this year, more than double the U.S. projection and far outpacing the sluggish performance of the Eurozone. Vietnam, along with Malaysia and the Philippines, is on track to achieve growth of over 6% this year.
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