This year’s second quarter saw a 5.1% vacancy rate in Ho Chi Minh City retail space, down from 5.5% in the first quarter and indicating slight market recovery, according to Cushman & Wakefield.
The city’s retail real estate supply remained stable at about 1.1 million square meters, with no new supply in the second quarter.
“Vacancies are expected to stay in the short term as most retail brands, especially fashion, still need to set up brick-and-mortar stores,” the real estate services firm said in a Q2 report.
The city’s demand for retail space is gradually recovering, it noted. “Tenants who have good financial standing and survived during the pandemic have kept looking for high-qualified space for expansion. Landlords grew more confident and are planning to prepare their rent increase scheme.”
As of the second quarter, the average retail rent in HCMC reached $49 per square meter per month, up 4% on 2021 as a whole, the firm said.
Vietnam welcomed 600,000 international tourist arrivals in the first six months, almost seven times that in 2021, the year the pandemic wreaked havoc. The country’s total retail and service revenue reached around $117 billion in the first half, up 27.3% year-on-year. These figures showed retail recovery across the country.
In HCMC this April, Japanese casual wear brand Uniqlo opened a new store covering 3,000 square meters at Saigon Center in District 1, attracting a large number of customers.
Japanese retail giant Aeon is strongly expanding its Aeon Vietnam network. In 2020, Aeon said it would invest $2 billion expanding its presence across Vietnam, eyeing a total of 25 malls by 2025. Six are already operational, therefore 19 new malls are in the pipeline.
Meanwhile, Japanese retail company Muji is set to open a store with a scale of a 1,000 square meters or so at Crescent Mall in HCMC’s Phu My Hung township in the third quarter, raising its store total in Vietnam to four.
In addition to foreign investor expansions, a new growth trend is the formation of a multi-industry ecosystem of domestic companies, with their retail platforms including food, beverages, consumer goods, and services of various kinds.
Masan, one of Vietnam’s largest listed conglomerates by market capitalization, is strongly developing its “Point of Life” strategy, a concept of minimarts providing banking services, essential products, pharmaceuticals, food, coffee, tea and other beverages under one roof. Masan's vision in the strategy is to build an offline-to-online platform to help customers obtain the same experience whether sitting at home or shopping at stores.
In the second quarter, Vietnam’s GDP grew 7.72% year-on-year, the quarterly best performance since 2011. Cushman & Wakefield estimated that by the end of this year, an additional 98,000 square meters of shopping malls will join the east and west areas of HCMC. Therefore, the retail market is expected to be busier in the coming years, as more and more international brands would be present in the Vietnamese market.