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High-end leases demarcate Saigon’s “well-known brand” streets
Dong Khoi, Nguyen Hue, Le Thanh Ton and Le Loi Roads are now called “the well-known brands” streets in HCM City, because area trade centres only sell products with well-established names. Retail leases in this business hub, therefore, are also the highest in the city.
In late April 2010, Vincom Tower, a 58,000 square meter shopping complex, began welcoming guests. The rent for a ground floor space here is equal to the rent on the upper floor of another nearby trade centre.
Brand barriers
The appearance of fashion shops selling global brands like Louis Vuitton, Versace, Milano, Lacoste, Espirit and Omega, has turned Dong Khoi into a road with the highest rental rates for a retail premises in HCM City.
Fashion traders call Dong Khoi “the road of high rank,” because it is very difficult to lease a space here, even when the renters have plenty of cash. Vincom Centre rental rates are up to $250 per square metre and, retailers must sell products with well-known brand names to be able to lease a spot on the first or upper floors.
Louis Vuitton occupies the first floor of Opera View Centre, presenting a silent but visible statement to newcomers-- only high-end products welcome. Le Van Canh from Artex Saigon, the investor of Opera View, stated frankly that the company prioritises leasing to international brand names.
Businesses that intend to lease a space at Parkson trade centre are always questioned about what products they sell, which brand names and their world rankings.
A luxury shopping centre invested by Duy Anh Fashion Cosmetics and Saigontourist will become operational in the third quarter of 2010. The shopping centre, at the intersection of Nguyen Hue–Le Loi roads, covers an area of 2000 square metres and will gather the most popular brand names in the world like Chanel, Burberry, Ferragamo, Bally and Zegna.
Retail rents escalate
Marketing analysts report that the Louis Vuitton product representative was very lucky to obtain a lease at Opera View of just $15,000 a month.
The appearance of Vincom has now pushed area rents to new heights. The $65 per square metre rent at the Tax trade centre is just equal to half the rent of Vincom’s ground floor. Moreover, clients must lease an entire kiosk at Vincom, with an area of 70 square metres.
All other types of retail premises are raising their rents too. In 2009, one shop with the width of its entrance door (Just four metres) leased for $4000, but now the rent has increased by 25 percent. If the shop has a little wider entrance, the rent would have doubled.
One businessman leased a big shop on Dong Khoi Road with an area of 7x12 square metres in February 2009 at $30,000 a month. Two months ago, he was approached by a foreign brand representative to sub-lease for 50 percent more.
According to CB Richard Ellis (CBRE), businesses must compete fiercely to be able to lease unoccupied “beautiful” premises. The firm calculated that rent increased significantly in the first quarter of 2010 and will increase still further in the second quarter.
vietnamnet, SGTT
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