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Rents still rising for upscale store sites
The demand for commercial real estate is still very high even in the economic downturn, because consumers in HCM City and Hanoi have gotten used to going shopping at trade centres, according to a story in Dau Tu Chung Khoan business newspaper.
Supply grows, but rents don’t fall
Tran Van Hung, head of leasing at Eden Mall in the Saigon area of HCM City, said that the great majority of people buying brand name goods are Vietnamese, not Westerners, and it is their demand for such goods that is supporting the upscale retail premises market. Rents are still on the increase, though overall the real estate market is in the doldrums.
Real estate consultancy firms report the average monthly rent for retail premises in prime positions in HCM City is $85 per square metre on average, higher than Bangkok ($76 per square metre), Manila ($22.5) and Jakarta ($53).
However, there are big variances in different areas of the southern metropolis. At Saigon Square centre, street-front booths rent for $400 per square metre, the highest level recorded so far. At the Tax Building, the leasing fee is just $85 per square metre. At Zen Plaza, garment sellers only pay $45 per square metre per month.
Many retailers have been given notice that rents will be adjusted when their lease is renewed. Retailers are always ‘afraid’ of short term leasing contracts, which allow shopping center managers to raise the leasing fee regularly.
Money still going to trade centre projects
Evidently there aren’t yet enough shopping malls. Investors, both domestic and foreign, are still rushing to spend money on developing trade centre projects.
HCM City now has 18 trade centres with a total retail area of 233,000 square metres. Hanoi has some 100,000 square metres for lease at main trade centres in the city. The occupancy rate of big trade centres in HCM City is 96 percent.
Real estate consultancy firms believe that the supply is still far below the demand. Therefore, the investors in new projects, including The Plemington, The Everich and Kumho Asiana do not fear that they will fail to find renters though their projects have still not become operational yet.
Consultants predict the supply of such premises will top 1,000,000 square meters in HCM City within four years.
Retail premise owners remain optimistic. Though growth has been slowing down overall and affected spending, rising income per capita and high consumption levels still make the business of leasing retail premises attractive.
Analysts believe that the ratio of upscale retail premises to the number of potential shoppers remains relatively low in HCM City and Hanoi. Thus they expect rents to keep going up.
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