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Rent for retail premises keeps rising
Retail shops at big markets and on big roads change hands all the time these days. Their rent has been escalating, becoming unaffordable for many small merchants who end up leaving the premises.
Kim Loan used to have a tailor’s shop at Ky Dong T-junction. She revealed that her shop rent increased from two million dong a month to three million dong, and then four million dong. She still tried to pay the rent, however, because her loyal clients knew the address well.
When the landlord informed her that in the future her rent would not be less than eight million dong a month, she decided to relocate the shop because she cannot earn enough to pay the rent.
Loan admitted that eight million dong a month is now the average rental rate for this area.
“The problem is that others lease spaces for pharmacy stores and can earn fat profits, so they can pay higher rent,” she explained. “Profits for tailors are very small.”
The hair salon run by Mai on Ngo Duc Ke Road in HCM City is facing the same problem. Mai reported that she has been leasing the premises for five years at $2,000 per month. Recently when the rent jumped to $4,000 per month, Mai decided to give up and relocate the salon to her home.
Retailers’ rental rates have been skyrocketing everywhere in HCM City, including Dang Chat road area and the Nguyen Van Cu bridges opened for traffic. Tailor shops and groceries have been weeded out because shops’ owners cannot earn enough money to pay one million dong a month in rent. Tailors make only some tens of thousands of dong from tailoring a shirt.
Only very famous tailor shops with good brand names remain, serving high income earners who can pay high prices. Many shops in Districts 1 and 3 charge sky high fees like 500,000 dong for tailoring a shirt. They have raised their fees high to offset rising rental costs, estimated at 15-20 million dong a month.
Lan, who sells umbrellas and wallets at Ben Thanh Market, also suffers from the rent increases. She has found another solution, however, sub-letting her kiosk rather than conducting business herself.
Lan said that she sells products for everyday people and thus her sales revenues are “modest” and so are her profits. Every day, Lan earns around 300,000 dong after paying taxes and other expenses, a total monthly profit of nine million dong maximum.
Meanwhile, Lan can re-lease the kiosk to other merchants for 13-14 million dong a month. “Merchants trading more valuable products can produce bigger profits and therefore they can afford high rental rates,” Lan observed.
In related news, the rent at high-grade trade centres is now between $35-140 per square metre, according to Savills Vietnam, a market survey firm. Despite these high rates, retail premises have an occupancy rate of 96 percent.
vietnamnet, sgtt
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