Demand for urban retail space likely to skyrocket

Demand for retail space in Viet Nam's large cities is expected to soar in 2010 after the country officially openened the door to international retailers and agreed to abide by WTO commitments.

More international retailers, brands and franchises would be present in Viet Nam this year, said CB Richard Ellis Co Viet Nam (CBRE), a real estate consulting firm. In recent months, international brands have scrambled to secure scarce retail space in downtown commercial centres while restaurant chains are being opened on major streets nationwide.

International consulting group AT Kearney said that Viet Nam's sixth position in worldwide trade growth last year had placed the country on the map as an attractive destination for international distributors.

A preference among consumers to shop at modern shopping centres rather than traditional markets was another factor contributing to demand.

The CBRE said average occupancy rates in HCM City and Ha Noi's retail spaces now stood at 95 and 83 percent, respectively. With the rising demand for retail space, prices have been forecast to continue climbing in 2010.

Average rental prices for retail space in Ha Noi and HCM City currently stand between US$60 and 100 per square metre per month. In central business districts, rents have even risen to $250 per square metre per month.

In HCM City's Vincom Centre, rents now average $200 per square metre per month and 80 per cent of available retail space has already been leased, even though the centre is not due to open until the end of April.

According to Savills Viet Nam, a real estate consulting firm, Ha Noi's retail space will grow to reach 1 million square metre over the next two years, more than double its current supply. The projected growth has been attributed to completion of major projects such as the Hang Da, Mo and Nga Tu So markets, and the Grand Plaza and Sky City Tower.

Meanwhile in HCM City a further 740,000sq.m of retail space will be developed over the next three years, doubling current supply.

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