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Upscale store rents trend higher
Retail demand is holding up in the upscale clothing and accessories sector, allowing landlords to raise rents by up to 30 percent.
Nguyen, a handbag retailer with twenty outlets in HCM City, complained to Saigon Tiep Thi that some landlords are demanding higher rents. The monthly rent for his shop on Nguyen Trai street (District 1), for example, is going up by $200. The rent’s rising by $100 for his shop on Le Van Sy 100 dollar and he will have to pay one million dong more each month for his shop on Cach Mang Thang Tam road.
1001 reasons to raise the rent
The Saigon Square fashion clothes market, which debuted late in 2009 on Ton Duc Thanh street (District 1), has just re-opened after the long Tet holiday. Some kiosk owners there are demanding that renters swallow a three million dong increase.
“For Rent” signs can be seen on many kiosks on the third floor of An Dong Plaza. The asking price is about $1000 per month.
Phuong, who wants to re-lease her kiosk at Saigon Square, said that her sales are below expectations, therefore, she has to cut out some sale points. She explained that retail purchasing power has been decreasing sharply, especially after Tet, while the rents on her workshops keep escalating.
Real estate consultant CB Richard Ellis Vietnam reports that rents have increased slightly in the first quarter of 2010. Space in District 1’s Diamond Plaza command the highest rents – up to $220 monthly per square meter.
In 2010, the face of the city will have many changes thanks to the appearance of big modern trade centres. It is expected that HCM City will add another 128,000 square metres of new retail premises in 2010. Fifty percent of the total new supply will be in district 1.
Supply and demand are both up
Real estate trading firms predict that by 2013 the total retail premises supply will triple to some 740,000 square metres. The supply of upscale retail space in the HCMC suburbs will also increase by 50 percent in 2010, they say, and by seven times in 2013.
Some analysts have warned that the real estate market will not be able to digest so much additional supply. However, present reality is that even though rents are rising, demand remains strong and there is hardly any vacant space. Eighty percent of the space at the new Vincom Center in District 1 in anticipation of its opening in April.
Investors profess not to be worried. They point out that HCM City is a big commercial hub which has high demand. Surveys show that thirty percent of its nine million people have stable income that permits them to shop at big retail centers.
VietNamNet, SGTT
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