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Shopping malls set to brand HCM City, suburbs
It is expected that, by 2013, HCM City will have 740,000 square metres of shopping malls, a two-fold increase from the current level. Real estate developers are rushing to build more and more shopping centres in the commercial hub.
The construction of Bitexco Financial Tower is entering its final stage, and Bitexco, the project developer, is racing against time to put the tower into operation in October. The tower has total retail area of over 20,000 square metres.
Capitaland Group Vietnam & RF Chandle is also speeding up construction to complete The Vista project by the end of 2010. It will provide 14,000 square metres of retail premises to the market.
Many other shopping malls are opening in the near future, while construction of other projects has been slated for early next year. As planned, Taiwanese Pau Jar Group will inaugurate The Flemington Mall in the first quarter of 2011. The Crescent Mall project is now under construction and is expected to be completed at the end of 2011 or early 2012. If site clearance in the Eden area goes well, Vincom Company plans to kick off its Times Square project.
In 2012, HCM City will have seven shopping mall projects underway, including Saigon M&C in District 1, Tan Phong Shopping Complex, Sunrise City in District 1, Metropolis, Sport City, Thao Dien Pearl in District 2 and Saigon Pearl in Binh Thanh District. Meanwhile, Malaysian Berjaya Group is drawing up plans to implement Saigon Financial Centre project, expected to be completed in 2013.
Most new shopping malls are in suburban districts, while very few are located in city’s central area. The rental rates for retail premises in the suburbs has been decreasing slightly to $30-40 per square metre, while there are few tenants. Meanwhile, retail rentals in the central area remain sky high at $115-131 per square metre.
While HCM City faces an oversupply of retail premises in the next few years, real estate consultant firms are optimistic about the movement to construct malls.
Richard Leech, Managing Director of CB Richard Ellis, a real estate consultancy firm, noted that even though the supply will increase sharply in the next three years, it is still difficult to predict how the market will perform. This will depend on economic performance and supply and demand.
Truong An Duong, Head of the Savills Analysis Division of HCM City Branch, cited statistics provided by the HCM City Statistics Office to prove the attractiveness of the city’s retail market. Since 2005, the total revenue of the retail market in HCM City has increased steadily by 20 percent per annum. In the first five months of 2010, the city’s retail revenue increased by nearly 35 percent.
Duong went on to say that development of the retail market will still depend on the rapid growth of medium and upper classes in urban areas. Foreign retail groups have realized the bright prospects of the market and they are going ahead with strategies on developing distribution networks in big cities in Vietnam. This will affect the retail premises market and decide rental rates in the time to come.
According to VnExpress, though the HCM City retail market is regarded as one with great potential, there are still many unprofitable shopping malls in the suburbs. They have few customers, while some kiosks have temporarily shut down because there are no customers.
vietnamnet, VnExpress
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