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Rents plummet as retailers close shop
With the inflation causing consumers to tighten their belts, more and more retailers are shutting shop, sending retail rentals plunging.
In its 2010 fourth-quarter report, the US-based CB Richard Ellis, which has a presence in Viet Nam, said the retail-space vacancy ratio rose by 8.7 per cent, causing an 11 per cent drop in rentals.
In the first quarter this year, the trend gathered pace.
Nguyen Thu Anh, who runs a clothes shop at the An Dong Trade Centre in HCM City's District 5, said rentals there had dropped by 20 per cent to 30 per cent from a year ago.
"I only have to pay VND20 million a month now compared to VND30 million last year," he said.
"Living costs have become higher, forcing consumers, including rich ones, to tighten their belts. Consequently, many shops have had to close down because incomes are not enough to cover costs."
At Zen Plaza, a shopping mall in District 1, sales has dropped 15 per cent this month from a year ago, according to deputy general director Trieu Huong Giang.
To attract customers, Zen Plaza has organised several promotions offering more prizes, he said.
Many other shopping malls too had reported a fall in sales by around 20 per cent, she added.
At Ben Thanh Market, where rentals used to be the highest in the city at between VND40 million and 42 million per square meter per month, they have fallen by 10 and 20 per cent.
Tran Van Hanh, owner of a bag stall in the market, said last year he paid VND39 million but it had now dropped to VND32 million.
A survey by another real-estate consultant, Savills, found that HCM City now had six trade centres, 20 shopping malls, six retail areas, 58 supermarkets, and three wholesale super-markets with a total of 625,000sq.m, 27 per cent higher than in 2009.
The retail space lease situation in Ha Noi looks not better than in HCM City.
Attracting tenants
Grand Plaza in the west of Ha Noi is a five-star trade centre which was expected to be an ideal area for major retailers to promote their brands and attract affluent customers.
However, once it opened the occupancy rate was not as good as expected, a problem it shares with the Garden trade centre.
Both these luxury shopping centres have many vacancies and attract limited numbers of visitors.
Dinh Thi My Loan, General Secretary of the Viet Nam Retailers Association, said since most retailers in Viet Nam were still small- or medium-sized businesses, they could not afford luxury shopping centres like Grand Plaza and the Garden.
To attract tenants, Grand Plaza decided to cut rents early this month, offering a 50 per cent waiver for the first year of lease, 40 per cent for the second, and 30 per cent for the third, according to Nguyen Dinh Chung, its marketing director.
But if things have been bad, they could get worse since, in the near future, 12 projects with 116,000sq.m will hit the Ha Noi market, real-estate consulting firms forecast.
Pico Mall is scheduled to open in March and Hang Da Galleria in April, while Vincom City Towers is completing its upgrade.
In HCM City, at least three retail centres are expected to open in the first quarter – The Crescent, Bitexco Financial Tower, and The Manor stage 2 – bringing about 30,000sq.m into the market.
vietnamnews
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