Market news


Some developers HCMC's retail sector will be forced to lower rental expectations

Tenants compete to secure space in the CBD: Upcoming supply in the CBD continued to delay their completion dates. There will be no new supply in the CBD in 2018. In 2019 and 2020, 124,000 Sq. m of new supply will come online from the podiums of luxury mixed-use projects such as Golden Hill, Tax Plaza and The Spirit of Saigon. Due to solid demand, rents of CBD retail property will continue to rise during the next three years and vacancy will remain under 5%. Any available space is expected to be quickly filled up.

Quality supply in Non-CBD area is still at a low level but increasing: With rising competition, rents in Non-CBD areas are constrained while the vacancy rate is expected to increase to 20% by 2020. Some developers without track records in retail development will be forced to lower rental expectations or apply more flexible lease structures to support retailers. In terms of future expansion, the East, including District 2, District 9 and Binh Thanh District will see the majority of new retail supply thanks to their gradual establishment of new residential clusters. Developers anticipating completion of these projects are planning large-scale shopping malls with net leasable area greater than 60,000 Sq. m each.

(Retail space for rent in Ho Chi Minh City, Vietnam)

To guarantee enough foot traffic and increase dwell time, landlords should save larger space for anchor tenants as well as increasing the number of anchor tenants. More importantly, high-impact tenants whose products generate intense word-of-mouth marketing online should receive preferential terms.

Consumers value convenience: According to a report by IGD Research, Vietnam is predicted to lead the convenience store market in Asia by 2021 with CARG of 37.4%, much higher than other regional peers such as China, South Korea, and Japan which have CARG of less than 10%. With a lower starting point, these numbers indicate a large potential market in Vietnam with a growing middle class and a young population who value convenience, modernity and comfort. The driving force behind such growth is the expansion of other international players have either already taken their first steps in to the Vietnam market or are currently considering doing so. The worldwide chain 7-Eleven opened its first store in Ho Chi Minh City in the middle of 2017 and the South Korean chain, GS25, is set to launch in early 2018 signaling further growth for this segment.

 

Song Chau Group (SCBI).

Tags:

Related news

Hanoi receive new large retail supply commercial space for lease

Hanoi receive new large retail supply commercial space for lease

Only 7% of total retail supply in Hanoi is located in CBD. 2018 is expected to be an active year in Hanoi retail coming from eight under-development projects. This is the largest number of new projects ever planned for a single year. Hence, new supply causing pressure on the vacancy rate, the landlords should save larger space for anchor tenants as well as increasing the number of anchor tenants. More importantly, high-impact tenants whose products generate intense word-of-mouth marketing online should receive preferential terms.
Hanoi's office rental recovery with new supply and occupancy rate 2018-2020

Hanoi's office rental recovery with new supply and occupancy rate 2018-2020

Commercial leasing activities will continue to be active, with rental growth and occupancy levels expected to witness sustained improvements across all property types. Meanwhile, occupiers from the traditional sectors of manufacturing, financial and tech industries retained their position representing nearly 50% of total enquiries. Sustainable demand from traditional sectors combined with the rise of new sectors of Logistics, Education, and Co-Working are expected to be key drivers which will boost net absorption.
HCMC office for lease enjoys further with rental growth and demand for office space over the next three years

HCMC office for lease enjoys further with rental growth and demand for office space over the next three years

The office sector in Ho Chi Minh City first quarter 2018 on a positive note. Rents improved in both cities even on the back of new supply added to the market. The improvement in performance was observed across Grade A and Grade B buildings, because of stable predicted growth in the economy and the city’s ever improving infrastructure in the form of metro lines. Projected Rental growth in 2018–2020 is a result of continuing appetite for quality supply
Vietnam’s economic growth rate to "impulse real estate market 2018"

Vietnam’s economic growth rate to "impulse real estate market 2018"

"As the economy had a stellar performance in 2017, Vietnam’s real estate investment scene continues to attract more and more interest from foreign investors and developers across all sectors. Vietnam’s real estate market is entering 2018 with a positive sentiment, despite some skepticisms about oversupply in the upscale residential sector, especially on secondary and rental markets."
"Serviced Apartment Q4 2017" Quarterly Report - Ho Chi Minh City, Vietnam

"Serviced Apartment Q4 2017" Quarterly Report - Ho Chi Minh City, Vietnam

"Q1 2018, an estimated 1,280 units of "serviced apartment" supply will enter the market by the end of 2018. In spite of the fact that landlords have enjoyed favorable market conditions with high occupancy rates and steadily increasing rental rates, Ho Chi Minh City serviced apartment market has seen increased competition from new buy-to-let apartments."
"Real Estate Q4 2017" Quarterly Report - Ho Chi Minh City, Vietnam

"Real Estate Q4 2017" Quarterly Report - Ho Chi Minh City, Vietnam

In 2018, the East and South will continue to be hotspots of the market with more new launches condominium / apartment. Within the next three years, office and retail market will be more competitive as a large amount of supply from community retail podium will be launched. Rental growth will increase at a slower pace as existing supply will remedy their rents more strategically while vacancy rate will surge up momentarily before dropping down
"Office Leasing Q4 2017" Quarterly Report - Ho Chi Minh City, Vietnam

"Office Leasing Q4 2017" Quarterly Report - Ho Chi Minh City, Vietnam

2017 witnessed the "office market bustling with new supply and healthy absorption." 2018 onwards will witness the market coming up with better supply albeit at a slower pace than 2017. "Rental growth will increase at a slower pace as existing supply will remedy their rents more strategically while vacancy rate will surge up momentarily before dropping down just as quick as the market will continue its healthy absorption momentum with new supply"
Vietnam continues to be the "TOP of destination foreign investors in 2018"

Vietnam continues to be the "TOP of destination foreign investors in 2018"

"Vietnam continue attracting foreign investors in 2018 and next ten years". Apart from subjective factors, in terms of objective factors; domestic market with the size of significant "population compared with other countries, young and dynamic population, middle class is increasing, urbanization grows fast pace will be make force the demand not only for housing market, also retail market, office building, etc."
The tenant looking out form Ho Chi Minh City "overload centre"

The tenant looking out form Ho Chi Minh City "overload centre"

With the narrow land fund in Ho Chi Minh City present, daily traffic jam; "office rentals and other service are rising" will be make burden for business, that is the reason why the tenant looking out form Ho Chi Minh City centre. "Thu Thiem" county town will be one of new centers in the future.