Big bounce: The exterior of a shopping centre in Hanoi. Vietnam’s retail scene has seen a strong resurgence following the Covid pandemic. — Bloomberg
HANOI: Vietnam’s retail real estate market is thriving in terms of scale and quality, with occupancy rates above 90% in major city shopping centres, according to a report from the Vietnam Association of Realtors (VARS).
The retail sector in Vietnam is a dynamic and resilient industry that has consistently experienced impressive growth rates for decades.
Despite being strongly impacted by the pandemic, it has shown remarkable recovery speed.
Since the beginning of 2022, the industry has swiftly rebounded after a prolonged disruption caused by Covid. Businesses have capitalised on opportunities and strategically chosen prime locations for long-term strategies.
This has attracted the attention of global retail giants, even as rental prices have started to rise slightly.
In 2022, it was estimated that total retail sales and consumer-service revenue reached nearly 5.7 trillion dong, up 19.8% year-on-year and 15% from 2019, prior to the Covid-19 outbreak.
Despite not achieving the double-digit growth seen pre-pandemic, the sector was showing a positive recovery.
Last year, total retail sales and consumer-service revenue were estimated to reach over 6.2 trillion dong, a 9.6% increase from the previous year.
In the first quarter of this year, retail sales were projected to increase 8.2% over last year to more than 1.5 trillion dong.
The retail-real estate market is expanding in scale and quality, with occupancy rates exceeding 90% in major city shopping centres.
Rental rates in Hanoi have ticked up by approximately 10% in 2023, while central areas in Ho Chi Minh City maintain high prices around US$140 per sq m per month and non-central areas have seen a slight rise to about US$40 per sq m per month.
Vietnam’s retail real estate market has seen several major conglomerates enter the scene.
Thailand’s Central Retail Corp plans to expand to all 55 provinces and cities nationwide, while Japan’s Aeon Group aims to launch 16 projects, including several in Hanoi, by 2025.
The Japanese retailer will also introduce new retail concepts to meet customer needs and drive future growth.
Meanwhile, FujiMart Vietnam, a joint venture between BRG Group of Vietnam and Japan’s Sumitomo Corp, targets 50 supermarkets by 2028.
Luxury and affordable fashion brands like Uniqlo, Muji, Dior and Cartier have also made a significant impact in recent years.
VARS forecasts a thriving retail real estate market with considerable potential for growth.
According to VARS, there are two key factors contributing to this positive outlook.
Rapid urban population growth and rising incomes have created significant demand for real estate, especially in the retail sector. People are seeking more convenient living and shopping spaces.
In addition, Vietnam is experiencing the development of major cities like Hanoi, Ho Chi Minh City and Da Nang, along with their surrounding satellite areas. Investments in improving transportation infrastructure, including the construction of highways and urban railways, are facilitating easier commuting and better connectivity between urban regions.
The tourism industry’s growth in Vietnam is also creating opportunities for retail property.
Popular tourist destinations like Phu Quoc, Nha Trang and Da Nang are attracting investors and retailers due to their long-term development potential.
Vietnamese consumers have high expectations for shopping experiences and demand convenience and diversity.
This opens up possibilities for retail brands to develop new business models, including integrated shopping centres with multiple services, dedicated areas for entertainment and dining and experiential product stores. — Viet Nam News/ANN
