Retail real estate showing promise

Vietnam’s retail market is on the mend and retail real estate will benefit as it recovers, especially in major cities, according to the Vietnam Association of Realtors (VARS).

In Hanoi, ground floor rents in the first quarter rose about 5 per cent compared to the previous quarter, with stable occupancy rates. It was a similar story in Ho Chi Minh City, with large tenants leading market demand. Major retailers are taking advantage of the recovery in the retail market by choosing locations with potential within their long-term strategies in Vietnam, according to VARS.

It believes that the rise in the retail market is not only due to rising incomes but also a shift in shopping habits. This is an opportunity for retail real estate to offer the customer experience that e-commerce and other forms of online shopping can’t.

Food and beverages, convenience stores, and pharmacies are believed to hold strong growth potential due to the expansion plans of brands and rising consumer demand.

The supply of retail real estate has only grown slowly over the last three year while demand among brands is rising again post-pandemic. Rents for retail space, especially in shopping centers in major cities, are therefore forecast to rise significantly.

Rents in Ho Chi Minh City are expected to grow 1.5-3.5 per cent over the next year and about 1-1.5 per cent in Hanoi.