Hanoi battles southern hub for retail investors
Hanoi battles southern hub for retail investors
The latest figures on retail estate space suggest that Hanoi may be catching up with Ho Chi Minh City as the country’s most attractive destination for retail development.
According to the latest report from CBRE Vietnam, Hanoi has more total retail space than Ho Chi Minh City despite the smaller population.
Hanoi is home to around one million square metres of retail space, while Ho Chi Minh City has less than half of this total, at just 450,000 square metres.
The gap between the two cities will become even larger in 2015 when Hanoi is due to have up to 2.2 million square metres, triple Ho Chi Minh City’s predicted total.
This low quantity of retail space in Ho Chi Minh City has led to higher than average rents and limited choice for those seeking retail outlets.
Foreign companies looking to enter the Vietnam market, have typically begun their operations in Ho Chi Minh City due to its reputation as the country’s economic hub. However, these traditional conceptions may be changing due to the recent growth of Hanoi.
“Hanoi is the rising star, and we see that there is a shift of investment trend to the northern provinces of Vietnam, particularly Hanoi,” said Richard Leech, executive director of CBRE Vietnam.
Both Starbucks and Burger King are continuing their expansion plans, while Auchan, one of the world’s largest hypermarket chains, is considering channelling $500 million into Vietnam over the next 10 years. Meanwhile, burger giant McDonald’s will enter the Vietnam market in 2014.
Leech revealed that in March next year, Central Group, a renowned Thai retailer, will setup operations in Hanoi’s Vincom MegaMall Royal City.
“This will cause a remarkable change to Hanoi’s retail market because Central Group will bring hundreds of famous brands,” he predicted.
A number of large-scale retail developers are present in Vietnam. The domestic firm Vincom, owner of the new Vincom MegaMall Royal City enjoys very high occupancy rates of around 95 per cent.
In Ho Chi Minh City, Coopmart is listed among the top 500 Asian retailers. The group is expanding to Hanoi later this year when they will open their second centre in the country which will supply more than 10,000 square metres of retail area.
Singaporean retailer Fairprice and Saigon Co.op have also received approval for a commercial joint-venture and will open two supermarkets named Co.opXtra and Co.opXtraPlus in the near future.
The Korean company Lotte has been gradually consolidating its presence in Vietnam with four centres already operating in Ho Chi Minh City, Dong Nai and Danang. The fifth Lotte centre will be opened at the beginning of next year in Hanoi’s Mipec Tower, while the Lotte Hanoi Centre, its first private Hanoi complex, will be opened in the second quarter of 2014. Lotte also has unveiled its plan to open 60 supermarkets in Vietnam by 2020.
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