Retail space more expensive in downtown Saigon than in other big Asian cities
Retail space more expensive in downtown Saigon than in other big Asian cities
The average rent for retail space in the heart of Ho Chi Minh City is higher than that in many major Asian cities such as Dubai, Doha, Bangkok, Kuala Lumpur, and Manila, according to a report released by U.S.-based real estate consulting firm Cushman & Wakefield.
At over US$1,540 per square meter per year, the rent for shopping locations in the central business district of Ho Chi Minh City, called Prime High Street by Cushman & Wakefield, ranks 32nd, up one notch against last year, Cushman & Wakefield said in the Main Streets Across the World 2015 report, which was released on November 17.
In the Asia-Pacific region, the average rent for shopping spaces in the central business district Vietnam’s southern economic hub is cheaper than that in Shanghai, Taiwan, Singapore, Tokyo, Seoul, according to the report which surveyed more than 500 leading shopping streets worldwide and ranked them according to the rental rates.
Meanwhile, the average rent in Ho Chi Minh City is more expensive than that in some other big Asian cities such as Dubai, even 50 percent higher than that in Doha.
If compared to the Southeast Asian region, rent in the Vietnamese economic epicenter is also more expensive than that in Bangkok, Kuala Lumpur, and Manila.
According to Cushman & Wakefield, as Vietnam is preparing to join the ASEAN Economic Community (AEC) and a series of free trade agreements, such as the Trans-Pacific Partnership (TPP) accord, this will cause more trouble to domestic retailers because rent is the second important factor after locations in their business strategy.
ASEAN is a ten-member bloc which includes such Southeast Asian countries as Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar, and Vietnam.
The AEC, slated for establishment by the end of this year, is aimed at creating a single market and production base, a highly competitive economic community, a region of equitable economic development, and one fully integrated into the global economy, according to the ASEAN website.
The TPP deal, which aims to liberalize commerce in 40 percent of the world's economy, was reached following five years of negotiations between 12 countries, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam, during a final meeting in Atlanta on October 5.
Meanwhile, the top important element for retail space – locations – will be occupied by foreign retailers who have enough financial resources to afford the rent there, leaving the less attractive one for local competitors, said Cushman & Wakefield.
"Top foreign retailers consider Vietnam as a potential market in the region, given the fact that 36 percent of the total value of successful merger and acquisition (M&A) deals in Vietnam in the period of 2014-2015 was in retailing and consumer goods," Cushman & Wakefield said in its report.
According to the firm, within five to seven years, approximately 1.5 million square meters of retail floor space will enter the market in Ho Chi Minh City, bringing the total area to nearly 2.5 million square meters.
The retail market will be busy, especially in the affordable and intermediate segments.
This is the 27th time Cushman & Wakefield has prepared the report.
Accordingly, the company’s data showed that the average rent on the most expensive streets worldwide has increased by 35 percent although global uncertainty has intensified in the past year.
In each country, Cushman & Wakefield also chose one street with the most expensive rent.
This list has 65 streets, of which the leader is still 5th Avenue in New York, with nearly $36,000 per square meter a year, followed by Cause Bay in Hong Kong, Champs-Élysées in Paris, New Bond Street in London, and Via Montenapoleone in Milan.
