Brands jostle for prime space
Brands jostle for prime space
The retail market of Ho Chi Minh City has seen growing interest from both new and large-scale international investors.
Neil MacGregor, managing director of Savills Vietnam said that the retail market in Ho Chi Minh City would reach a key turning point in 2016.
“Consumer spending is increasing at a rapid rate in comparison with other regional markets, resulting in a more sustainable model going forward,” he said, adding that international retailers were excited to enter the local market following the announcement of the various free trade agreements, offering the prospect of reduced tariffs and simplified procedures.
The young population and rapidly-growing middle class are the two major factors that are driving retail market growth. These customers are more aware of their spending power, and seeking modern and convenient retail environments. “We are seeing a growing number of such shopping centres, particularly in new residential areas such as districts 2 and 7, and Go Vap district, to meet this blooming demand,” MacGregor said.
Both local and international retailers are seeking better quality shopping centres in prime locations, but the number of options remains limited.
Joanne Gasgonia, general manager of Crescent Mall in Phu My Hung New Residential Area, said that the retail market in Vietnam was still at a very early stage of development, but efforts were being made to address the demand for high-quality options.
As such, the Phu My Hung Development Corporation has provided pre-opening services including the design, tenancy mix, and marketing methods to attract customers.
Meanwhile, according to a report made recently by Cushman & Wakefield Vietnam, high profile venues in Ho Chi Minh City around the City’s Post Office and Church are in high demand. This area has reported the highest rental fee of $150 per square metre, per month.
At the end of January this year, McDonald’s opened a new restaurant on Nguyen Van Binh street, several metres from the Post Office and looking on to the Church.
Even though the retail fee is very high, the central areas of Ho Chi Minh City are being sought by many famous brand names.
Retail properties with more than 200sq.m in these areas are charging from $6,000 to $10,000 per month.
Private shops for rent in Nguyen Du and Dong Khoi streets are fetching rental fees of between $30 to $50 per sq.m, per month. Meanwhile the first floor of high-rise buildings are offering rates from $130 to $150 per sq.m, per month.
Some of the outstanding brands which have a presence in the city are Dunkin’ Donuts, Café De La Poste, The Coffee Bean & Tea Leaf, NYDC, Highland Coffee, Windows Parkview 4 Cafe, Propaganda Saigon - Dì Hai - Món Việt, Creperie & Café, and Kem Haagen Dazs.
Retail development has been feverish as foreign and local developers compete in this rapidly changing environment.
In 2015, the year-on-year growth in retail sales stood at 9.5 per cent, which was one of the highest rates globally.
There has been significant retail related mergers and acquisitions activity throughout 2015. In 2016, there will be more space added, with new retail formats to be tested such as the Takashimaya Department Store within the Saigon Centre in Ho Chi Minh City.
