Fierce competition in retail property scene
Fierce competition in retail property scene
Although e-commerce is evolving rapidly, 90 per cent of retail revenue comes from shops and shopping centres, which made the real estate segment for retail leasing vibrant.
The first half of 2019 has just ended with four new retail projects at emerging locations in non-CBD (central business district) areas. As a result, the total retail supply increased by approximately 65,700 square metres to just over 930,000 sq.m.
Two new projects, Vincom Plaza Skylake and Vincom Center Tran Duy Hung, are located in the major retail clusters of Hanoi, midtown and the west, accounting for just over 60 per cent of the total supply in the market. The other new projects, Plaza Ancora and Sun Plaza Thuy Khue, added around 29,900sq.m NLA (net leasable area) to the north and the south, according to CBRE's second-quarter 2019 report.
Looking into the second half of the year, two new retail projects are expected to be rolled out with the total scale of 80,800sq.m, including AEON Mall Hadong and FLC Twin Towers, reaffirming the leading position of midtown and west as major retail clusters.
Ground floor rents in the CBD area picked up slightly in the second quarter, reaching $100.7 per sq.m per month, up 1.6 per cent year-on-year and 0.7 per cent quarter-on-quarter. As no new supply in the CBD is expected to open this year, average asking rents in this area will continue to post positive growth in the coming year while vacancy will continue to stay as low as below 2 per cent.
Meanwhile, ground floor rents in the largest retail supply cluster midtown and the west increased to $31 per sq.m per month in the second quarter, up 6.2 per cent year-on-year, as the market continued to see more high-quality supply from reputable developers in this area. Vacancy in these areas stood at 8.3 per cent.
On the demand side, the Vietnamese market experienced very positive consumer sentiment. Moreover, the rising effect of e-commerce and millennials' changing shopping habits are expected to reshape the future of retail in general and the local market in particular.
New shopping malls should be expected to have modern design and focus on customers' experience while bringing technology into delivery services and online platform. The active convergence of online and offline retail strategies is forecast to strengthen in the near future to boost retail sales and at the same time attract potential consumers.
Over the last time, there has been a contradictory scene of success and struggle among retail stories in Vietnam during the first half of 2019. While various food and beverage chains continued to outperform and keep expanding in the local market, supermarkets continued to see the consolidation trend with the exit of French supermarket Auchan, who sold its portfolio to locally owned Saigon Co.op.
Earlier last year, Vingroup also acquired the Fivimart chain from AEON Group, making it the supermarket leader in Hanoi. In last March, the online fashion arm of Central Group, Robins.vn was suspended, following the closure of online website vuivui.com operated by Mobile World in December last year.
As a result, according to Desmond Sim, head of Research, Southeast Asia, CBRE, "Technology will shape the future by focusing on customer emotions and experience, the power of prediction, building brand ambassadors, and product experts, and focusing on robotics and automation."
