|The Garden Trade Centre in Ha Noi. Rental in retail spaces in the capital city are witnessing a gradual decrease because of high vacancy rates and a large increase in new stock. — VNA/VNS Photo
HA NOI (VNS)— Rental in retail spaces in the capital city are witnessing a gradual decrease, as high vacancy rates and a large increase in new stock in the short term suggest pressure on rental levels.
According to Cushman&Wakefield Viet Nam, in 2013 many well-known international trademarks joined the Vietnamese retail market. At the same time, many property projects were completed and offered large shopping spaces, thus causing high vacancy rates, reports Vietnam Economics Times.
Also, several property developers had to improve their retail spaces and offer many promotions and incentives for leasers.
According to Richard Leech, managing director of CBRE, retail space in the capital city in the fourth quarter of 2013 witnessed the beginning of property projects developed by giant property developers, such as Vincom Megamall and Times City, offering more than 110,00 square metres of shopping space.
Two other projects, including Ocean Mall in Trung Hoa-Nhan Chinh, offered space of 18,500 square metres, along with Hong Ha centre, with a total retail space of more than 4,000 square metres in the city downtown. Meanwhile, Ha Thanh Plaza in Thai Thinh, Dong Da District, has closed for renovations.
As a result, by the end of 2013, total retail space for lease reached about 569,660 square metres, or a year-on-year increase of 91 per cent.
In addition, shopping spaces also witnessed the opening of 15 electronics centres and 14 supermarkets, to mark a strong growth in this segment.
It was also reported that the average price of total leased shopping space reached $41.4 per square metre, or a decrease of 11.9 per cent against the previous quarter.
Oversupply of retail space
The vacancy rates throughout the entire market as of the end of 2013 reached 15.9 per cent, or a year-on-year rise of 2.1 per cent.
Some shopping centers have seen the highest vacancy of 23.5 per cent, or a year-on-year increase of 17.8 per cent.
Also, vacancy rates of trade centres reached 15.5 per cent, which was attributed to the withdrawal of those leasing in many trade centres.
It was reported that in the fourth quarter last year, 324 new leasers occupied trade centres, while 140 others closed their shops in the same places.
According to statistics from Savills Viet Nam, the capital city is expected to see a significant supply from 99 property projects, with a space of 1.8 million square metres for retail space.
From 2014 to 2016, about 880,000 square metres are expected to be offered to the market. The districts in the city's downtown will supply a centre business district retail areas of 42 per cent.
The suburban areas rank second with 40 per cent. It is predicted that property developers will see fierce competition due to oversupply of retail spaces.
Further, the Ministry of Industry and Trade reports that foreign retailers accounted for more than 40 per cent of the total 700 supermarkets in Viet Nam. In addition, 31 of the total 125 trade centres have foreign investment capital, showing high interest by foreign investors in the retail market in Viet Nam. — VNS