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News Release

Vietnam

HCMC Retail market Q2 2017 – JLL

By JLL


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Vietnam, 12 July 2017 – The domestic retail market is attractive to foreign retailers because of the high population of more than 90 million people at end-2015, stable economic growth and gradually increasing GDP per capita with a compound annual growth rate of 12% during the last ten years. There have also been improvements in the legal system related to investment activity and policies aimed at attracting foreign investment. Existing foreign retailers are actively expanding their retail chains, while new brands are looking at the potential of the market. In the meantime, domestic retailers such as Vingroup and Coop.Mart are also increasing the number of projects to maintain market share.

Supply Increases Sequentially

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  • As at 2Q17, the supply of premium retail space witnessed the arrival of 19,000 sqm of department store in the non-CBD area, pushing total stock to more than 858,000 sqm citywide.
  • Convenience stores remained robust in the period, with total existing supply reaching nearly 244,000 sqm, mostly supported by huge local and foreign retailers, such as Vinmart, Circle K, B'mart, Satrafoods, etc. In addition to that, in the first half of 2017, HCMC welcome one new entrant entering to this segment, 7-eleven. Until now, the Japan-based brand has operated four convenience stores across the city, mostly located in CBD area. ​

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Rents Continue To Trend Upward

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Average Rental Rate (US$/sm/month)

  • The average gross rate in the retail market was USD 46.7 per sqm per month as at end-2Q17, up 0.9% q-o-q.
  • With regards to location, the gross rate in CBD recorded around USD 73.4 per sqm per month in 2Q17. Meanwhile, the average rent of non-CBD projects tend to increase gradually, at USD 37.4 per sqm per month, up 0.2% q-o-q and up 1.4% compared to end-2015.

A Modest Drop In Demand 

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Occupancy Rate

  • As of 2Q17, the occupancy rate saw a slight decline of 0.4% q-o-q to 91.7%, yet a marked increase of 0.7% q-o-q. Namely, the take-up rate of prime shopping malls remained relatively constant (87.1%), while the non-CBD projects experienced a mild fall to 93.2%, down 70 bps q-o-q due.

Tenant market

  • CBD shopping centres are occupied by a number of favourable cross-border retailers in Fashion, Cosmetic, F&B industries, for example, Tous Les Jours, Baskin Robbins, Highland Coffee, KFC, Lotteria, PizzaHut, Old Navy, Zara, Nars, etc. Notably, Vingroup – the largest domestic developers supplies a wide range of its brands, such as VinDS (including Beautyzone, Sportworld, Shoecenter), Vinpro, and high-end outlet - Fashion Megastore with a total area up to 5.000 m2, just in Vincom shopping malls.    
  • Moreover, the local retailers mainly situate on the outskirts, thanks to a strong demand of residents. Besides, in the recent years, other facilities are tending to popular in HCMC shopping malls, for example, English centers, bookstores, Gyms or cinema coming from CGV, California Fitness & Yoga, Wall Street English, Tini World, Dream Game Center, etc.

Outlook

  • Between now to end-2017, the city will welcome a retail space of 103,000 sqm, in which Gargen Mall (well-known as Thuan Kieu Plaza) with nearly 25,000 sqm and Pearl Center with 30,000 sqm in District 2.
  • The battle between domestic and foreign retailers is expected to be hotter for maintaining the efficient performance as well as competing directly to extend their market share when upcoming storm of international brands.

     
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