Hanoi Retail Market 3Q21
No new completions entered the market
As the pandemic resurgence got worse together with the government’s strict social distancing measures, all shopping malls closed from July 24. Therein, the opening date of some new projects, including a Regional Shopping Centre and several retail podiums, is delayed until the end of 2021 or early 2022.
Demand stays stable
Most of Prime Malls in Hanoi recorded occupancy rates at over 90%. Prime Malls in City Centre and City Fringe managed to keep their occupancy rates stable compared to the previous quarter. It seems that before the pandemic is well-contained, tenants are likely to be hesitant towards expansion activities and renewing leasing contracts.
This quarter, healthcare products and daily essentials are in the allowed-to-open-products category and attract customers to shopping malls.
Net effective rent decreased
The asking rent and face rent of Prime Malls still hold constant. Yet, given the economic uncertainty and the complicated pandemic, landlords have enhanced their support for tenants by offering flexible leasing terms such as monthly rent-free incentives during the lockdown. Besides, landlords are considering some short-term discount policies to support existing tenants and attract new ones. Hence, net effective rent was dropped significantly by 15.9% y-o-y.
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Outlook: Market sentiment expected to bounce back after lockdown
By the end of this year, Hanoi retail market is expected to welcome 40,800 sqm NLA from a regional shopping centre, namely Vincom Smart City in Nam Tu Liem District, pushing the total supply to nearly 1 million sqm. Concurrently, several community malls in mixed-use developments, scheduled to open by 2021-end, are still looking for tenants. Under current circumstances that temporarily impact the lease demand, the grand opening of these projects may be delayed.
The net asking rent is estimated to hold flat until 2021 under the lingering impact of Covid-19. Meanwhile, net effective rent will be adjusted based on the policies of each shopping mall. Besides, the market sentiment is expected to bounce back, considering the customers’ repressed craving for shopping during prolonged lockdowns. Hence, this could be a good opportunity for luxurious or deep-pocketed brands to eye for new retail space for business expansion.
- Prime rents refer to average net effective rent of Prime Mall across the city, excluding VAT and service charges. Please refer to terminology for definition of Prime Malls
- City Centre refers to Hoan Kiem, a part of Ba Dinh and Hai Ba Trung District. City Fringe refers to the rest of the city.
Source: JLL Research