Article

HCMC Retail Market 3Q21

Landlords continued offering rental concessions during the lockdown

October 01, 2021

Malls shutdown during 3Q21

Since early June, HCMC was under lockdown for 120 days, shutting down all retail centres except stores selling necessary merchandise. Meanwhile, some shopping centres continued to delay their scheduled openings to 2022, despite completing construction.

Limit leased transactions

The fourth outbreak coupled with strict social distance policies limited new retail lease transactions in 3Q21. While most landlords have yet to announce their tenant structure plans due to the uncertainty of the pandemic, tenants are also adopting a “wait-and-see” strategy.

Landlords continued offering rental concessions during the lockdown

Continuing with the rental concessions policy in June 2021, most landlords offered incentives like rent discounts or rent deferment during three months of social distancing in 3Q21. As a result, key shopping malls’ actual average rental rate fell by 8.3% q-o-q, at USD 30,7/sqm/month.

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Outlook: Market to face downward pressure

Although HCMC has lifted social distancing since early October and allowed shopping malls to start operations, landlords and tenants are still cautious about the reopening plan. Their main concerns are the slow resuming of footfall and the costs incurred to contain the pandemic. However, in the medium and long term, with vaccinations and reopening plans in HCMC, we expect the city to resume its status of being an attractive destination for big international brands, thanks to its advantages in population scale and high urbanisation rate.

The opening plans of new retail centres will be deferred to 2022, including Socar Mall and other neighbourhood shopping centres in the podium of mixed-use projects if they can not meet required occupancy rates. For existing shopping centres, some landlords are planning to restructure the tenant/floor plan to create a new face for the malls when reopening.

The asking rent and face rent tend to remain stable. However, the effective rent is expected to increase as rental concessions may stop when malls reopen. Support policies between landlords and tenants will be negotiable on a case-by-case basis as landlords are also under financial pressure after more than 120 days of decommissioning the malls.

Note:

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 District 1. City Fringe refers to the rest of the city.

Source: JLL Research