McDonald's, Starbucks return prime premises in HCMC
McDonald's Facebook page has just announced the closure of the Ben Thanh branch at 2-2A Tran Hung Dao, Pham Ngu Lao Ward, District 1, Ho Chi Minh City. This is one of the first stores of this fast food chain in Vietnam.
"Although we don't want to say goodbye, at 2:00 a.m. on September 19, McDonald's Ben Thanh will end its 10-year journey," the announcement said.
McDonald's has been present in the Vietnamese market since February 2014 with its first branch located at 2-6 Bis Dien Bien Phu, District 1, Ho Chi Minh City. At that time, the American brand announced that it would open 100 stores in 10 years.
However, after more than a decade, McDonald's has only achieved more than 1/3 of its ambition. Currently, the chain has 36 stores in several major cities and provinces such as Ho Chi Minh City, Hanoi, Binh Duong, Khanh Hoa, Hai Phong...
Although McDonald's did not reveal the reason for closing this prime location, many experts believe that the American fast food brand cannot afford the rent in the central area of Ho Chi Minh City.
Previously, Starbucks also announced the closure of the Starbuck Reserve store located in a prime location on Han Thuyen Street, Ben Nghe Ward, District 1, Ho Chi Minh City from August 26. In fact, right after Starbucks Han Thuyen (Hanoi) closed, the landlord advertised this location for rent at 700 million VND per month.
High-end rental prices in Ho Chi Minh City are at a high level.
According to data recently released in the Prime Benchmark report by Savills Asia Pacific, the retail real estate market in Hanoi and Ho Chi Minh City recorded strong growth in the first 6 months of the year.
Three emerging markets in Southeast Asia, Ho Chi Minh City, Hanoi and Jakarta, saw significant improvements in rental prices with increases of 4.7%, 4.6% and 3.8% respectively. Experts attributed this result to the rise of the middle class and the recovery of the tourism industry.
The rental price of high-end premises in the central area of Hanoi is 96.4 USD/m2 and in Ho Chi Minh City is 151 USD/m2. This price is 158.6 USD/m2 in Kuala Lumpur, 399.7 USD/m2 in Singapore and 289.5 USD/m2 in Beijing.
Ms. Do Thi Thu Hang, Senior Director, Consulting and Research Department, Savills Hanoi, assessed that the cost of renting high-end premises in Hanoi and Ho Chi Minh City is still competitive compared to many markets in the region.
In contrast, in other cities in the region, the abundant supply of retail space has created great competitive pressure, forcing owners to adjust rents to attract customers.
Data from Savills research department shows that the total retail space for lease in Ho Chi Minh City is currently about 1.52 million square meters with an occupancy rate of 94%.
Sharing details about this market, Ms. Tran Pham Phuong Quyen, Senior Manager of Retail Leasing at Savills HCMC, said that the limited supply of high-end retail has led to fierce competition for shopping mall projects in prime locations.
“However, high-end premises in Ho Chi Minh City are still mainly concentrated in the city center or developed districts such as District 7. In the coming time, the market will tend to expand to neighboring areas. In addition, in 2024, the increase in the USD exchange rate has contributed to a significant increase in rental prices calculated in domestic currency,” Ms. Quyen added.
