The high-end retail real estate market is bustling

Thạch Lam |

The high-end retail real estate market in Vietnam is in a period of strong development with great potential for long-term growth.

Long-term growth potential

According to the socio-economic report recently released by the Directorate of Statistics, in the first 8 months of 2024, revenue from the retail real estate market is estimated to reach more than 3 million billion VND, an increase of 7.3% over the same period in 2023. The growth in retail real estate revenue was noted in a number of localities, including Hanoi.

According to the Ministry of Industry and Trade, the size of Vietnam's retail industry is expected to increase to 350 billion USD by 2025, contributing 59% of the total domestic budget.

Along with the development of the retail industry, Vietnam is also emerging as an attractive destination for high-end retail real estate investors with a rapid growth rate compared to other countries in the region. The high-end retail real estate market in Vietnam is expected to continue to grow strongly in the long term, with annual rental prices continuing to grow in double digits, despite short-term challenges.

According to the latest report of the Vietnam Association of Realtors (VARS), one of the most important factors driving the high-end retail real estate market in Vietnam is stable and rapid economic growth.

Rising demand, coupled with growing investment in urban and commercial infrastructure, has also made Vietnam an attractive market for many international retail brands. Many high-end brands from the fashion, cosmetics, home appliances and high-end food industries have landed in Vietnam, especially in major cities such as Hanoi and Ho Chi Minh City.

The investment and business environment, especially in the real estate sector, has been increasingly improved with many policies to attract investment as well as credit support and tax incentives for retail real estate development projects. Especially projects focusing on the high-end segment, also create favorable conditions for domestic and foreign investors. A series of high-end commercial centers have also been developed to meet the advanced standards of this sector.

Fast growing but modest in scale and quality

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 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%.

In addition, despite its rapid growth, Vietnam’s retail space remains modest in terms of scale, quality and experience. According to VARS experts, Vietnam needs to continue investing in infrastructure, expanding the supply of high-quality space and improving the shopping experience for consumers to attract more international investors and compete with neighboring countries.

The slow growth in supply of high-end retail space while the demand from international brands and trademarks is constantly increasing has caused rental prices in central areas in Ho Chi Minh City and Hanoi to increase, creating great pressure on high-end retailers.

Thạch Lam
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