Retail space supply continues to increase
Entering 2025, the Vietnamese retail market continues to record positive growth signals as the economy maintains its growth momentum, the middle class increases rapidly and modern consumer demand is expanding. However, the market also faces many challenges, especially from changes in consumer behavior, competitive pressure from foreign investors and the explosion of e-commerce.
According to Ms. Phan Thanh Huyen - analyst, Analyst, VNDIRECT Securities Joint Stock Company, the Vietnamese retail market in 2025 is expected to continue to maintain its appeal. The demand for renting premises is still high, especially in the two major cities of Hanoi and Ho Chi Minh City, despite the increasing supply.
Data from CBRE shows that the average rental price in the central areas of Hanoi and Ho Chi Minh City in 2024 has increased sharply, respectively 16.2% and 15.4% over the same period, reaching 173 USD/m2/month and 280 USD/m2/month.
The occupancy rate in both Hanoi (nearly 90%) and Ho Chi Minh City (about 93%) will improve in 2024, thanks to the high absorption rate of the site.
It is forecasted that in 2025, Hanoi will welcome about 115,800m2 of new net leased area, while Ho Chi Minh City will add nearly 40,000m2, equivalent to an increase of about 10% over the same period.
Large retail developers are continuing to push forward expansion plans in Vietnam. Many international brands such as AEON Mall, Lotte Shopping or Vincom Retail are planning to open new shopping malls in key cities, while focusing on improving operational efficiency and optimizing customer experience. However, the completion of legal procedures is still a barrier, causing the progress of some projects to be slower than expected, said Ms. Phan Thanh Huyen.
Traditional retail adapts to e-commerce trends
According to experts, to take advantage of the opportunity, investors need to continue to expand their high-quality premises, while flexibly adapting to modern consumption trends, including effectively combining traditional retail and e-commerce.
The strong development of e-commerce is gradually changing consumer habits in Vietnam, but the traditional retail system with physical stores still plays an important role in the market.
Mr. Matthew Powell - Director of Savills Vietnam commented that the flexible combination of online retail channels and traditional store models is becoming a main trend. According to him, this integration helps businesses take advantage of the advantages of digital technology to expand the scale of operations, while maintaining a direct shopping experience and on-site consulting services, which are factors that are difficult to completely replace with online platforms.
The expert said: Vietnam possesses a unique traditional retail culture, in which retail space not only plays the role of trading goods but also acts as a place to connect the community. Therefore, although e-commerce continues to grow, physical stores will still hold a certain position in consumer life".
With the advantage of a young population, an expanding middle class and an increasing demand for shopping experiences, the Vietnamese retail market is expected to continue to be an attractive destination for international brands. However, Mr. Powell emphasized that to effectively meet the increasingly diverse needs of consumers, investors need to focus on improving site quality, improving customer experience and developing a multi-channel retail model in line with modern consumer trends.
