Disposal brands still favor areas around Hoan Kiem

Factors of diversified supply sources, competition from brands, and the participation of international brands are promoting the development of the retail market in Hanoi .

Ms. Hoang Nguyet Minh, Senior Director, Commercial Leasing Department, Savills Hanoi, shares about the current outstanding developments in the retail market, while emphasizing future trends and prospects.

Luxury goods stores still prefer to choose the area around Hoan Kiem, picture 1 — Hoan Kiem area, with its position as the historical and cultural center of Hanoi, attracts a large number of civil servants, tourists and local residents. (Photo: PO)

How do you evaluate the Hanoi retail real estate market in 2023?

- Data from Savills Vietnam's recently published Q4 2023 market reports shows that since 2019, the supply of retail space has remained stable, with shopping malls increasing by 2% annually, and retail podiums recording the highest increase at an average of 7% annually. In Q4 2023, the total retail supply reached 1.78 million m2, of which shopping malls accounted for 63% of the supply, equivalent to 1.1 million m2.

Retail occupancy in Q4 2023 increased by 2% q-o-q to 88%. Of which, retail podiums recorded the highest occupancy increase of 4 percentage points, followed by shopping malls with an increase of 2 percentage points. Shopping malls had the largest additional leasable area and accounted for the highest proportion.

The emergence of diverse new brands, along with the expansion of international brands, not only provides more choices for consumers but also contributes to enhancing Hanoi's position on the regional retail map.

According to you, which retail model has been "popular" with retail tenants in the past year?

- In the Hanoi market, location plays an important role in the rental decision of brands. With the differentiation of areas, each place brings its own unique characteristics to serve the diverse needs of brands.

For example, the Hoan Kiem district, with its status as the historical and cultural center of Hanoi, attracts a large number of civil servants, tourists, and locals. The area is often home to government agencies, embassies, and headquarters of multinational corporations, and it continues to maintain its appeal, especially to high-end brands.

In addition to existing brands, other high-end and luxury brands in the world are still interested in this area and are looking for premises suitable for their brands and models.

However, in reality, shopping malls are the retail model that many tenants are interested in, especially with high-quality premises, full legal status and ensuring fire prevention and fighting standards.

It is important that these shopping malls are well organized, from advertising strategies to tenant zoning and operational management strategies, as these are important factors in operating and maintaining the shopping mall.

The key to the success of modern shopping malls lies in the integration of well-planned tenant zones, retail and entertainment brands, and food and beverage services. Today's customers are not just looking for a place to shop, but also want a comprehensive experience with entertainment and dining options.

Luxury goods stores still prefer to choose the area around Hoan Kiem, picture 2 — This area still maintains its appeal, especially for high-end brands. (Photo: MN)

According to her, what will be the trends in the retail market in the near future?

- Retail market trends in the coming time will be shaped by factors such as increased spending on services, a move towards sustainable and environmentally friendly stores, and a focus on providing unique experiences for customers.

In the future, the Vietnamese retail market will witness strong growth in the food and beverage (F&B) industry. Entertainment retailers such as cinemas and amusement parks will also attract a large number of customers.

The combination of online and offline shopping through a multi-channel retail strategy is also becoming increasingly popular, offering customers a flexible and convenient shopping experience. Retailers are creating unique shopping spaces and new experiences, transforming retail into an innovative and attractive experiential destination. This will undoubtedly increase the competitiveness of the Vietnamese retail market in the coming years.

What is the outlook for the market in the coming time, both in terms of opportunities and difficulties and problems that need to be solved, madam?

- The outlook for the Vietnamese retail market in 2024 presents both opportunities and challenges. On the one hand, retail supply remains limited, and reputable developers hold the majority of high-quality supply, especially in central city areas. This requires retailers to build strong relationships and be willing to pay higher rents to access prime locations.

On the other hand, the number of reputable developers offering high-quality projects in suburban areas has increased, providing retailers with more choice in terms of location and affordability. This has prompted the emergence of new stores in non-central locations, after success in previous locations, expanding to more non-central areas.

According to Savills Vietnam's statistics, retail supply is expected to increase by 247,601 m2 between now and 2025. However, the challenge of limited supply in city centers persists, with only 0.4% of future supply located in the central area, requiring retailers to continue seeking innovative and flexible solutions in location selection and business models.

Thank you, ma'am!

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