Commercial properties in Hanoi are experiencing low demand for tenants.

On Ton Duc Thang Street ( Hanoi ), a once bustling commercial street, there is now, on average, a house displaying a "For Rent" sign every 100-200 meters. Many other streets such as Bach Mai, Kim Ma, Nguyen Luong Bang… are in a similar situation.

On Ton Duc Thang Street in Hanoi, once a bustling commercial street, there is now, on average, a house displaying a "for rent" sign every 100-200 meters. Many other streets such as Bach Mai, Kim Ma, Nguyen Luong Bang, etc., are in a similar situation.

Many street-front shops in Hanoi have "For Rent" signs up for months but haven't found tenants yet (Photo: Duc Thanh)

The streets are deserted as Tet approaches.

Gone are the colorful decorations welcoming the Lunar New Year; many shops and restaurants in prime locations are now closed. On streets like Tay Son, Ton Duc Thang, and Nguyen Luong Bang (Dong Da district), it's easy to spot houses with "For Rent" signs.

Similarly, famous streets in Hai Ba Trung district such as Hue Street and Bach Mai Street have seen many businesses returning their premises. The situation is no better on Kim Ma and Nguyen Thai Hoc streets (Ba Dinh district), with many houses quietly closing their doors and posting notices seeking tenants.

Speaking to a reporter from the Investment Newspaper, Ms. Tuyet Lan, a resident of Bach Mai Street, said that many street-front properties are seeing a decrease in rental prices. At the beginning of 2024, a 20 square meter space was rented for approximately 16 million VND per month, but now, after a long period of not finding tenants, the landlord has lowered the price to 12 million VND per month.

Most townhouses in the city center lack parking spaces and have relatively narrow storefronts and floor areas. These limitations will diminish the shopping experience for customers.

Some landlords have kept their rental prices unchanged, so tenants, facing business difficulties, have had to move elsewhere to save costs. On Ton Duc Thang street (Dong Da district), a shoe store closed down because it could no longer afford to pay the rent of approximately 10 million VND per month for a space of less than 20 square meters.

"Typically, contracts include clauses for rent increases/decreases of around 10% per year. The landlord hasn't raised the rent for the past two years, but the tenant couldn't hold out any longer because the cost of the premises was already accounting for more than half of their revenue," a resident of the neighborhood shared.

With the boom in e-commerce, some small shops are also changing their business strategies. Ms. Ngoc Yen, an office worker, said that she and her friends pooled their capital to open a clothing store in an alley on Bui Xuong Trach Street (Thanh Xuan District).

"Because the house is located in an alley, the rent is quite cheap, just over 7 million VND per month. We will use the savings from rent to run advertisements and hire KOLs to review our products on social media," Ms. Yen said.

 

Businesses' preferences when choosing premises.

According to Mr. Le Anh Thai, Deputy Director of Ngoc Nguyen Land Company, a unit specializing in leasing commercial space in Hanoi, areas that were once popular such as Hue Street, Bach Mai (Hai Ba Trung district), Ton Duc Thang, Nguyen Luong Bang, and Tay Son (Dong Da district) are gradually declining in both attractiveness and rental prices.

“Part of the reason stems from the fact that these streets have limitations in terms of car parking, narrow sidewalks, and frequent traffic jams, making it difficult for customers to shop at the stores. Besides that, although the commercial value has decreased, the rental value here remains high compared to neighboring streets with better infrastructure and visibility,” Mr. Le Anh Thai shared the reasons why many businesses are “fleeing” from major streets.

Furthermore, after Covid-19, the financial health of many businesses has not fully recovered. To save costs, many companies are looking for locations in alleyways or switching to e-commerce platforms. Once the situation stabilizes, businesses can continue to search for prime locations to enhance brand recognition.

"Nevertheless, streets like Xã Đàn, Thái Hà (Đống Đa district), Nguyễn Văn Lộc (Hà Đông district), Trung Hòa (Cầu Giấy district), Lê Đức Thọ (Nam Từ Liêm district)... are still attracting significant interest and rentals from major brands. In addition, areas near Ho Gươm Lake such as Hai Bà Trưng, ​​Lý Thường Kiệt, Trần Hưng Đạo, Quang Trung streets and the Old Quarter (Hoàn Kiếm district) are also highly sought after by large businesses," Mr. Thái informed.

According to Mr. Thai, prime locations not only bring good business results but also reflect the influence and value of the brand. This is why many large businesses in the F&B (food and beverage), fashion , jewelry, and technology sectors are willing to spend hundreds of millions of dong each month on the most desirable business locations in Hanoi, despite the ever-increasing rental prices.

According to Mr. Nguyen Chi Thanh, Permanent Vice Chairman of the Vietnam Association of Real Estate Brokers (VARS), the townhouse rental segment is facing significant competition from shopping malls and e-commerce platforms.

Notably, some fashion and accessory brands are no longer keen on renting storefronts on main streets. Instead, they are shifting to renting properties in alleyways to expand their warehouses and focus on online marketing.

The VARS expert also pointed out the disadvantages of most townhouses in the central area, such as the lack of parking spaces and relatively narrow storefronts and areas. These limitations will reduce the shopping experience for customers.

According to Ms. Hoang Nguyet Minh, Senior Director of Savills Hanoi, instead of automatically choosing a central location, businesses are now considering many more factors before renting premises. Accordingly, factors such as parking areas for shippers and customers, fire safety standards, and traffic conditions during peak hours are prioritized.

Source: https://baodautu.vn/batdongsan/mat-bang-nha-pho-ha-noi-e-khach-thue-d241419.html