According to Savills Vietnam, in the second quarter of 2023, retail space in Ho Chi Minh City decreased by 7,000 m2, the lowest since the fourth quarter of 2022. Recently, after the Miniso brand returned the space, the Thao Dien Pearl project (Thu Duc City) recorded a decrease of 3,000 m2 of consumed floor space and the investor also decided to convert the retail rental area to office rental.
Not only Thao Dien Pearl, some small-scale projects under 10,000m2 in suburban areas of Ho Chi Minh City have also had to convert their functions from modern retail space to office space for rent or co-working space. According to real estate experts, this trend has shown a reality that many retail rental projects are facing today.
Ms. Giang Huynh, Deputy Director, Head of Research & S22M Savills HCMC, said that small-scale projects often have difficulty attracting diverse tenants as well as maintaining the number of tenants. Most of these projects are located in new residential areas far from the city center with business models limited to a number of services such as F&B, convenience stores, hair care, etc.
"These are tenants who are often unable to pay high rents. Therefore, these models are mostly financially inefficient for investors. Therefore, they tend to convert the functions of these projects to more commercially effective types such as offices for rent," said Ms. Giang Huynh.
Savills' report for the first 6 months of 2023 also shows that the modern retail space situation in Ho Chi Minh City is stable in both supply and demand. The total floor supply reached more than 1.5 million square meters, unchanged from the previous quarter. The occupancy rate remained at 91%, unchanged from the previous quarter. However, the biggest problem in the retail space market is the scarcity of quality space.
In particular, retail space in central districts is always sought after by large international brands that have just entered the Vietnamese market. These brands often have strict requirements on location to ensure access to many customers, the ability to have an impressive brand presence on the street or in famous shopping centers. In fact, last quarter, the central area had a rental price of nearly 3.5 million VND/m2/month while the suburbs were only about 1 million VND.
Savills Vietnam forecasts that in the last months of 2023, the shopping mall market in Ho Chi Minh City will have 3 new projects located in areas outside the city center, with a total area of about 70,000m2. However, most of this supply is located in remote areas and in new residential areas, so the story of the problem of occupancy may repeat itself.
Similarly, the real estate market report for the second quarter of 2023 by Coillers Vietnam also pointed out that the shift of investors from the shopping mall to the office leasing market may not be entirely to find customers. Although the office leasing market was relatively stable in the first months of 2023, the occupancy rate decreased slightly in the class B segment, down to about 79%. Particularly in District 2 (old), including Thao Dien area, the first half of 2023 recorded 01 new class C project opening, while 10 other class B and C projects stopped leasing due to ineffective operations or internal use.
Source
Comment (0)