Recently, according to CBRE Vietnam's market report, in 2023, Vietnam's retail revenue growth reached 9.6%, lower than the 19.8% growth rate last year, but this is still a positive growth rate compared to many other countries in the region.
Data according to market report of CBRE Vietnam.
The Ho Chi Minh City retail real estate market shows resilience with sustained rental growth thanks to the active entry and expansion of high-end and luxury brands. High-quality retail space for lease in prime locations in Vietnam remains scarce, even in the two largest cities.
In Ho Chi Minh City, the average rent in the central area is nearly 240 USD/m2/month, up 6% compared to the previous year. Scarce supply has caused the rent in the non-central area to increase sharply to 51 USD/m2/month, up 28% compared to the previous year, the average occupancy rate of the whole market is approximately 91%, up 2 percentage points compared to the previous year.
Shopping malls are performing relatively well, with occupancy rates remaining high. Foreign retail brands, especially high-end and luxury brands, have mostly recorded good sales in the Asia Pacific region compared to other regions in the past year, driving continued store expansion. High-quality retail space for lease in prime locations in Vietnam remains scarce, even in the two largest cities.
According to observations from the Commercial Leasing Department, Savills Vietnam shows that economic growth and the increase in the middle class have boosted retail demand.
In 2023, retail sales of goods and services (RSGS) in Ho Chi Minh City increased by 6% year-on-year to reach 50 billion USD. Retail sales of goods accounted for 59% of the market share, increasing by 8% year-on-year, but lower than the national growth rate of 12%.
The industry groups that saw revenue declines in Ho Chi Minh City were mainly from transportation (7%), other fuels excluding petroleum (4%), and wood and construction materials (2%). According to Savills’ survey of leasing transactions from 41 key projects, fashion and food and beverage (F&B) continued to lead and accounted for 57% of total leasing area with an average leasing area of 257 m2.
Another important factor that makes the retail market in Vietnam attractive is that compared to neighboring countries such as Singapore, Thailand, Indonesia, the number of international brands present in Vietnam is still limited. This creates a large development space for brands that want to expand the market, especially looking for the first steps here.
The market also recorded a more vibrant high-end retail segment with expansion activities and new store openings. In 2023 alone, Vincom Retail - Vietnam's leading retail real estate developer - pioneered the introduction of 11 major international brands to the Vietnamese market such as: Lush, ADLV, Wulao...
In 2024, a series of major international brands such as Macy's, Sephora, Cartier, Tiffany & Co., etc. are also expected to open their first stores in Vietnam.
In 2024, two major projects Vincom Mega Mall Grand Park will open in Ho Chi Minh City.
Ms. Cao Thi Thanh Huong, Senior Manager, Market Research Department, Savills Ho Chi Minh City commented, “The economy continues to grow well despite the slowdown, consumer confidence is increasing again, creating a positive signal for the upcoming growth cycle”.
However, the current difficulty for retail brands, especially high-end retail, is the supply of premises. According to experts, the need for expansion and new openings of high-end brands in Vietnam is increasing.
The number of luxury goods and brands in Vietnam is still too small compared to the markets in Bangkok, Singapore or Indonesia in the region. The lack of supply leads to price competition and pushes up rental prices in some areas.
To solve this difficulty, domestic and foreign retail real estate developers are constantly making efforts to increase the supply of retail space for the market.
Accordingly, with 6 new shopping malls opening in 2024, including two major projects Vincom Mega Mall Grand Park in Ho Chi Minh City and Vincom Mega Mall Ocean Park 2 in Hanoi, Vincom Retail will provide the market with hundreds of thousands of square meters of retail space, helping to relieve the demand for space supply in the Vietnamese retail market.
According to the Ministry of Finance, Vietnam's retail sales in 2024 are expected to increase by 8% amid the target of a low consumer price index of below 3.5%. To boost purchasing power, the 2% VAT reduction policy is still being maintained until June 2024.
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