Vietnam’s economic downturn and lower consumption have not stopped retailers from moving into Hanoi’s three newest shopping centres.
Richard Leech, executive director of CBRE Vietnam, told Vietnam Investment Review’s reporter that since opening in the final quarter of 2011, Parkson Keangnam and Vincom Centre Long Bien have been fully occupied, while Savico Mega Mall has reached 85 percent occupancy.
“I think this is the result of the fact that investors of those centres had very good understanding of their business, and opened them at the right time,” Leech said.
Another reason was that all of those centres are located outside the central business district (CBD) area of Hanoi, where the population is increasing, and where there is good access and parking systems, and reasonable rental rates, Leech said.
He added that those centres had met the increasing demand from the developing areas around them. All three centres opened in December last year and they have provided around 110,000 square metres to the market.
The performance of the three new centres is in stark contrast with the poor business of Grand Plaza Department Store and Trang Tien Plaza. The former has seen tenants withdraw, while the latter has been closed for restructuring because of low shopper turnout.
Parkson Keangnam has a leasable retail area of 28,700 sqm. This is Parkson’s second centre in Hanoi, and Tham Tuck Choy, general director of Parkson Vietnam, said he planned to set up an additional four, or even six, department stores in Hanoi in the future. Parkson’s first centre in Viet Tower opened in 2008 and is 11,000 sqm.
Located in the Keangnam Hanoi Landmark Tower, Parkson Landmark 72 has many advantages with its location in the new centre of Hanoi, linked by many key highways and with access to Noi Bai International Airport.
Situated at the intersection of Nguyen Van Cu, Ngo Gia Tu and Nguyen Van Linh streets, Savico Mega Mall has transport links to downtown Hanoi and the most dynamic cities and provinces in the north, including Bac Ninh, Hung Yen, Hai Duong, Hai Phong and Quang Ninh.
Savico, developed mainly by Hanoi Savico Joint Stock Company, covers 43,000 sqm in the eastern part of the city and comprises a three-storey building with one basement level.
Meanwhile, Vincom Centre Long Bien is developed by Vingroup. With leasable area of 36,000 sqm over five storeys, the centre is home to many famous trademarks. In addition, there are a supermarket and restaurants.
Average asking rental rates in the CBD area have remained high at US$60 per square metre a month. Having had difficulties with vacancies, Hang Da is currently improving its occupancy rate. Pico Mall has compensated the loss of some shop units by opening its food court. Furthermore, the Garden Mall has improved its situation as attractive rental packages have brought in leading brands such as Mango and Charles & Keith. Rental rates in non-CBD locations have respectively declined, as more space with lower rental rates has entered the market.
With the current asking rate of US$32.20, it is likely that downward pressure will continue because of new supplies. According to CBRE, in 2012 approximately 181,000 sqm of new retail space will enter the market. These figures will heat up competition. Already existing challenges will intensify as the number of tenants will not increase significantly. Furthermore, tenants will prefer to concentrate on consolidation rather than expanding their business.
Among projects to come online in 2012 are Trang Tien Plaza (14,000 sqm), Indochina Plaza’s IPH (35,000 sqm), Habico Tower (34,000 sqm), Melinh Plaza (45,000 sqm) and Thang Long International Village (23,000 sqm). Hanoi Royal City which will supply 200,000 sqm will be finished in 2014.
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