Currently, Hanoi has a total retail space of 117,000 m2, mostly rented at high rates.
For instance, the average price in its inner districts such as Hoan Kiem and Dong Da hovers around US$60/m2.
Retail market potential
Vietnam is maintaining a “golden” retail index in the world with 68 percent of its population being under 40 and 15 percent of which often go shopping at trade centres.
According to CB Richard Ellis (CBRE) Vietnam Director, R. Leech, this does not mean traditional markets will disappear as there will be some changes to better satisfy people’s needs.
Vietnam’s total retail sales have declined in the last two months, making it difficult for retailers operating in the country. In Hanoi, which has a high purchasing power, upmarket fashion clothes are no longer sought after by customers as they are not essential products.
Most retailers are new and short of customer care staff, while their marketing capacity is poor and ineffective, Leech said.
Worse still, relevant agencies have detected a series of fake goods and knockoffs on sale at famous trade centres.
At the opening of the Pico Mall trade centre, its Director Michael Vong told the press that to ensure consumer rights, the centre has asked shop owners to sell products of clear origin only. If they violate their commitment, they will be dealt with strictly.
Deputy Director of Pico Joint Stock Company, Trinh Duc Tuan said, “We are very careful about choosing renters. Small retailers are often rejected for lack of long-term planning. At present, 86 percent of the centre’s retail space has been hired.”
Retail space close to saturation
As many as 850,000 m2 of retail space, including 347,000 m2 in Hanoi will be launched onto the market by the end of this year. The total space for retailers in Hanoi and HCM City is predicted to hit 3 million m2 by 2012, not to mention large supermarkets such as Big C and Metro, even though it is too small to compare with other cities in Asia.
Little wonder that foreign real estate investors are very keen to exploit the retail market in the country. Despite this fact, the number of retailers wanting to expand their business is not increasing in tandem with the development of retail space in major trade centres.
In the latest report released at the Asian real estate forum, CBRE said the flow of investment capital into the Vietnamese real estate market is slowing down on account of wrong location decisions and other problems related to application for investment and business licenses. If foreign investors fail to make a good profit from their projects, they will pick up the slack in other markets, Leech noted.
VOV
