Hanoi Retail Space: Positive Signs

On supply side, in the first quarter of 2015, the total retail space supply in Hanoi dropped 4.6 percent quarter on quarter to 590,960 square metres from 19 shopping centres, two department stores, and nine retail podiums. For the first time since the second quarter of 2013, the market average asking rents in the first quarter of 2015 increased slightly by 0.7 percent quarter on quarter to US$37.4 per square metre per month. Rental rates improvement was mainly driven by shopping centres in non-CBD (central business district) area. While there were a few projects that managed to ask marginally higher rents, the majority of retail projects kept their rents stable. Average vacancy rates declined for the first time after four consecutive quarters increasing to 18.6 percent (down 0.7 percentage points) from the previous quarter. The huge supply pipeline of retail podiums in residential projects in non-CBD area in coming years should caution existing and upcoming shopping centres’ operators when pressure is expected for both rental rates and vacancy levels.

 

During this quarter, movements were observed from both local and foreign retailers. Vincom Retail aggressively expanded the Vinmart+ chain, including mini-supermarkets and convenient stores while opening two new brands VinPro (electronics outlet) and VinDS (department store) in 2015. Strong expansion was also reported from Aeon Group (Japan) and two other retailers from Thailand (BJC and Central Group) via partnership with local retailers.

 

In a recent consumer survey conducted by CBRE in August 2014 where 1,000 consumers from 18 to 64 years old were interviewed in Hanoi and Ho Chi Minh City, 25 percent of respondents said they expect to shop less often in a store. 45 percent-50 percent of respondents said that they would shop online via desktop/laptop, smartphone or tablet more often than they do now. It is surprising that 69 percent of consumers aged from 55 to 64 actually think that they would use their smartphone or tablet more frequently. Although the outlook of the brick-and-mortar format still remains upbeat, shopping centre operators should be aware of the challenges posed by online retail. This is crucial for shopping centre management and related areas such as marketing.

 

CBRE recommended that retailers and landlords should take advantage of this trend and do more online selling and advertising via social media and their well customised business to customer websites. In addition, CBRE recommend landlords adapt their strategy to boost both e-commerce and offline business activities by leveraging big data, which can track levels of consumer engagement, implement online to offline strategies, and create simple and useful applications for those who want to shop via their smartphone or tablet.

 

CBRE also said that rent of inline stores remains stable in the short term. Shopping centres with weak performance will need to re-merchandise while adding more anchor tenants.