A shopping mall in HCM City. Large retail formats are forecast to dominate the retail property market. — Photo Internet
Large retail formats will dominate the retail property market in HCM City, especially destination and lifestyle malls in township projects, market researchers have predicted.
Looking forward to 2030, CBRE said many street shops in the Central Business District (CBD) will be styled up as appearance will become an important factor to attract shoppers. The Thu Thiem new urban area will become a new entertainment and shopping hub for Viet Nam by that time, it said.
CBRE noted that the HCM City retail market is shifting gradually from small-scale shopping malls to destination malls which focus on millennials and provide millennials with experience-based shopping.
These malls require the presence of anchor tenants who are usually large and draw a high level of foot traffic. Anchor tenants in HCM City’s most popular shopping malls have traditionally been confined to cinemas and supermarkets but now fashion stores are a new type of anchor tenant that has taken over 1,000sq.m of Net Leased Area (NLA), such as Zara, H&M and Uniqlo as the latest examples.
“Usually, anchor tenants in the fashion category are well-known international brands and are very sought after by young people, and thus create a constant strong flow of foot traffic even on normal days. For this reason, landlords usually offer an attractive mix of turnover share and base rent for these anchor tenants. The trend will grow in the future as it brings many values to retail projects. Other trends that will continue to grow are green living, health consciousness, food & beverage (F&B), entertainment, lifestyle stores, and more,” said Thanh Pham, senior manager at CBRE Vietnam.
In the next three years, the HCM City market will welcome more than 400,000sq.m NLA of new supply and most of that will be in the non-CBD area, according to CBRE’s report.
In the CBD, construction of The Spirit of Saigon was restarted in Q4 2019 and Parkson Saigontourist Plaza is expected to re-open this year. Other projects do not have clear construction plans.
Most of the future supply will be clustered in the East, accounting for over 70 per cent of new supply, followed by the West and the North. The Central and The North will not record new developments. Rental rates are expected to grow healthily in the next two years in both CBD and non-CBD areas, while the occupancy rate will slightly decrease yet still remain at a level of above 90 per cent.
Commercial real estate services firm JLL predicted that some shopping malls in non-CBD areas will enter the market this year, namely, Satra Centre Mall, Socar Mall, Elite Mall and Central Premium Mall, contributing more than 280,000sq.m of Gross Floor Area (GFA).
In addition, after renovation and brand restructuring, some existing malls are expected to improve their occupancy rate.
As a new trend in the market, both retailers and mall developers are reinventing themselves with a focus on F&B and experiential retailers, providing better customer services and applying technology and consumer analytics to enhance their popularity and increase foot traffic, JLL research has predicted. — VNS