The retail space leasing market in Ha Noi has recorded its best occupancy and rental rates in the last five years, according to Savills Vietnam.

Local products are displayed at the Aeon Mall in Long Bien District of Ha Noi.

The property consultant said at a press conference on October 11 that the average occupancy rate has hit a five-year high of 95 per cent, up 11 per cent year on year.

Retail space rentals have increased by about US$7 per square metre to around $45 per square metre. Notably, all retail space for lease in the inner district of Hoan Kiem has been occupied. Other downtown districts like Hai Ba Trung, Dong Da and Tay Ho have also reported improvement in both rental prices and occupancy rates.

Do Thu Hang, Deputy Director of Savills Ha Noi’s research division, said an 8.1 per cent rise in retail sales helped boost occupancy. With personal consumption in Viet Nam forecast to grow faster than in other countries in the region, and inflation kept at below five per cent, retail market prospects are bright, according to Savills.

Other property experts have also noted that Viet Nam’s consumer confidence index has reached a high level, which means they will be more ready to spend. These are favourable factors for the retail space for lease market to continue flourishing.

JJL Viet Nam, another foreign property service provider in Viet Nam, said at its third quarter report on Ha Noi that no new shopping centre was built during the period. The total available space remained unchanged at nearly 970,000sq.m with 24 projects. The districts of Thanh Xuan, Hai Ba Trung and Long Bien accounted for 70.9 per cent of total stock, it said.

Convenience stores continued to boom in the Ha Noi market with the increased presence of both international and local brands. The average size of these stores was approximately 40-50sq.m in the central business districts (CBD) and around 80-100sq.m in the non-CBD sub-market.

More than 16,700sq.m of retail space was taken up in Q3. Thanks to many promotion programmes in new shopping centres and lower rent in older malls, overall occupancy increased to 82 per cent in Q3, up from 80.3 per cent in Q2/2017.

Retail space supply is likely to increase significantly in 2018 with 322,000sq.m entering the market.

Zara Vietnam will open its first Ha Noi store later this year. Another two huge projects, AEON Mall Ha Dong and Ciputra Mall Ha Noi are expected to enter the market in 2019-2020.

The lower-than average rents expected for news projects and abundant supply are likely to result in downward pressure on rents in the future, according to JLL Viet Nam. 

VNS