Stiff competition continues in Hanoi’s retail property market
Hanoi continued to see fierce competition among retail properties during the first quarter of 2019, partially due to an additional 16,000 square meters from an inner-city project, reported Savills Vietnam.
The real estate services provider noted in a recent report that Hanoi’s total stock reached roughly 1.4 million square meters, with the addition of 16,000 square meters from one project alone in the secondary area, accounting for a market stake of 46%.
The average ground floor gross rent grew 2% on quarter and 20% on year, whilst occupancy edged up 2% points (ppts) on quarter but fell 1 ppts on year.
Retail podiums in fast growing residential areas enjoyed strong performance with high occupancy rates, leading a rising development trend of shophouse podiums.
Many projects have been transformed into community hubs, lifestyle centres, and entertainment complexes. Entertainment providers have undergone rapid expansion in order to attract a wider demographic.
Typical retail services such as spas, fitness centres, educational centres, and art galleries have been incorporated into many malls. The recalibration of food and beverage, fashion, furniture, electronics, entertainment, and non-retail offerings helps to enhance mall traffic and will ultimately lead to higher sales.
E-commerce on the rise
Consumer lifestyles are rapidly evolving, in turn requiring retailers to invest in innovation to keep up with emerging trends. Retailers are expanding their social media presence to better engage with their customers.
Robust growth in the domestic e-commerce market is expected to continue while key players are backed by Chinese conglomerates. For 2019, Hanoi has set the target of increasing e-commerce sales to 9% of the total retail sales and keeping its e-business index at the second place in the nationwide rankings.
The capital city also expects those involved in online shopping would account for 68% of internet users and 85% of retailers. It also looks to have 25% of all petrol stations accept non-cash payment while 95% of all firms are projected to own an official website.
Meanwhile, large-scale projects are believed to enjoy a positive outlook ahead. By 2020, 22 projects with approximately 364,000 square meters of space are expected to enter the market.
Retail projects within residential complexes are said to grow up. Large-scale and professionally developed projects such as Lotte Mall and Aeon Mall Ha Dong are highly anticipated for their great impact they could put on the surrounding areas.
Long-term economic prospects remain positive with strong consumer confidence, high GDP growth, and an ever growing middle class. With an improved trading landscape, the number of foreign retailers planning to enter the market is expected to increase.
Hoang Dieu Trang, senior manager for commercial leasing from Savills Vietnam said that global luxury brands have shown interest in Hanoi, but the market is yet to offer quality retail space that matches requirements of tenants.