One thriving, one not: the tale of two expensive retail streets

According to U.S. property consultancy Cushman & Wakefield (C&W), HCMC’s Dong Khoi, where the rent averages US$390 per square foot per year ($350 per square meter per month), ranks 13th in the world.

The 800-meter-long street has stores selling many famous fashion, cosmetics and food and beverage brands.

A few hotels aside, most of its buildings are small at 100-200 sq.m.

Before Covid-19 hit, whole buildings cost VND300-450 million (US$11,970-17,950) per month to rent.

But this year many of the buildings lie empty amid the economic downturn.

Along the street, especially in the section between Ly Tu Trong and Ton Duc Thang streets, “For rent” signs can be seen on dozens of buildings. More are unoccupied but their owners are afraid putting up the sign for fear of devaluation, according to property brokers.

A broker says a 120 sq.ft property near the corner of Ly Tu Trong with a ground floor and a mezzanine that he is looking to rent out has an asking price of $13,000 a month.

But the landlord might agree to cut the rent to $12,000, $4,000 less than five years ago.

The broker said another building on the street near Mac Thi Buoi Street measuring 50 sq.m has a rent of $10,000.

Near the Dong Khoi Vincom Center, a 40 sq.m property with three floors has a price tag of $11,000, but its owner is willing to cut it to $9,500.

Smaller properties are available at VND100-160 million ($4,000-6,380), some as low as VND70-90 million.

Like elsewhere in downtown HCMC, rents have declined on Dong Khoi since the pandemic.

It may be a perfect street for businesses, but like other streets near Ben Thanh Market, it mostly attracts foreigners, Ta Trung Kien, deputy CEO of property developer Wowhome, says.

Not many businesses can afford to rent space on the street while property owners are wealthy and can afford to wait for rents to go back up instead of devaluing their assets.

Meanwhile, Hanoi’s Trang Tien Street is almost fully occupied.

Louis Vuitton (left) and Dior (right) stores on Trang Tien Street. Photo by VnExpress/Anh Tu

With average rent at $300 per square meter per month, it ranks 17th in the world according to C&W, but only a few properties near the Hanoi Opera House are vacant now.

Several high-end fashion brands like Louis Vuitton, Sandro, Kenzo, Rimowa, Boss, and Longchamp have stores on the street.

The 400-meter street has around 100 buildings, many of them owned by the government.

Hoang Nguyet Minh, senior director of real estate consultancy Savills Hanoi, says Trang Tien can be separated into two areas, one from Ngo Quyen Street to the Hanoi Opera House, which has luxury stores like Louis Vuitton and Dior.

The rest of the street does not garner much interest from major brands.

Rents in the first area are three to four times higher than in the second, and often as high as on Dong Khoi Street.

A few unoccupied spaces on Trang Tien Street. Photo by VnExpress/Anh Tu

Analysts predict an imminent rise in central Hanoi’s rental prices, attributing it to a scarce supply of retail space, particularly for high-end brands, currently limited to 3,500 square meters.

According to Minh, the supply is enough to satisfy demand for now, but brands seeking to expand and new entrants to the country will soon push up demand for retail space.

The number of high-end brands in Vietnam is still small compared to neighboring countries like Thailand, Singapore and Indonesia.

The lack of supply will lead to fierce competition which will drive up rents on Trang Tien, especially in its prime area, Minh adds.