The economic situation is causing retailers in Hanoi and Ho Chi Minh City to relinquish their leases, according to property consultancies and analysts.
In the last two months many malls and commercial podiums in HCMC have been reporting higher vacancy rates after tenants moved out. The vacancy rates are lower in the downtown area.
According to real estate consultancy Savills Vietnam, retail spaces outside the downtown area, especially on higher floors and in old buildings, are the worst affected.
Of those moving out, 24% were in fashion, 22% in food and beverages and 20% in entertainment and education.
According to a report by real estate service provider Cushman & Wakefield, the occupancy rate decreased by five percentage points since late 2022, increasing the vacancy rate to 12%.
In Hanoi, Discovery Complex in Cau Giay District has eight floors for offices and shopping, dining and sports outlets, but only the ground floor and parts of the second and seventh floors are occupied.
Many places for lease in other buildings such as Artemis and MIPEC Tower are also vacant.
Analysts said the exit by retail, services and entertainment brands is determined by location and rentals, but is greatly influenced by the economic situation.
Trang Minh Ha, chairman of consulting and training firm North Stars Asia, said the International Monetary Fund has forecast global economic growth to slow down to 2.7% this year from 3.2% last year, and the slowdown is affecting consumer demand in many countries, including Vietnam.
According to data from the HCMC Statistics Office, accommodation and catering services’ revenues in the first two months of this year were up 1.2% year-on-year but down 6.2% from the same period in 2019 before Covid broke out.
Most retailers on the 3rd to 6th floors of the 68-story Bitexco Financial Tower in HCMC have moved out in recent times. Photo by Phong Anh
According to Trang Bui, executive director of Cushman & Wakefield Vietnam, improper arrangement and management of retail spaces are also driving tenants away amid the difficult economic situation.
Young people are key customers for modern commercial traders, and so many buildings are rearranging retail spaces, especially shopping and amusement, to attract them, she said.
Trang Minh Ha, chairman of consulting and training firm North Stars Asia, said to overcome the current difficult period, owners of retail spaces in HCMC’s suburban areas should lower rents, the Department of Tourism should organize more festivals, exhibitions and other events to stimulate demand and the government should subsidize hotel rooms and airfares for domestic tourists,.
“Spurring tourism demand can create more opportunities for the retail industry.”
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