“Successful retail property developers will find ways to attract retail businesses, so it’s a mistake to keep thinking about the project,” says Matthew Powell, director of Savills. in Hanoi comment.
Shopping behavior is transforming the retail market
Retail in Vietnam is an attractive market, demonstrating that Vietnam is ranked 6th in the world according to AT & T’s 2017 Retail Growth Index.
Investors have the potential to be the ideal destination for retailers such as customer confidence, the boom of e-commerce, free trade and infrastructure is constantly being upgraded and developed.
In addition, the retail market in Vietnam still has many opportunities for development by retail density in Hanoi and Ho Chi Minh City being currently at 0.26 and 0.12 sqm retail per person, much lower than other regional cities such as Bangkok, Singapore and Kuala Lumpur.
Although there is a potential development platform, Vietnam’s market needs not only the quantity but also the quality of the retail space. In Vietnam, the difference between the largest market is Hanoi and Ho Chi Minh City.
Specifically, the retail space in HCMC. HCMC is more concentrated in the central area with a rate of 13%, higher rents, high occupancy rate and stability. Meanwhile, Hanoi provided only 2% of the total retail area in the central area due to limited land funds, high land prices and height limits.
Retail sales also experienced a drop of 15.5% y / y in Q1 FY2010 and occupancy was only 85%, leaving 186,000 m square empty area.
In addition, Vietnam is in a period of economic transition, with profound changes in customer behavior. This can be seen in the gap between the expansion rates of different retail sectors.
In particular, popular fashion at affordable prices, close to the global average price is now the most developed industry. Followed by other industries such as cinema, entertainment and food. Retailers are getting more responsive to their daily needs and offering better prices to consumers.
As for luxury goods and jewelry, the selling price is 20% to 50% higher than the world average due to tax implications and valuation issues. Enterprises in this industry are currently focusing on improving the business of existing stores, shrinking and even closing down some stores.
It’s not the time to “celebrate”
Retail in Vietnam is a dynamic and competitive market. In order to survive new retail real estate projects, new and innovative designs and utilities should be introduced to attract customers.
There are a number of trends that developers and developers can take into account: gadgets, amusement parks, sportswear, new technology or co- Working is quite popular.
One of the things that developers should be cautious about is retail development, such as quality planning and design, quality of management and marketing of the trade center, competition from small retailers. street vendors, informal retailers and alternative retailers.
“The retail market has a lot of potential and opportunities. This is a very good time for Vietnam’s retail industry, but it’s not a time for real estate retailers to celebrate.” Matthew Powell warned.
One of the most important questions posed to retail businesses in developing cities is how to develop them. Centralized locations can be a safe solution but require higher costs, while emerging areas, at lower cost, are more likely to be at risk.
In addition, retail space markets in cities are constantly changing, and higher-quality projects will quickly overtake previous projects.
Under the new development trend, retailers looking to expand will find reputable developers to cooperate. Successful retail property developers will find ways to attract retail businesses; The mistake is to keep thinking “keep building the project, tenants will find.”
“Our advice for developers and real estate retailers is to combine careful project research and planning with a long-term vision, a realistic assessment of the level of edge. the future of the market and how the changes in the retail market will affect its real estate project.
Retail customers are changing day by day; The future will be the people of the technological age, with the era of smartphones, Facebook or other technological gadgets. Retail businesses will have to constantly change to keep up with trends; Retail real estate projects need to be adaptable so that they are not eliminated in this extremely competitive but highly competitive market, “commented Matthew Powell.
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