CBD becomes decisive to Hanoi retail market in Q1/2019
Updated at Friday, 05 Apr 2019, 08:22
The Hanoitimes - Additional space supply from central business district (CBD) makes Hanoi`s retail market more diversified and much in demand.
The retail market in Hanoi has experienced a bustling period of time in the first quarter (Q1) this year thanks to the presence of more foreign retailers and the additional space in central business district (CBD).
Total stock was approximately 1.4 million square meter (sq.m) with the addition of 16,000 sq.m from one project in the secondary area, mostly in CBD and the west, statistics by Savills Vietnam showed.
Until 2020, roughly 364,000 sq.m from 22 projects will enter the market. Retail projects within residential complexes are expected to grow amid the rising number of apartment projects in the city, mostly in the west and southwest.
The majority of upcoming space would come from large-scale and professionally developed projects such as Lotte Mall and Aeon Mall Ha Dong which are highly anticipated for their great impacts on the surrounding areas.
Retail podiums in fast growing residential areas have performed well with high occupancy rate, which lead to a rising development trend of shophouse podiums.
Stock: In another report, Savills Vietnam predicted the total supplying area this year would hit approximately 285,000 sq.m from 16 projects.
Market performance. Photo: Savills Research & Consultancy
Reatimes cited a report by JLL reckoned that the competition in the retail market would become stronger following the additional space. As a result, the rent would rise in areas outside the downtown. JLL noted that demand for retail space in the fourth quarter 2018 was boosted by diversified advertising channels.
CBRE’s statistics showed that as of end 2018, the market saw the addition of 72,500 sq.m from four malls. The main supply came from urban districts of Dong Da and Ba Dinh, and the west, with more than 60% of the total market. It added that the thin supply would switch retailers to CBD.
Future supply in Hanoi is mostly in the West. Chart: Savills Research & Consultancy
The market witnessed an increasingly diversified tenant mix as many projects have transformed into community hubs, lifestyle centers, and entertainment complexes.
Notably, entertainment providers have expanded rapidly to attract a wider demographic. Typical retail services such as spas, fitness centers, education centers and art galleries have been incorporated into many malls.
In addition, the recalibration of food and beverage, fashion, furniture, electronics, and entertainment and non-retail offerings enhances mall traffic and will lead to higher sales.
Fall short of requirements
Consumer lifestyles are rapidly evolving, requiring retailers to invest in innovation to keep up with emerging trends.
Meanwhile, retailers are expanding their social media presence to better engage shoppers.
Especially, the robust growth of e-commerce has largely left impacts on the retail segment.
With key players in Vietnam are Chinese conglomerates, Hanoi targets e-commerce sales for 2019 to comprise 9% of the total retail sales and e-business index to keep second rank nationwide.
Hoang Dieu Trang, senior manager of Commercial Leasing at Savills Vietnam, said that global luxury brands have shown interest in Hanoi, however, the market has yet to offer quality retail space matching tenants’ requirements.
The retail segment is expected to show fast growth with the investment of more foreign developers thanks to positive long-term economic prospects that lead to strong consumer confidence.
Obviously, high GDP growth, an expanding middle class and an improved trading landscape, the number of foreign retailers is anticipated to increase.