According to Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), the retail real estate market in Vietnam is poised to become increasingly vibrant, fueled by new supply and development plans by international retail units.

Research data from VARS indicates that Vietnam’s retail real estate market is continually expanding in both scale and quality. Retail occupancy rates in major shopping centers in large cities exceed 90%. The increasing presence and expansion of international brands in the context of high-quality commercial spaces with limited supply continue to drive rental prices upward.

Rapid Recovery of the Retail Sector

Continued construction and completion of commercial center projects in central areas of Hanoi and Ho Chi Minh City (Photo: PV)

Retail is one of Vietnam’s most dynamic economic sectors, maintaining continuous and impressive growth rates over decades. It has also demonstrated one of the clearest recovery trajectories despite significant impacts from the pandemic.

Since early 2022, following a prolonged period of COVID-19 restrictions, the retail sector swiftly recovered, seizing opportunities and selecting prime locations for long-term strategies in the Vietnamese market by global retail giants, as new lease rates began to increase slightly. Overall in 2022, total retail sales of goods and consumer service revenues reached VND 5,679.9 trillion, up 19.8% from 2021 and 15% from 2019 – the year before COVID-19 struck.

In 2023, total retail sales of goods and consumer service revenues at current prices are estimated to reach VND 6,231.8 trillion, up 9.6% from 2022. In Q1 2024, total retail sales of goods and consumer service revenues at current prices are estimated at VND 1,537.6 trillion, up 8.2% from the same period in 2023.

In the Hanoi market, ground floor lease rates in 2023 recorded an approximately 10% increase from the previous quarter with stable rental capacities; the market in Ho Chi Minh City also saw growth with major tenants leading market demand.

Attracting Major Investments

As one of the fastest-growing economies in Southeast Asia, Vietnam’s retail real estate market is opening up a range of new opportunities for investors and businesses in the sector, especially supermarkets, convenience stores, and fashion brands, from affordable to luxury segments – which are still relatively scarce compared to neighboring countries in the region.

“The retail real estate market will become increasingly vibrant with new supply and development plans by international retail units,” said Mr. Nguyen Van Dinh, Chairman of VARS.

Central Retail (Thailand) has announced plans to expand retail points from the current 40 provinces and cities to 55 nationwide. Similarly, Aeon Group (Japan) is planning to implement 16 additional projects in Vietnam by 2025, including 3-4 projects in Hanoi. They will also introduce new retail models to meet customer needs, paving the way for future development.

FujiMart Vietnam, a supermarket chain joint venture between BRG Group (Vietnam) and Sumitomo Corporation (Japan), aims to reach a total of 50 supermarkets by 2028. The influx of fashion brands from high-end to mass-market segments such as Uniqlo, Muji, Dior, and Cartier in recent years has been more vibrant than ever.

Analyzing Vietnam’s retail commercial real estate market, Mr. Nguyen Van Dinh believes that this market remains highly attractive with considerable room for development and potential. Specifically, he highlights four key aspects:

Firstly, the rapid urban population growth and income increase have generated significant demand for real estate, particularly in retail, as people seek more convenient living and shopping spaces. The growth of major cities like Hanoi and Ho Chi Minh City not only presents opportunities for real estate developers but also a promising market for retail brands to expand their business operations and develop new real estate projects.

Secondly, Vietnam is witnessing the development of major cities such as Hanoi, Ho Chi Minh City, Da Nang, and satellite areas as investment policies improve urban infrastructure, including urban highways and railways, facilitating easier movement and connectivity between urban areas. This development not only creates opportunities for new real estate projects but also opens up potential for retail businesses to expand their store networks and operations.

Thirdly, playing a crucial role in Vietnam’s economy, with the goal of becoming a leading economic sector, the development of the tourism industry is creating new opportunities for the retail real estate market. Developing tourism areas such as Phu Quoc, Nha Trang, and Da Nang are increasingly attracting the attention of investors and retail businesses with long-term development potential.

Fourthly, Vietnamese consumers are becoming increasingly savvy and have high demands for shopping experiences. They not only seek quality products but also demand diversity and convenience in their shopping experiences. This creates opportunities for retail brands to develop new business models, including integrated shopping centers with multiple services, shopping areas dedicated to entertainment and dining, and product experience stores.

It is evident that Vietnam’s retail real estate market is not just a business opportunity but also an integral part of sustainable economic development. Understanding the trends and opportunities in the market will help businesses leverage potential and achieve success in the future.