Hanoi: Will the retail market "heat up" in the next 3 years?

According to CBRE's forecast, in the last quarter of 2019, the market is expected to welcome two new projects coming online, adding 88,400 m2 of retail to the market.


Including Aeon Mall Ha Dong and FLC Twin Towers. These two projects will further strengthen the leading position of Hanoi retail market supply in Dong Da - Ba Dinh area and the West.


Market in the CBD also recorded quite positive developments in the CBD. The asking price increased by 2.3% YoY and 1.1% QoQ, reaching 101.8 USD/m2/month. As there is no new supply expected to come online in this area in 2019, the average asking rent is expected to continue to grow positively, while vacancy rates remain low at less than 2%.


Compared to the same period last year, the market has received more than 90,000 sqm of retail from reputable developers and in good locations, contributing to the increase in the rent of non-CBD area.


The average rent in the region with the largest supply in the market - Dong Da - Ba Dinh and the West - reached 31.1 USD/m2/month in the third quarter of 2019, equivalent to an increase of 5.6% year on year. The vacancy rate in Dong Da - Ba Dinh and the West reached 8.4% in the quarter, equivalent to a decrease of 3.5 percentage points year-on-year but an increase of 0.1 percentage points QoQ. Similarly, other non-CBD rents increased 3.4% YoY and reached US $ 25/sqm/month while the vacancy rate increased 2.1 percentage points year-on-year, decreasing 1.5 percentage points QoQ and reached at 7.9%.


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In the next three years, Hanoi retail market is expected to be more active with new shopping centers in operation with regional scale (40,000 - 70,000 m2 of retail each shopping center). Two new Vincom shopping center projects are expected to come into operation (Vincom Megamall Ocean Park and Vincom Megamall Smart City), taking advantage of the demand from the two major urban projects in the East and the West.


Besides the big domestic company, Vincom Retail, foreign retail groups are also increasingly interested in the Hanoi market. Aeon Group also recently announced a new project of Aeon Mall Hoang Mai Shopping Center after the Aeon Mall Ha Dong project (expected to open in the fourth quarter of 2019).


CBRE said that these large-scale shopping malls are expected to be upgraded in design, product diversity and increase customer experience, thereby bringing many benefits to retailers seeking. opportunities outside the CBD - limited area of land as well as quality retail space. On the other hand, the distribution of large-scale shopping centers around Hanoi also creates certain challenges when the market does not form a concentrated shopping area.


According to CBRE, although not many new foreign brands entered the market in the third quarter of 2019, Hanoi in particular and Vietnam in general were still considered to be an attractive environment for foreign units, thanks to Economic growth and young population structure. Major international retailers such as Emart and Takashimaya have announced plans to invest in the Hanoi market, expected to start being available in the next three years.


According to Tam An