Hanoi’s retail space showed high occupancy in the fourth quarter of 2020 thanks to increasing retail sales of goods and services, Savills Vietnam has said in a recent report.
|Hanoi's retail occupancy fueled by good purchasing demand|
Average occupancy increased by 1 percentage point (ppt) on-quarter supported by economic indicators including a rise of 5.6% on-quarter in the city’s total retail sales of goods and services at VND162.6 trillion (US$7 billion) in the fourth quarter (Q4).
The retail sales of goods and services in 2020 valued at VND584.7 trillion (US$25.2 billion), up 2.7% on-year.
Whilst high-end brands opened new flagship stores, numerous street stores remained vacant or were converted, most noticeably in the central business district (CBD) following the sharp drop in tourists.
Occupancy and rent in Hanoi's retail space. Source: Savills Research & Consultancy
During the quarter, average ground floor gross rent rose 3% on-quarter.
Total stock increased by 1% on-quarter to approximately 1.6 million square meter (sq.m) after the launch of Vincom Mega Mall Ocean Park in the East.
Footfall is recovering but yet to return to pre-pandemic levels due to limited impulse and extravagant spend to increase savings.
|Outlook of Hanoi's retail. Source: Savills Research & Consultancy|
Some 18 projects supplying over 158,000 sq.m are scheduled for launch by end 2022, including Vincom Mega Mall Smart City in 2021, the most significant. Continuous large supply expansion to the non-CBD might result to decreasing overall rent and occupancy.
Noticeably, e-commerce has shown robust growth and continues to change shopping behaviors. While classic retail was deeply affected by Covid-19, it enabled online opportunities in production and business.
Statistics by the Ministry of Industry and Trade showed that in 2020, e-commerce revenues in Vietnam rose 18% on-year to US$11.8 billion thanks to online purchase by 53% of the population.
The country’s e-commerce is expected to grow 25% per annum to US$35 billion by 2025 and the annual growth rate for Hanoi is 20% by the year.
Competition between foreign and local retailers will continue heating up in the course that Vietnam has extensive potential for development and will remain an attractive investment destination with its rising incomes, political stability, sizable population, and youth skewed demographics.
It looks as though Covid-19 will come to an end at some point in 2021 with the vaccine available, nevertheless it is crucial retailers prepare for relevant experiences and continuously pay close attention to sustainability, health measures, as well as flexibility and efficiency in retail channels, said Ms. Hoang Dieu Trang, Senior Manager, Commercial Leasing, Savills Hanoi.