Vietnam prime malls 'fare well' with less than 10% vacancy

Vacancy rates generally held stable, thanks to firm occupier demand.

The market saw an improvement in net absorption in 4Q20 in both submarkets, mainly contributed by international tenants, says JLL.

International brands, despite the second wave of outbreak, continued to expand in the quarter, including Uniqlo, Giordano, ACE and Watson, etc. This showed retailers’ confidence in the Vietnam consumption outlook in the long run, and the challenging period was believed to be only temporary.

Malls still fare well with less than 10% vacancy

In 4Q20, no new supply was recorded in both submarkets. Total prime retail space in the HCMC City Centre and City Fringe stood at 81,300 sqm and 453,300 sqm, respectively.

Generally, vacancy rates of all prime malls held stable, supported by firm occupier demand. Good tenant mixes with a variety of quality tenants in prime malls has helped the market fare well, with vacancy rates of less than 10% amid the challenging environment. Only Bitexco Financial Tower with vacancy rising slightly y-o-y to 17% in 4Q20, was challenged in attracting new tenants.

Rents remain stable y-o-y

Rents remained stable q-o-q and y-o-y, driven by the recovery of market sentiment due to Vietnam’s relative success in containing the COVID-19 epidemic.

The capital value slightly increased by 6.3% y-o-y and 4.0% y-o-y in City centre and City Fringe, respectively, since rentals stabilised and investors remained confident regarding the COVID-19 situation in Vietnam.

Outlook: Sustained demand and stable rents are expected to continue

Socar Mall is expected to launch a grand opening in 3Q21 after a one-year delay due to the less-than-expected pre-commitment under the challenging market conditions. This 48,000-sqm NLA mall is the first shopping mall in Thu Thiem NUA and thus, it is expected to pave way for further urban facilities in this area.

Net rents will likely inch up to about USD 78.3 and USD 36.5 per sqm per month in City Centre and City Fringe, respectively, in 2021 given the optimistic outlook regarding local consumption. Tenant mix restructure and concept revision are also expected in some malls to ride through the challenging period.

Note: Ho Chi Minh City Retail refers to Ho Chi Minh City's overall prime retail market.