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“Malls are not for the faint hearted-as they are complex in nature, but in the long term, they provide a consistent return on investment,” said Mears, director of Retail Analysys.
Mears, who has over 20 years experience in the shopping mall industry in Australia and Asia, predicts unprecedented growth for Vietnam.
His company is currently working on two mall projects in Hanoi - Pico Mall and Hang Da Galleria.
According to figures from CB Richard Ellis, more than 340,000 square metres of retail space is available in Ho Chi Minh City right now. This figure is projected to grow to over 1.1 million square metres by 2013 if all developments proceed as planned.
As for Hanoi, retail space totalling over 118,000sqm has already been available and this is projected to grow 660,000sqm by 2013.
Given such stiff competition, retail developers needed to pay more attention to design, development and management if they wanted to avoid failure, Mears said.
Design was vital because mistakes at that stage could not be rectified, he added.
“It is critical that the developer ensures the right team is in place - one that has the experience in designing successful shopping malls. This includes not just the architect but also mechanical and engineering structural staff, quantity surveyors, the project development team, and consultants.
“There is a need to examine all their credentials, not only in the terms of the number of shopping mall projects, but also how successful these malls are now,” said Mears.
“The key person in the design phase is the person who has the most experience in the design and management of shopping malls. They will not only help you save money but also show you how to maximise your profits,” he said.
The second most important stage was development.
Mears made it clear that 95 per cent of all plans should be completed at the start of the development, as constant changes would drive costs up and returns down.
“In over 10 years of carrying out all types of development, we have learnt the more time we spend going through the fine details the more successful the developments,” he said.
Last but not least is management. Management was still in its infancy in Vietnam, said Mears, and this would determine the ongoing success or otherwise of all shopping malls.
“As there is little existing experience it may be necessary initially to bring in foreign expertise to train your people in the proper procedures and processes,” he said.
Mears added that experience had taught him to set up the management for new shopping malls at least 12 months before they opened.
Meanwhile the classic adage “you get what you pay for” continues to apply in property development as it does in most other aspects of life.