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|Bling, bling - showing off the latest brands is now the height of fashion in Vietnam|
As a result, modern retail space has been quickly expanding due to new investments in shopping malls and the redevelopment of traditional markets into modern trade centres in big cities.
Hanoi’s rapid urbanisation with more new urban areas and high-rise buildings gracing the skyline has brought about dramatic changes in urban residents’ shopping habits.
According to the General Statistical Office, the average per capita income of Hanoians stands at roughly $1,900, an increase of 23 per cent year-on-year. Residents between the ages of 20-40 account for 40 per cent of the capital’s population. This age bracket is embracing a “shop till you drop” mantra, offering opportunities for Hanoi’s retail market in coming years.
Retail rents in Hanoi are high, at an average of $55 per square metre, per month. This rent is even higher in some trading centres, up to $150 per square metre per month and demand is exceeding supply in those centres.
Rents are roughly $35 per square metre, per month in non-central business districts.
According to CB Richard Ellis statistics, there was still insufficient retail space in inner Hanoi, with zero per cent vacancies. The vacancy rate at ring roads or outskirts of Hanoi was higher at 10 per cent.
Trading centres are mostly located in golden land areas. In Hanoi, Trang Tien Plaza and Vincom City Towers were built some years ago. Recently, Hang Da Trading Centre was put into operation while a range of others such as Cho Mo, Nga Tu So trading centres will come online in the coming time.
With the expanding urbanisation, trading centres have been expanded to new residential areas, especially underground levels of multi-function complexes. This trend exists at Savico Plaza, Royal City and the Garden.
However, Trang Tien Plaza is one example of a shopping venue failing to grab shoppers despite its golden location. One of the reasons is Trang Tien Plaza lacks support facilities for a modern trading centre, such as entertainment facilities like cinemas, supermarkets, or food and beverage courts.
Trang Tien Plaza has also failed in attracting famous retail brands.
Another shopping complex to miss the mark is Ho Chi Minh City’s Saigon Paragon Shopping Mall, which has temporarily closed because of a poor turnout. Saigon Paragon’s developers have contracted Parkson to manage it as the Malaysian mall operator has a proven track record in managing malls in China, Malaysia and Vietnam.
According to a CB Richard Ellis report, the modern trading centre segment will increase by six-fold in the next three years, with an estimated 660,000sqm coming from new projects such as Pico Mall, Keangnam Hanoi Landmark Tower, Ciputra Mall Hanoi and Usilk City.
To attract customers, trading centre management boards have applied new and dynamic promotion strategies.
Located in Tu Liem district’s My Dinh commune, the Garden Shopping Mall recently offered new facilities such as a supermarket, beauty care centres, cinemas and cultural and art activities. As a result, it now has a positive occupancy rate after beginning with fewer customers.
Many further trading centres are set to be built on the outskirts of cities.
The later arrivals will need to offer outstanding attractions to customers, with Song Da Thang Long’s Usilk City trading centre as an example. Stretching nearly one kilometre along extended Le Van Luong road, a potential lucrative road through key Hanoi urban development areas, it will offer 70,000sqm of retail space and two floors for car parking.
Usilk City has different facilities such as supermarket, stores, entertainment, food and beverage and health care centres and will make Ha Dong new urban district and the Hanoi’s south-west gate an important commercial hub.
Song Da Thang Long chairman Nguyen Tri Dung said the added strings to its bow would make the complex a success when it opened at the end of 2013.
Other developers are also building largest ever retail centres to cash in on growing demand from new urban areas. Citra Westlake City Development is building a 120,000sqm shopping mall within Ciputra International City on Lac Long Quan street while Royal Trading and Real Estate Joint Stock Company is developing a 200,000sqm shopping centre within Royal City complex on Nguyen Trai street.