City Fringe attracts retailers seeking consumer-base growth

• In 1Q24, the overall retail market in HCMC recorded a net absorption of 1,900 sqm, primarily driven by the City Fringe area. The City Centre submarket saw no change in total occupied space, whereas the City Fringe continued to experience growth in demand, with several notable transactions contributing to the submarket’s positive performance.
• Galaxy Cinema (around 2,300 sqm) at Thiso Mall Thu Thiem, Manwah at Hung Vuong Plaza, Aim Box at AEON Celadon Tan Phu and Carter and Gymboree at Crescent Mall were among the major transactions in the City Fringe submarket, showing the expanding presence of entertainment, F&B and children’s retail stores in the area as they sought to leverage their growing consumer base.

No new prime malls open in the HCMC retail market

• The HCMC retail market recorded no new prime mall openings in 1Q24. Vincom Mega Mall Grand Park was nearly completed by end-1Q24 and is set to open on Reunification Day in 2Q24 as originally planned. Thus, the total supply remained unchanged, standing at 84,100 sqm for the City Centre and 538,800 sqm for the City Fringe.
• In 1Q24, City Centre’s low vacancy rate of 1.6% remained unchanged q-o-q, reflecting the enduring appeal and resilience of prime retail in the area. Meanwhile, City Fringe saw an improvement in its vacancy rate, declining from 5.4% to 5% q-o-q due to the healthy absorption of available space driven by sustained demand from retailers seeking to establish or expand their presence in the area.

Rents are stable in both submarkets

• In 1Q24, the HCMC retail market witnessed stable rents in both the City Centre and City Fringe submarkets. The City Centre’s net effective rent was unchanged at USD 83 per sqm, per month, demonstrating the submarket’s ability to maintain its premium positioning and attract high-end retailers.
• The City Fringe submarket also experienced stable net effective rent at USD 35.4 per sqm, per month, indicating consistent demand for retail space in the area. This resulted in the overall market net effective rent standing at USD 41.9 per sqm, per month, a marginal 0.01% q-o-q increase that underlined the market’s resilience amidst prevailing economic conditions.

Outlook: Stable rents expected amid economic conditions

• In 2024, the HCMC retail market is poised for growth with the anticipated completion and launch of Vincom Grand Park in the City Fringe submarket. This will boost the total prime mall supply to 653,000 sqm. While City Centre is expected to maintain its current supply level, City Fringe, with its new completion, will expand to around 568,900 sqm.
• City Centre’s prime malls are projected to achieve a net rent of USD 84.5 per sqm, per month by 2024, while City Fringe is anticipated to rise to USD 38.4 per sqm, per month, driven by new supply. Demand from major anchor retailers, especially those in F&B, fashion and sports apparel, is forecast to grow as they continue to establish their presence in new malls.