APPD Market Report Article

Ho Chi Minh City

December 1, 2021


USD 57.6


Limited leasing activity over the quarter

  • The fourth wave of COVID-19, which forced the government to implement strict social-distancing measures, limited retail leasing transactions in 3Q21. The occupancy rate remained unchanged compared to the 2Q21 level.
  • The retail market in HCMC was muted throughout 3Q21. Due to the uncertainty caused by the pandemic, most landlords have not disclosed their tenant structure plans; likewise, tenants have been taking a “wait and see” approach.

Malls shut down during 3Q21

  • The 120-day lockdown in HCMC, which started in early June, forced all stores to close. During this time, only retailers providing necessities were permitted to open.
  • As no malls operated during 3Q21, the vacancy rate remained unchanged q-o-q, and stood at 2.9% and 4.1 % in City Centre and City Fringe, respectively.

Landlords continue to offer rental concessions to support tenants

  • In 3Q21, most landlords continued offering rental concession policies that were adopted since June. Rental concessions were typically offered in the form of rent discounts or rent deferment. As a result, the actual average rental rate of key shopping malls fell by 8.3% q-o-q, to USD 30.7 sqm per month by end-3Q21.
  • The capital value moved in tandem with effective rent, slightly decreasing in the 3Q21. Meanwhile, yields remained modestly compressed as current investors continued to seek investment opportunities in the midst of the pandemic.

Outlook: Market to face downward pressure

  • Although HCMC has lifted social distancing since early October and has allowed shopping malls to resume business, landlords and tenants are still wary of the reopening plan. The main concerns are in the sluggish resumption of foot traffic in the mall and the costs incurred to operate in “new normal” conditions.
  • The opening of new retail centres, including Socar Mall and other neighbourhood shopping centres in mixed-use projects, will be postponed until 2022 if required occupancy rates are not reached as planned. Some landlords intend to reconfigure the tenant structure or floor layout of their shopping centres in order to establish a new face for the malls when they reopen.

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

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