APPD Market Report Article
HanoiNovember 28, 2022
Trang Le, Head of Research, Vietnam
F&B and grocery store tenants lead demand
- CBD prime malls recorded a net absorption of about 900 sqm, while net absorption in the City Fringe recorded around 6,500 sqm in 3Q22. New deals were mostly recorded in AEON Mall Long Bien and Vincom Mega Mall Smart City.
- Local F&B and grocery store tenants led Hanoi’s retail market demand in 3Q22. Some notable deals were the expansion of the Manwah chain in Vincom Royal City, and the high-end grocery chain, Annam Gourmet, which headlined demand in 3Q22 with two new stores in Vincom Times City and Vincom Smart City. Entertainment services also continued to expand their businesses in the quarter.
Tight vacancy in prime malls
- The Hanoi retail market recorded no new prime malls in the quarter. The total supply of the market remained unchanged at 1.1 million sqm (NLA), located mainly in the non-CBD areas.
- The vacancy rate dropped in both the City Centre and City Fringe with positive absorption in almost every mall. The vacancy rate in the market was around 10.2% in the City Centre and 9.0% in the City Fringe.
Net effective rent remains stable in both submarkets
- Overall, net effective rents in the City Centre and City Fringe were stable. In the City Centre, the average net effective rent was USD 63.6 per sqm per month, while in the City Fringe, it was USD 29.3 per sqm per month. Most landlords still had their annual rent increase by around 5%-10%, while keeping the asking rent unchanged to attract more new tenants.
- Capital values increased in both the City Centre and City Fringe by 1.5% q-o-q and 1.4% q-o-q, respectively. This was driven by stable demand from both international and local retailers, as well as recent growth in the number of stores.
Outlook: Near-term market performance is likely to be positive
- No new supply is expected in 4Q22, but one project, Tien Bo Plaza in the City Centre, is expected to complete in 2023.
- Near-term market performance is forecast to be positive. The occupancy rate in existing retail prime malls is expected to increase as customer purchasing power remains strong, while new supply in 2023 is expected to push up net absorption due to high-quality development plans.