City Centre witnesses stable net absorption while City Fringe attracts diverse tenants

• The retail demand in Hanoi City Centre held steady in Q3 2024, with 130 sqm of net absorption recorded. The area maintained its appeal for luxury brands, exemplified by Vietnam’s first Gucci Beauty store opening at Vincom Ba Trieu in the quarter.
• ROBINS’ withdrawal left 10,000 sqm vacant in Vincom Mega Mall Royal City. However, new leases from diverse tenants in the F&B, fashion and lifestyle sectors (e.g., Long Wang, Ownday and Max Patin) have softened the City Fringe net absorption to -8,500 sqm.

No new retail projects complete in Q3 2024

• No new prime malls completed in the first nine months of 2024, keeping City Centre and City Fringe supply unchanged at 55,000 sqm and 616,300 sqm, respectively. Non-prime retail podium space grew by 40,000 sqm, from notable mixed-use projects like Taisei Square Hanoi and Grand Terra.
• The vacancy rate in City Centre remained low at 3.5% thanks to stable demand amidst limited supply. In contrast, the City Fringe vacancy increased by 1.3 ppts q-o-q to 7.9%, mainly due to the new vacant space in Vincom Mega Mall Royal City.

Retail market remains resilient with slight rent growth

• Thanks to positive market sentiment, Hanoi’s City Centre and City Fringe saw an uptick in net effective rents during the quarter, reaching USD 66.2 per sqm, per month and USD 34.3 per sqm, per month, respectively.
• City Centre’s net effective rent increased by 1.6% y-o-y, while City Fringe recorded a higher rise of 5.3% y-o-y, driven by the high-quality supply Lotte Mall West Lake, introduced in 2023, and the growing tenant interest in the area.

Outlook: Rents are expected to continue their upward trend

• By 2024, the Hanoi prime retail market is anticipated to maintain its current supply level. In 2025–26, two prominent projects, namely Tien Bo Plaza in the City Centre and Takashimaya Star Lake in the City Fringe, are expected to add around 67,000 sqm leasing space.
• The net effective rent in the City Centre is projected to rise by 2–3% in 2025. In the City Fringe, rents are expected to grow slightly faster at 3–4% annually, led by higher-than-average rent expected in high-quality supply in the West Lake area.