Stable net absorption despite economic difficulties

• City Centre’s net absorption in 4Q23 was stable at 189 sqm, with new leases at Vincom Centre Ba Trieu that include Rock Port and Hermes. City Fringe’s net absorption rose to 52,100 sqm, led by Lotte Mall Ho Tay leases with MUJI, UNIQLO, KidZania and Zara. KidZania’s debut offered notable children’s activities.
• The LinC ParkCity, which was newly opened in the quarter, reported the successful leasing of anchor tenants. Tops Market, owned by Central Retail, took over 2,300 sqm, making it one of the most significant leasing deals in this complex.

New supply comes on stream in the City Fringe

• Only the City Fringe saw new Prime Malls in 4Q23, including Lotte Mall Tay Ho (80,000 sqm NLA) and The LinC ParkCity (10,600 sqm NLA). By end-2023, the total Prime retail space was 671,200 sqm, with the City Centre contributing 55,000 sqm (8%) and City Fringe 616,300 sqm (92%).
• The vacancy rate in the City Centre stood at 4.8%, a drop of 0.4% compared to the previous quarter. However, the City Fringe area experienced an increase in the vacancy rate, pushing it to 11.3%, up 5.4% compared to the previous quarter, primarily due to the new supply introduced in 4Q23. All things considered, the market vacancy rate remained stable.

An uptick in net rents, especially in the City Fringe area

• The net effective rent for en bloc assets in the City Centre increased slightly to USD 65.3 per sqm, per month, a 0.2% q-o-q increase. City Fringe’s net effective rent for en bloc assets rose to USD 33.7 per sqm, per month, up 3.4% q-o-q due to the new high-quality Lotte Mall West Lake Hanoi project.
• No investment transactions were recorded in Hanoi’s retail market in 4Q23. The City Centre’s capital value rose by 2.6% q-o-q and 10.1% y-o-y. In the City Fringe, capital value increased by 4.8% q-o-q and by 13.84% y-o-y. Market yields kept declining, with market yields in the City Centre and City Fringe dropping to 7.4% and 9.0%, respectively.

Outlook: Rents continue to grow across the market

• Supply in the City Centre is projected to remain at 55,000 sqm to the end of 2024. Meanwhile, due to the arrival of The Heritage Mall project in the Tay Ho region, which will bring 19,324 sqm of new retail leasing space to the market, supply in the City Fringe area is estimated to increase to 635,600 sqm.
• Net effective rent in the City Centre in 2024 is expected to be constant or slightly higher than the year before. Meanwhile, the City Fringe area is expected to see a solid net effective rent increase in 2024, fuelled by high-quality new supply in the Tay Ho neighbourhood.