Tenants continue to expand and operate steadily

• In 4Q23, the overall market experienced a net absorption of 35,600 sqm, driven by new projects. In City Centre, however, net absorption decreased slightly during the quarter. This was caused by the removal of some underperforming stores from Vincom Centre Dong Khoi and Diamond Plaza.
• The City Fringe area recorded a positive trend with net absorption reaching 35,900 sqm. This growth was primarily driven by the expansion of major tenants in new projects. Notable transactions during the quarter included Haidilao (>1,000 sqm), H&M (876 sqm), Starbucks (193 sqm) and VNVC Centre (870 sqm) at Hung Vuong Plaza.

New supply records in City Fringe area

• In 4Q23, the City Fringe area witnessed the addition of new supply with the renovation of Hung Vuong Plaza (28,066 sqm) in District 5 and Thiso Mall Phan Huy Ich (18,000 sqm) in Go Vap, bringing the total supply in the area to 538,800 sqm. Meanwhile, the City Centre’s supply remained stable at 84,100 sqm.
• The vacancy rate in Prime Malls across the market in 2023 remained relatively stable at 4.9% despite the new supply. This was also lower than the 7.9% recorded in the same period in 2022, bringing it back to pre-pandemic levels and demonstrating a positive movement in the retail market.

City Centre rents stable, while City Fringe rents decrease

• In 4Q23, the net effective rent in the City Centre saw a slight increase to USD 83 per sqm per month, up 0.4% q-o-q and 4.9% y-o-y. This reflects the growth of Prime Malls in the area, marking the market’s recovery and growth in this sector. In contrast, given new completions with competitive pricing, City Fringe’s net effective rent decreased to USD 35.4 per sqm, per month, down 1.6% q-o-q.
• In 4Q23, City Centre’s capital value stayed at USD 14,564 per sqm NLA, up 7.4% y-o-y. Meanwhile, City Fringe’s value increased 1.5% q-o-q to USD 5,087 per sqm NLA, or 8.1% y-o-y. Market yields in City Centre and City Fringe continued the compression trend as the market gradually became more established.

Outlook: Strong performance is expected across the Prime Malls

• Vincom Mega Mall Grand Park, a project by Vinhomes, will open in 2024, adding 30,000 sqm retail space to the City Fringe area. Sectors such as Food & Beverage (F&B), Fashion and Lifestyle are expected to remain the leasing demand drivers in the market. Prime Malls are expected to maintain their growth trajectory, supported by stable tenants and good footfall in the malls.
• Developers are making constant efforts to maximise occupancy rates through stable rent policies and closer collaboration with tenants to enhance the shopping experience for visitors. Moreover, developers have been consistently implementing attractive marketing activities to entice visitors to malls, as well as closely monitoring tenant performance for any necessary adjustments.