Colliers International Vietnam Ha Noi Market Insights Q32015 - Retail Sector (ENG)

1. PERFORMANCE
Retail center average net rents in Hanoi are currently US$37/sqm/mth. The
CBD rents fell 3.1% q-o-q whilst that of non-CBD area’s recorded a slight
decline of 0.9%. This is an unsurprising result due to the supply of new spaces
coming to non-CBD area’s. Occupancy level has improved with an average
growth rate to 85%. This is due to strong leasing activity occurring in new
retail centers. Retail podiums remain the most resilient sector, maintaining
the highest occupancy rate across retail centre types, followed by shopping
centers and department stores. This can be explained by the fact that most
retail podium projects are located in prime locations with high productivity.
SUPPLY
In Q3 2015, the market welcomed 133,400 sqm GFA from The Yard, Hanoi
Creative City and Aeon Mall Long Bien. Whilst the Yard and Hanoi Creative
City target young people with dynamic designs, Aeon Mall Long Bien is for
mass population. This is the first shopping center in Hanoi and the third one
in Vietnam developed by Aeon Group. Thanks to strong pre-commitment
activity, the occupancy rate reached 98% before the grand opening in late
October 2015. The supply pipeline is expected to increase significantly this
year and in 2016. Approximately 672,292 sqm GFA of retail space has been
identified as being under construction or expected to be completed over the
next two years.
DEMAND
The ANZ-Roy Morgan Vietnam Consumer Confidence index has increased by
1.6 points to 135.3 points in September, which is 0.3 point higher on yearly
basis. The increase was driven by rising optimism about the country’s overall
economic prospects in the next year and over the next five years.
RETAIL SECTOR
Q3 2015 | MARKET INSIGHTS
HANOI
Economy overview
The Vietnamese economy continued to show positive growth in Q3 2015.
GDP in Q3 increased 6.5%year on year (y-o-y), which is the highest
growth rate among the six key economies of Southeast Asia. Total retail
sales and consumer services in the first nine months of 2015 were
estimated at VND 2,374.5 trillion, up 9.8% compared to the same period
last year.
The CPI increased nominally at 0.74% y-o-y, the lowest level in the past
10 years. FDI pledges year to date, rose 53% from a year ago to $17
billion, with strong inflows into the manufacturing sector and production
of export goods and the associated services sector rose 6.17% in the first
nine months.
The State Bank of Vietnam issued government bonds highlight
improvements in the economy showing significant yield compression
with an average in Q3 of 6.7% and 7.1% for five year and ten year bond
respectively.
In the long term, the economy will benefit from domestic reforms and
trade liberalization as a pre requisite of Vietnam membership of the
Trans-Pacific Partnership (TPP), the Free Trade Agreement (FTA) and
further ASEAN integration.
DAVID JACKSON
General Director
david.jackson@colliers.com
PLEASE CONTACT US FOR ANY INFORMATION
www.colliers.com/vietnam
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The low interest rate environment, low inflation and consumer
confidence have been major factors to encourage international
retail brands to continue their expansion into Vietnam, with CBD
locations still their first choice for flagship store openings.
Outlook
At the present time, demand on the market is at a moderate
level. An abundant supply over the next two years will create
pressure on existing retail precincts which are experiencing
low occupancy due to high asking rents. However, retail centers
in prime locations of Hanoi CBD are expected to maintain its
current rate over the medium term. Once the Trans-Pacific
Partnership (TPP), the Free Trade Agreement (FTA) and Asean
integration are implemented, barriers to enter the Vietnam
market will be dropped and many taxed goods’ tariffs will be
lifted. Hence, the number of retailers planning to enter Vietnam
across all segments is expected to be higher in the future.
Figure 1: Supply by location, sqm NLA
Figure 2: Market Performance
Figure 3: ANZ-ROY Morgan Vietnam Consumer Confidence Index
Source: Colliers International Research
Source: Colliers International Research
Source: ANZ-Roy Morgan
HA VO
Senior Research Analyst
ha.vo@colliers.com
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200,000
400,000
600,000
800,000
2010 2011 2012 2013 2014 2015
YTD
CBD Non-CBDsqm
2014 Ave: 133.3 pts
110
115
120
125
130
135
140
145
Vietnam CCI 2014 Averagepoints
0
10
20
30
40
50
60
70
80
75%
80%
85%
90%
95%
100%
2008 2009 2010 2011 2012 2013 2014 2015 YTD
US$/sqm/month
Rental rate Occupancy