Troy Griffiths, deputy managing director of Savills Vietnam, said the pandemic has had a direct impact on the shophouse market, with difficulties starting to arise in February when the first Covid-19 cases were confirmed, and social distancing measures imposed in April and July dealing a further blow to businesses.

VnExpress data shows that in the South Korean neighborhood in District 7, Ho Chi Minh City, vacancy of the shophouse segment climbed to 40 percent in July compared to 5 percent before the pandemic.

Around 11,000 South Koreans live here, but the closed borders mean many have been unable to return to Vietnam and businesses here have seen revenues plummet.

In downtown District 1, many landlords reduced rents by 25-40 percent, even in prime areas, but yet realtors said the number of vacancy listings increased through 2020 since business were uncertain.

In Hanoi, the third quarter saw downtown shophouse rents falling by 20-25 percent from before the pandemic as many coffee shops, restaurants and fashion stores struggled with plummeting sales.

Nguyen Hong Van, director for the Hanoi market at real estate consultancy Jones Lang LaSalle (JLL), said businesses in most sectors have refrained from expanding.

Vietnam’s retail and services revenues grew at 2.6 percent in 2020 compared to 9.5 percent in 2019, according to the General Statistics Office.

Industry insiders said falling incomes have resulted in dwindling demand for all kinds of products and services, and commercial real estate has become a victim.

The shophouse commercial real estate segment was the hardest hit as small and medium-sized businesses saw a sudden fall in revenue, forcing some of them to close low-performing locations, which increased vacancies in the market, Griffiths said.

In February many retailers stopped renewing their lease contracts, and a recent survey by Savills found that people are looking for a 40 percent rent discount as against the 20 percent landlords offer, he added.

Owners of commercial buildings reluctantly adjusted their rents and gave short-term discounts such as lowering monthly services fees by $2 or lowering rents by 30 percent for a few months for new tenants.

But the pandemic has forced retailers and buyers to change their behavior and created an opportunity for e-commerce.

Retail chains like Coopmart and VinMart have expanded their home delivery services, while other traditional retailers are now focusing more on developing websites and increase marketing via smart devices as customers began to get used to getting discounts online and having their goods delivered to their doorstep, Griffiths added.