The Ho Chi Minh City commercial property market has returned to its growth trajectory from before the COVID-19 pandemic.

The Ho Chi Minh City commercial property market has returned to its growth trajectory from before the COVID-19 pandemic thanks to the retail and services sector as well as increasing number of foreign visitors to the city, experts said.

A report from the city’s Department of Industry and Trade affirmed that one year after the COVID-19 pandemic, local industries are back on track. Many sectors have reached positive growth.

The department informed that the city’s total retail sales and services in the first nine months of 2022 reached 466 trillion VND (177 billion USD), up 21% over the same period a year ago. 

During this period, international visitors hit 1.87 million, 16.4 times higher than the same period last year. About 70% of those visitors came from Asia.

Thanks to these positive signals, the property market has recovered.

Real-estate services firm Cushman & Wakefield said that the occupancy rate of the whole market reached 93%, and the total accumulated supply of shopping malls, department stores and commercial units reached 1 million sq.m. The average rental price is 48.3 USD per one sq.m each month, up 5.6% over the same period last year.

The building speed for new retail supply is still quite low. From 2017 to 2019, HCM City saw an average of 80,000 sq.m being supplied to the market every year; but in the past three years, there has been no new supply recorded.

However, future retail projects are on the rise, with approximately 140,000 sq.m of floor space currently under construction.

In its latest quarterly report, CBRE said that HCM City recorded improved vacancy rates in both CBD and non-CBD areas compared to the previous quarter. 

According to CBRE, the occupancy rate in the third quarter in the central area reached nearly 93.8%, up 1.0 percentage points quarter-on-quarter.

Meanwhile, the vacancy rate of the non-CBD area of HCMC was 11.4%, down 1.2 percentage points quarter-on-quarter. However, compared to the same period last year, the vacancy rate recorded an upward trend of 4.3 percentage points year-on-year in the CBD.

Thanh Pham, associate director, research and consulting department at CBRE Vietnam, said, “the asking rent in the CBD area is still high with an upward momentum, especially in prime locations as foreign retailers are entering and expanding their businesses in the Vietnamese market. Vacancy rates tend to decrease slightly in non-CBD area as some brands shift towards non-CBD areas and shopping centers are changing the tenant’s category to match the shopping demand and brand expansion after COVID-19.”

CBRE reported positive growth in the number of leasing inquiries, especially those focusing on categories such as food and service (F&B), fashion & accessories, and lifestyle, which account for nearly 87% of the total number of requested inquiries.

The food and beverage (F&B) sector continues to rank first in the number of total leasing inquiries with a 26% quarter on quarter increase since the beginning of 2022.

In Q3/2022, in the central area of District 1, famous brands such as McLaren, Beverly Hills Polo Club, ViinRiic Galeries De Parfumes, Maestro, De Obelly and Sohee entered the market. In September 2022, Decathlon was also officially opened at Van Hanh Mall, District 10.

Thanh Pham said, “the asking price in the prime area of the city will continue to increase in the coming time. With the increasing interest of foreign retailers in the Vietnamese market, brands need to seize the opportunity for presence expansion.”

In addition, as rising inflation will have a negative impact on consumer spending, leading retailers are forecasted to face more pressure and their revenues might not be as high as expected.

Regarding future supply, HCM City is expected to receive one new mall by the end of this year with the 35,000 sq.m Thiso Shopping Center in Thu Duc city, and 144,000 sq.m in the period of 2023-2024./.