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International Brands Seek Flagship Stores in HCMC

Large retailers are bringing new international fashion, lifestyle, and sportswear brands into Viet Nam after a difficult two years. These brands will occupy physical stores, which will be positive for the retail market.

 

A retail report published by Savills Asia Pacific in February stated that although vaccination rates are increasing in many countries, market recovery has not been consistent across the region. Cities in Viet Nam and China have the fastest-recovering retail markets with stable business activity and only periodic interruptions. Rent in Beijing, Shanghai, Guangzhou, Ha Noi, and Ho Chi Minh City maintained modest growth of about 0.5% to 13% between 2019 and 2021. According to Savills Viet Nam's Q4.2021 market report, landlords in HCMC did not continue supportive policies like direct discounts in the last quarter. As such, the average rent reached VND 1,150,000 /m2/month, representing a 2% increase compared to the previous quarter.

In Ho Chi Minh City, well-known retail brands, including Uniqlo, Mobileworld and Con Cung, continue to launch new stores or expand. Despite two years filled with uncertainty and lockdowns, retailers still plan to expand stores and want to invest in how customers perceive the shopping experience, reinforcing the importance of physical stores in their business plans.

According to Ms Tran Pham Phuong Quyen, Retail Leasing Manager of Savills HCMC: “Viet Nam's domestic consumption levels are rising and becoming more stable. There is also great potential for businesses focused on healthcare, mother and baby care, sports, fashion, and F&B.”

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Some retailers have taken advantage of this opportunity, for example, Pharmacity opened two new stores a day in 2021 and reached 1,000 stores nationwide

In 2022, large retail groups plan to bring new international fashion, lifestyle, accessories, and sportswear brands to Viet Nam. Multi-brand stores are also forecast to expand as they are popular with consumers due to the diverse range of goods and affordable prices they offer. Brands entering and expanding is set to restore and revive the retail leasing market.

“Many international brands have been interested in Viet Nam since 2019 but their plans were delayed by the pandemic. However, these brands still plan to launch once international flights reopen in 2022. This is good news for commercial real estate and will drive retail leasing,” Ms Quynh added.

In terms of leasing demands, brands usually have specific needs for their flagship stores, such as location, facade, area, and capacity for brand identity. Therefore, demand for properties in the CBD or close to popular destinations is set to be high as they are reputable, desirable sites with a loyal customer base.

With new brands entering, domestic and international brands expanding their footprints, and high demands expected for flagship stores, the outlook for commercial leasing will certainly be more lively compared to the last two years.

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