Retail actual property in townhouses and industrial facilities is taken into account one of many segments most affected by the Covid-19 pandemic. So how will this market in HCMC get better within the final months of 2021?
General scenario within the first 6 months of 2021
In 2020, the market predicts that about 170,000 m2 of business house can be launched in 2021. However, up to date to mid-2021, it isn’t anticipated that any actual potential initiatives will come into operation by the top of the 12 months. this 12 months. All initiatives delay the development progress or delay the opening date by a number of years regardless that development has been accomplished. Of which, about 80% of this complete provide is anticipated to be within the non-CBD space, and most of it’s a retail podium together with the world positioned on the first and 2nd flooring of workplace and house initiatives. with restricted tenant allocation. In 2022, it’s anticipated that only one mission with the dimensions of a shopping mall can be opened, which is Socar Mall in Thu Thiem space, Thu Duc metropolis.
In the primary months of 2021, a survey on retail buyer teams confirmed that a lot of the tenants are optimistic and have a must develop the shop community in Ho Chi Minh City in 2021, particularly concentrating on the timing. Opening falls on October, 11 and 12 in time for the height competition season on the finish of the 12 months. Therefore, the rental scenario of the primary 6 months of 2021 is kind of thrilling to have the ability to meet up with the corporate’s goal. However, the intense social distancing scenario that has lasted from the start of June till now has prompted many outlets to complete development however not be opened, to proceed to fall right into a passive place till the State permits them to proceed to function. allowed purchasing shops to return to regular operations, affecting gross sales plans, stock and employees that weren’t ready to make use of sources.
Ms. Tran Pham Phuong Quyen, Retail Space Leasing Manager, Savills Vietnam commented: “It is expected that after this period of social distancing, it will take retailers at least 3 months for shopping malls to gradually recover shopping traffic, and at least 1 year for retailers and consumers. regain confidence and the whole market is in stable balance, recovering its state and revenue level as of 2019. During this time, new stores must silently sell goods and promote online advertising rather than advertising. can no longer use the method of organizing events at the store as before, but still give priority to attracting and creating buzz for their opening. “
“After a difficult period, many brands have repositioned, defined growth strategies more carefully, selected locations carefully, and managed costs more closely, a good example is the budget for For rental premises for coffee and restaurants, previously can reach 20% or even 30% of revenue for beautiful and prime premises, now only 10-16% maximum to maintain efficiency”– Ms. Quyen added.
Outlook for the final months of the 12 months
Assessing the change in lease ranges within the final months of the 12 months, Ms. Quyen stated: “Compared to the affluent interval of the Retail market, every lease that expires will shut a brand new lease improve by 8-months. 10% represents the good development worth of the industrial space, now the lease for brand new contracts has principally remained the identical, even lowered by 20-30%. The annual charge of value improve has additionally decreased from a median improve of 8% per 12 months to solely 5% per 12 months, inflicting a big lower within the complete worth of a rental cycle of a industrial property, reflecting the apprehension of traders. The market and the stability of pursuits are falling extra within the fingers of shops and types. “
In fact, in Ho Chi Minh City, the fact that many spaces are vacant makes it possible for brands with strong financial potential to collect as good positions as they want that they have never been able to squeeze into rental auctions before. at the premises of Nguyen Hue, Dong Khoi, Ho Tung Mau… and supported by the Investor with the rental price reduced by 30% compared to the regional price level in early 2020, the construction period is longer from 60-90 days compared to the previous year. Previously, the maximum was only 30 days for a space of about 100-150m2. In a large commercial center, the Investor accompanies the tenants more by reducing the rental price by 20-50% depending on the category in the low months of shopping, free of charge, free of service fee or free of charge. 50% discount on Service Fee during the quarantine period, non-essential stores must be closed according to Government Regulations.
Savills conducted a small survey with a few large retail groups in the market about their business plans for the next leg, in 2022, the results show that there are adjustments but are assessed as still possible. The business scale is still invested and expanded to develop the economy, for example, a cosmetic brand with 4 stores, an accessory brand with 6 stores, a pizza chain with 20 stores. shops, coffee shops with 80 stores, small restaurant chains with 100 stores will continue to be expanded in the next time. During this time, Savills also received many requests to find cooperation partners, the first space to enter the market came from the beauty, health, fitness, and gym industries from Singapore. With the target of 10 new branches, it proves that retailers are still quietly preparing for the development strategy during this delay.
The field of e-commerce is expanding day by day
According to a survey by YoGov published in June 2021 assessing the change of customer behavior during the Covid-19 epidemic, 65% of customers have a frequency of direct shopping often from several times a day, 1 times/day, several times/week, once/week to several times/month. The shopping channel is not only limited to large centralized trading platforms such as Shopee, Lazada, Tiki, and Sendo, but also self-developed online shopping forms under hanfg brands such as Sociolla, Watson, and The Body cosmetic groups. Shop, Kiehl’s… with similar complete functions, or F&B group with Pizza 4Ps, Yen Sushi & Sake Pub, The Pizza Company, Otoke Chicken… or Fahasa (book sale)… making customers more and more diverse Choose to shop online according to your preferences and convenience more. The competition in online retail shopping is therefore also deeper and requires more promotional combos and thoughtful customer care programs to retain loyal customers. The trend of prepaid payment by e-wallet or card, not cash is also popular at a faster rate with 51% of consumers in Vietnam converting from cash on delivery to paying. this prepayment since Covid-19 appeared.
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