The retail property market, unlike other asset classes, has managed to buck the downward trend, according to global property consultant Knight Frank.
The performance of the retail market in Hanoi is generally stable thanks to a strong demand, the firm said on Thursday. The firm found that occupancy of retail space in Hanoi's central business district remained very high at nearly 100 percent at the end of June.
Many retail brands found new space for their second and third shops in the second quarter and there will be more retail brands penetrating the Hanoi market in the coming years, which will keep boosting the demand, according to Knight Frank.
"Overall, the evolving Hanoi retail market retains an optimistic outlook at the end of Q2," the firm said.
Existing supply in the retail market at the end of the quarter was 230,000 square meters including shopping centers, department stores, retail podiums, and hypermarkets.
Knight Frank predicted that retail stock will double in the capital city, this year.
The firm said that the Ho Chi Minh City retail market was also quite stable and only saw a slight decline due to current economic conditions. Demand from international retailers looking for well-designed space in good locations in the Southern metro remains high, according to the firm.
But Knight Frank also warned that trading conditions for most retailers are becoming more difficult. They either need to " adapt, or face problems in the future."
Meanwhile, developers should consider the design and layout of all future developments to suit the current trend of less mixed-use projects.
Unlike the retail market, almost all other asset classes have been affected by the difficult macroeconomic environment, the firm found. "The government's restrictions on bank loans to "˜non-manufacturing' sectors will continue to strangle credit to the property market, with developers and home buyers alike having difficulties raising finance."
The firm said the performance of the apartment market, in particular, will be directly linked to inflation.
"Price stability is now the government's top priority and if inflation comes under control and we see a relaxing of monetary policy, then this should breathe more life into the apartment sector and we expect to see a pickup in activity," it forecast.
The government has said it will strive to keep this year's inflation at 15-17 percent and credit growth at under 20 percent. It plans to maintain its tightened monetary policy to achieve the targets.