Retail rents in Vietnam are expected to slip this quarter but market propects are still positive in the long term, consulting firm CB Richard Ellis said in a new report.
The decline is due to a number of factors, including continuing high inflation and declining growth in retail and services turnover, the company said.
"Traditionally CBRE reports the prime retail rents, meaning the ground and first floors. There is still strong demand from retailers for this prime space, but when the third quarter data is released in early October, we expect to see the rental rates for less prime space slipping," said Managing Director of CBRE Vietnam, Marc Townsend.
Adam Bury, CBRE's Head of Research and Consulting in Ho Chi Minh City, said the downward pressure on rents in Vietnam is contrary to the trend seen in other markets across Asia.
"Notably in mainland China and Hong Kong, rents have advanced thanks to strong sales, particularly for mid and high-end brands. Unfortunately for Vietnamese retailers, the expected demand from consumers has yet to fully materialize," Bury said. "This is undoubtedly a reflection of slackened confidence within the economy."
But he said Vietnam's retail development is improving. "A more modern retail format, comparable with that seen in leading shopping cities across Asia, such as Bangkok, Hong Kong and Singapore, will take over in Vietnam in the next 10 years," he said.
"The question," he added, "is when demand and foot traffic from shoppers will help further tip the scales from traditional shophouses and markets to modern retail formats."