A commercial property displaying multiple “for rent” signs at the Truong Dinh Street – Ly Tu Trong Street intersection in District 1, HCMC. Photo by VnExpress/Vien Thong
Shophouse rents continue to decline in HCMC while retail space at shopping malls has become more expensive.
In January the average monthly rent for shophouses in the downtown District 1 has fallen for a third consecutive month to VND128 million (US$5,201) per square meter, according to property listing platform Nha Tot.
It was VND166 million in November 2023.
In areas like Phu Nhuan District and District 7, rentals have decreased slightly.
According to Canada-based real estate service Avison Young, the low consumer demand in the last two years caused many businesses to cancel their shophouse lease in the downtown area.
But Avison Young also said that as of December rentals at shopping malls in District 1 had risen by 4% year-on-year to $46-300 per square meter, and 2% to $20-115 elsewhere.
Property consultancy CBRE Vietnam said the uptrend, which started last year due to the entry and expansion of several premium and luxury brands, seems to continue into 2024.
“Unlike the sluggish shophouse rental market, shopping malls are operating relatively well with high occupancy rates,” Pham Ngoc Thien Thanh, deputy director of research and consulting at CBRE Vietnam, said.
Last year the average occupancy rate at malls was 91%, two percentage points higher than in 2022.
Nha Tot expected shophouse rentals to decline further this year, though not significantly.
Many real estate brokers concurred, but pointed out that shophouses in prime locations are often owned by wealthy people with multiple properties who are willing to leave them vacant for years if the rents are not high enough.
Two large shopping malls, the Vincom Mega Mall Grand Park in Thu Duc City and the Parc Mall in District 8, are set to open in HCMC this year with nearly 70,000 square meters of retail space.