HCM City (VNS/VNA) - The Ho Chi MinhCity commercial property market has returned to its growthtrajectory from before the COVID-19 pandemic thanks to the retail andservices sector as well as increasing number of foreign visitors to the city,experts said.

A report from the city’s Department of Industry and Trade affirmed that oneyear after the COVID-19 pandemic, local industries are back on track. Manysectors have reached positive growth.

The department informed that the city’s total retailsales and services in the first nine months of 2022 reached 466trillion VND (177 billion USD), up 21% over the same period a yearago. 

During this period, international visitors hit 1.87 million, 16.4times higher than the same period last year. About 70% of thosevisitors came from Asia.

Thanks to these positive signals, the property market has recovered.

Real-estate services firm Cushman & Wakefield said that the occupancyrate of the whole market reached 93%, and the total accumulated supply ofshopping malls, department stores and commercial units reached 1 millionsq.m. The average rental price is 48.3 USD perone sq.m each month, up 5.6% over the same period lastyear.

The building speed for new retail supply is still quite low. From 2017 to2019, HCM City saw an average of 80,000 sq.m being supplied to the marketevery year; but in the past three years, there has been no new supplyrecorded.

However, future retail projects are on the rise, with approximately 140,000sq.m of floor space currently under construction.

In its latest quarterly report, CBRE said that HCM City recordedimproved vacancy rates in both CBD and non-CBD areas compared to the previousquarter. 

According to CBRE, the occupancy rate in the third quarter in the centralarea reached nearly 93.8%, up 1.0 percentage points quarter-on-quarter.

Meanwhile, the vacancy rate of the non-CBD area of HCMC was 11.4%, down1.2 percentage points quarter-on-quarter. However, compared to the sameperiod last year, the vacancy rate recorded an upward trend of4.3 percentage points year-on-year in the CBD.

Thanh Pham, associate director, researchand consulting department at CBRE Vietnam, said, “theasking rent in the CBD area is still high with an upward momentum, especiallyin prime locations as foreign retailers are entering and expanding theirbusinesses in the Vietnamese market. Vacancy rates tend to decreaseslightly in non-CBD area as some brands shift towards non-CBD areasand shopping centers are changing the tenant’s category to match theshopping demand and brand expansion after COVID-19.”

CBRE reported positive growth in the number of leasing inquiries,especially those focusing on categories such as food and service(F&B), fashion & accessories, and lifestyle, whichaccount for nearly 87% of the total number of requested inquiries.

The food and beverage (F&B) sector continues to rank first in thenumber of total leasing inquiries with a 26% quarter on quarter increasesince the beginning of 2022.

In Q3/2022, in the central area of District 1, famous brands such asMcLaren, Beverly Hills Polo Club, ViinRiic Galeries De Parfumes, Maestro, DeObelly and Sohee entered the market. In September 2022, Decathlon was alsoofficially opened at Van Hanh Mall, District 10.

Thanh Pham said, “the asking price in the prime area of the city will continueto increase in the coming time. With the increasing interest of foreignretailers in the Vietnamese market, brands need to seize the opportunity forpresence expansion.”

In addition, as rising inflation will have a negative impact on consumerspending, leading retailers are forecasted to face more pressure and theirrevenues might not be as high as expected.

Regarding future supply, HCM City is expected to receive one newmall by the end of this year with the 35,000 sq.m Thiso Shopping Center inThu Duc city, and 144,000 sq.m in the period of 2023-2024./.