Vietnam: Retail premises left idle, landlords struggle to find tenants

Business activities are cooling as consumers have had to tighten their purse strings, with some vendors setting up business on wide sidewalks in HCM City.

A sticky rice vendor run by Huynh Ngoc set up on a sidewalk on Hai Ba Trung street in district 1 one month ago. This is a busy street with heavy traffic. Many people on the way to the office every day buy sticky rice from Ngoc for a fast breakfast. 

As the number of customers is relatively high, Ngoc’s business is prosperous. Every day, she can sell 80 servings of sticky rice, and she finishes at 9 am.

Trang’s vendor is just meters away from Ngoc’s. The woman from An Giang has been earning her living from sidewalks in the largest city in the country. After deducting money for materials, she pockets VND10 million a month from her vending business. 

More and more vending machines have appeared on the pavements of Hai Ba Trung street lately. The street has become an ideal place for vendors to sell nosh.

Hai Ba Trung was once a noisy street, with houses used as bustling shops. But now, the many shops are not open. On the entrance door, one can see many ads which say the landlords are seeking lessors. The ads seem to stay there for many days.

At the T-junction of Nguyen Van Chiem and Hai Ba Trung streets, one can see a huge banner on leasing the retail premises with phone numbers for contact. 

Just 50 meters away from it, a three-story house at No 139 Hai Ba Trung, is also up for lease. It was a large fashion shop in the past. 

At the transaction office of KSFinance nearby, at the crossroads of Tran Cao Van and Hai Ba Trung streets, one can see a signboard on leasing the retail premises. In the Ho Con Rua (Turtle Lake) area, the famous F&B brands such as Saigon Casa Café and PhinDeli have left.

For many years, streets in district 1 have been the business hub of the city. The retail premises with advantages for introducing and trading products and services, is a symbol of the boisterous economy in the HCM City.

In general, street-front houses in the large cities of Hanoi and HCM City are considered ‘goose that lay golden eggs’ as they can be retail premises that can bring huge profits.

However, a report on retail premises for lease in the first quarter of 2023 from Savills HCM City said that lessees were leaving retail premises idle and not extending leasing contracts at projects outside the central city. This is explained by the low traffic in places with disadvantageous positions and weak marketing as well as ineffective management.

According to Savills, 30 percent of retail premises in the beverage sector have been left idle. The figure is 21 percent for fashion, 20 percent for entertainment and 6 percent for the educational sector.

Business confidence

Nevertheless, figures are not all bad. According to the HCM City Statistics Office, some business fields and service sectors saw active changes in May.

Retail turnover of household appliances increased by 6.5 percent; retail turnover of phones, computers and electronic components increased by 8.4 percent after falling sharply in the first three months of the year; travel services grew by 12.2 percent; and accommodations and eateries by 7.9 percent thanks to long holidays.

The total retail turnover of goods and services in May grew by 3.1 percent over April and 10.1 percent over May 2022.

The agency predicted that HCM City’s GRDP (gross regional domestic product) would grow by 5.87 percent in the second quarter after increasing 0.7 percent in the first quarter. 

The sharp rise is attributed to improvements in industrial production and increased retail turnover.

However, at a press conference on the socio-economic development situation, Tran Phuoc Tuong, deputy head of the HCM City Statistics Office, said that though HCM City’s GRDP growth rate in the second quarter was higher than in the first quarter, it was still low compared with the other 62 cities and provinces (ranked 35th out of 63 cities/provinces).

HCM City was below Hanoi (5.98 percent growth rate) and Hai Phong (10.45 percent). The growth rate of 5.87 percent of HCM City was only 0.15 percent higher compared with the second quarter in 2022.

The report on the socio-economic situation of HCM City in May to the Government Office pointed out that the number of newly registered businesses was 18,630, up 7.9 percent, but the average investment capital decreased by 21.2 percent. Export turnover increased by 13.4 percent over April, but fell by 19.5 percent compared with the same period last year.

Tran Chung