HCM City (VNS/VNA) - The affordable and mid-range segments will remain pivotal in the city's retail property this year, experts said.
Forecasting the market, Thanh Nguyen, head of research & consulting at CBRE Ho Chi Minh City, said, "In response to consumer preferences, landlords are refining their tenant mix to focus on categories like F&B, fashion & accessories, lifestyle, and entertainment. This trend is expected to persist in 2025, catering to consumers of all age groups.”
Due to economic challenges, many retailers have had to close their stores.
According to CBRE's records in Q1 2025, new stores opening in HCM City accounted for 6%, while the number of stores that closed accounted for 11% of total transactions.
Shopping malls in non-CBD areas faced increased vacancy, it added.
The HCM City Business Association (HUBA) recently released its first quarter 2025 report, highlighting numerous challenges in business operations that have weakened consumer confidence.
Consequently, CBRE noted stores in F&B, fashion and accessories, healthcare & beauty, and entertainment closed during the quarter.
This led to a 61.6% quarter on quarter decrease in net absorption in HCM City to 6,322 sq.m. The retail market average vacancy rate slightly increased from 6.9% at the end of 2024 to 7.1% in Q1 2025, with the central-business-district (CBD) area at 5% and the non-CBD area at 8.5%, marking increases of 0.21% and 0.7%, respectively.
Leasing transactions in the quarter mainly came from the F&B segment, accounting for 35% of total transactions, fashion & accessories, accounting for 20%, and lifestyle, accounting for 16%.
In terms of supply, CBRE reported that in the first quarter of this year, the retail market in HCM City welcomed a new shopping mall in District 6, Centre Mall, situated on Vo Van Kiet street, offering nearly 15,000 sq.m of net leasable area.
Upon its opening, Centre Mall reported a 75% occupancy rate, featuring notable brands like Mr. DIY, Trung Nguyen Legend, Highlands Coffee, Fahasa, Poseidon, Chang Kang Kung, and Cinestar.
In its report, Cushman & Wakefield summarised that total retail supply in HCM City reached 1.2 million sq.m, marking 1.27% growth quarter-on-quarter and an 11.43% increase year-on-year.
Notably, it said new retail malls were consistently being introduced in districts outside the central areas, offering a wide array of business models. This trend was gradually transforming traditional street-front retail, which is under significant pressure from the growing e-commerce sector.
Projections indicate that the HCM City retail market will see an influx of approximately 38,000 sq m of new retail space in 2025, followed by nearly 80,000 sq.m in the subsequent two years, according to the report. Despite this incoming supply, high-quality retail spaces in prime locations, which are in high demand from food, F&B, and entertainment businesses, will remain limited.
This constrained supply results in fierce competition for available space and posed a notable challenge for major brands looking to grow their footprint in the HCM City market.
While the average rental price decreased by 4.43% year-over-year, it did register a marginal increase of 1.42% compared to the previous quarter, reaching 53.48 USD per sq.m per month.
This growth signals a slow but steady recovery in demand for retail space, primarily due to the limited supply of expansive shopping centres. Moreover, the changing dynamics of shopping and entertainment preferences towards mall environments have yielded positive shifts, notably seen in the increased popularity of shophouses within shopping centres, a stark contrast to their underperformance on streets outside the central business district.
CBRE reported the average asking rent in the CBD area was at nearly 280 USD per sq.m per month, up 15.4% year-on-year, but unchanged from the previous quarter. The average asking rent in the non-CBD area decreased by 1.4% quarter on quarter and 1.2% year-on-year, recorded at $52.6 per sq.m per month.
In recent years, newly opened shopping malls in non-CBD areas often offered attractive asking rent, with ground floor rent below 25 USD per sq.m per month in some cases./.
HCM City retail property market expected to heat up
In 2025, the commercial real estate market, especially in HCM City, is forecast to undergo significant positive changes, with an improved supply. It can be said that this segment will "transform" to recover for a new growth cycle.
