Illustrative image (Photo: VNA) HCM City (VNS/VNA) - Vietnamese landlords shouldconsider shifting from their traditional fixed-rent model to base rents andrevenue sharing like in many other countries to spread the risk, experts havesuggested.
“Retailers with the infrastructure to fulfil online ordersthrough home delivery are currently being perceived as beneficiaries ofconsumers’ reluctance to visit stores, and we are seeing an increasedconversion of people to online,” real-estate services firm, Jones LangLaSalle (JLL), said in a recent report on the retail market.
“Greater emphasis will be placed on the shift towards aflexible omni-channel retail model and sustainable fulfilment; strengthenedpartnerships between landlords and retailers will need to emerge to achievethis.
“No matter how adversarial the relationship can be betweenlandlords and tenants at times, the bottom line is that we are all in thistogether and the need to find common ground is more important than ever,”the report said.
Duong Thuy Dung, senior director at CBRE, said:“From the effects of COVID-19 that we have seen, the local market will requiremore presence of online platforms and development of omnichannel strategieswhich can serve a wider range of consumers and categories and help pushmarketing.”
Retail is the segment most affected by COVID-19 in theHCM City real estate market.
JLL said footfall at many malls and retail centres inthe city declined by 80 percent year-on-year in February and March.
“Retailers with the infrastructure to fulfil online ordersthrough home delivery are currently being perceived as beneficiaries ofconsumers’ reluctance to visit stores, and we are seeing an increasedconversion of people to online,” real-estate services firm, Jones LangLaSalle (JLL), said in a recent report on the retail market.
“Greater emphasis will be placed on the shift towards aflexible omni-channel retail model and sustainable fulfilment; strengthenedpartnerships between landlords and retailers will need to emerge to achievethis.
“No matter how adversarial the relationship can be betweenlandlords and tenants at times, the bottom line is that we are all in thistogether and the need to find common ground is more important than ever,”the report said.
Duong Thuy Dung, senior director at CBRE, said:“From the effects of COVID-19 that we have seen, the local market will requiremore presence of online platforms and development of omnichannel strategieswhich can serve a wider range of consumers and categories and help pushmarketing.”
Retail is the segment most affected by COVID-19 in theHCM City real estate market.
JLL said footfall at many malls and retail centres inthe city declined by 80 percent year-on-year in February and March.
Many malls closed due to COVID-19 fears.
Some international brands postponed plans to launch in Vietnamthis year, particularly HCM City, the company said.
The pandemic would affect plans to open nearly 280,000sq.m ofgross floor area (GFA) of retail space in HCM City this year and180,000sq.m of GFA in Hanoi, it said.
Challenges could persist in the sector in the second quarterdue to the nation-wide social-distancing campaign from April 1, itwarned.
The retail landscape had been fairly robust for 18-24 monthsbefore the outbreak, it said.
“E-commerce’s growth continued,” Trang Bui, head of marketsat JLL Vietnam, said.
“I don’t think it deeply affected bricks and mortar retail;it was more of a complementary option.
“The challenge we are seeing in the market currently is theoverdue rent payment from retailers and tenants who have closeddown. Since this is an unprecedented event – nobody saw anything like thiscoming – the language used in most leases about business interruption and forcemajeure is a section that people never thought that they would have to look at.Yet, over the last two weeks, those are the clauses that are being read,re-read, and turned upside down and inside out.”
CBRE made a similar assessment, saying, “Retail is one of thesectors most affected by COVID-19.”
In a report, it said in the first quarter total revenues fromfood and beverages and accommodation and tourism services decreased by 9.6percent and 27.8 percent year-on-year.
A major reason for the difficulties faced by the retailsegment was the drop in the number of international visitors.
JLL said this most acutely impacted luxury segments and superprime retail destinations.
Domestic retail spending could suffer a temporary declinefrom consumer reluctance or inability to visit destinations where infectionrisks are elevated.
Non-essential goods items and leisure services will be hitharder than perishables and essential dry goods, which have seen elevateddemand as consumers stockpile to avoid personal shortages.
To support retailers, some landlords have offered rentdiscounts in February and March of 10-30 percent, especially for generalretail segments like food and beverages and entertainment.
Others have considered reducing rents by up to 50 percentdepending on the performance of their tenants.
Some have also agreed to defer a portion of the rent untilthe situation improves/.
Some international brands postponed plans to launch in Vietnamthis year, particularly HCM City, the company said.
The pandemic would affect plans to open nearly 280,000sq.m ofgross floor area (GFA) of retail space in HCM City this year and180,000sq.m of GFA in Hanoi, it said.
Challenges could persist in the sector in the second quarterdue to the nation-wide social-distancing campaign from April 1, itwarned.
The retail landscape had been fairly robust for 18-24 monthsbefore the outbreak, it said.
“E-commerce’s growth continued,” Trang Bui, head of marketsat JLL Vietnam, said.
“I don’t think it deeply affected bricks and mortar retail;it was more of a complementary option.
“The challenge we are seeing in the market currently is theoverdue rent payment from retailers and tenants who have closeddown. Since this is an unprecedented event – nobody saw anything like thiscoming – the language used in most leases about business interruption and forcemajeure is a section that people never thought that they would have to look at.Yet, over the last two weeks, those are the clauses that are being read,re-read, and turned upside down and inside out.”
CBRE made a similar assessment, saying, “Retail is one of thesectors most affected by COVID-19.”
In a report, it said in the first quarter total revenues fromfood and beverages and accommodation and tourism services decreased by 9.6percent and 27.8 percent year-on-year.
A major reason for the difficulties faced by the retailsegment was the drop in the number of international visitors.
JLL said this most acutely impacted luxury segments and superprime retail destinations.
Domestic retail spending could suffer a temporary declinefrom consumer reluctance or inability to visit destinations where infectionrisks are elevated.
Non-essential goods items and leisure services will be hitharder than perishables and essential dry goods, which have seen elevateddemand as consumers stockpile to avoid personal shortages.
To support retailers, some landlords have offered rentdiscounts in February and March of 10-30 percent, especially for generalretail segments like food and beverages and entertainment.
Others have considered reducing rents by up to 50 percentdepending on the performance of their tenants.
Some have also agreed to defer a portion of the rent untilthe situation improves/.
VNA
