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Many houses in front of Le Loi Street in Ho Chi Minh City's District 1 - the city's downtown area - are left empty without tenants |
Ms. Thien Binh in Ho Chi Minh City’s Binh Thanh District said that every month she spends VND15 million (US$637) to rent a shophouse in an apartment building to sell fresh seafood. Because the operating costs are too high, she decided to switch to selling online. She rented a smaller house with a rent of VND6 million a month instead of the previous large premises.
General Director of Hoang Gia Seafood International Trade Company Tran Van Truong revealed that the Hoang Gia seafood store chain has just stopped renting large premises at the intersection of Phan Van Tri - Nguyen Oanh in Go Vap District after the contract expires because the rent is too high, up to VND150 million (US$6,374) monthly. The company’s seafood shop was then moved into a supermarket, which operated as a split-of-sales.
Many premises in Ho Chi Minh City’s good locations are closed; for instance, busy roads such as Le Van Sy in District 3, Nguyen Trai in District 5, and Cach Mang Thang Tam in District 10 every 2-3 shops, there is an empty space with a sign for rent because previous tenants stopped the contracts. No more bustle atmosphere in large streets in the southern metropolis has been seen lately.
House owner Tran Thi Huong Ly at the intersection of Ly Tu Trong - Pasteur in District 1 said that the 3-floor house has hung the board ‘House for rent’ from December 2022 until now, but no tenant asked to hire it. The 60 square meter floor space has a monthly rent of VND70 million.
Quite a few tenants lease premises in the city center, at the crossroads of Vo Van Tan, Pham Ngoc Thach, and Tran Cao Van Streets which are considered as good locations. Worse, the PhinDeli coffee shop, which was previously considered an attractive place for visitors, now has to announce the return of the leased premises after 2 years of operation.
Another area in the heart of District 1 is the area around Notre Dame Cathedral, the City Post Office, which has always had a very high occupancy rate despite being the most expensive in Ho Chi Minh City, but now the location has seen a sharp fall in rent. The eDiGi store next to the City Post Office, which is very eye-catching announced to return the premises.
The rental housing market in Ho Chi Minh City in the first 6 months of this year shows that the retail space for rent segment has seen drastic changes. Talking about the trend of premises return, Mr. Nguyen Duy Thanh, General Director of Global Home Management Company (Global Home), said that many businesses are tending to move away as the is a big gap between premises rents in city center districts and neighboring districts.
Meanwhile, Ms. Tran Pham Phuong Quyen, Manager of Savills Ho Chi Minh City Retail Leasing Division, said that for a brand, when a business model has not achieved the expected effect, the closure of a favorable location to reduce costs is also understandable.
Particularly for the F&B (Food and Beverage Service) industry, the life cycle of a brand is usually not too long. Brands always have to actively innovate and create to bring new experiences to customers. Besides, after achieving the purpose of promoting the brand thanks to favorable premises, they will reduce space rent.
At the same time, they will expand stores in semi-central areas to reduce rental costs while maintaining business efficiency.
On the other hand, many brands are now looking for larger spaces to increase customers’ experience. Accordingly, beautiful premises in the downtown area are still considered a favorite destination of high-end and luxury brands.
