Rents for prime retail space rise in HCMC despite having few takers

A recent VnExpress survey found that many retail properties on Nguyen Hue street in District 1 remain unoccupied, but their landlords have hiked rents by 20-30 percent compared to rates prevailing during last year’s peak of the Covid-19 pandemic.

The rents are now at around US$15,000 per month compared to $11,000-12,000 previously.

On Ly Tu Trong street near Ben Thanh Market too many streetfront shops are vacant.

Their rents were cut by up to 50 percent during last year's Covid shutdown, but now they are only about 15 percent lower. Besides, the discount is only for the first two or three months rather than a year.

Many streetfront premises on high street Ly Tu Trong in HCMC's District 1 are left vacant, March 2022. Photo by VnExpress/Thien Ngan

Rents for three-story streetfront units on high street Le Thanh Ton have risen by 20-30 percent since the end of 2021 to $8,000-9,000 per month.

A broker specializing in townhouses around Ben Thanh Market said until 2019 tenants had to compete to get a prime unit with rents ranging up to $12,000 a month. But now many units are empty though rents are lower.

Property owners on Mac Thi Buoi and Dong Khoi streets in District 1 said they no longer cut rentals by 50-60 percent, and the maximum discount they provide is 15-20 percent for a few months at most.

Vo Hoang Quan, an experienced broker, said the townhouse rental market in the central districts is still gloomy.

But despite the vacancies, 85 percent of landlords are not willing to reduce rents, while another 15 percent only discount them for a couple of months, he added.

The reason is that most are confident the retail market and international tourism are set to recover, and, thanks to their deep pockets, do not mind leaving their premises empty for a while waiting for rents to recover.

People looking to rent places are waiting for a strong revival in the economy.

Many have chosen to relocate their business to other districts or in alleys so that rents are lower.

Quan said the pandemic has made tenants more cautious and price sensitive.

"At this time leasing a place is like a lottery, with winning or losing depending on luck."

Speaking to VnExpress, Nguyen Hong Hai, chairman of office rental firm VNO Group, listed four reasons for market’s continued sluggishness: unclear prospects for the economy and rising prices, transformation of retail from offline to online, the enormous rents at prime spots, and a trend of moving out of the central business district to reduce costs.

He forecast the high-end retail space market to thaw when the affordable segment is filled, signaling a recovery in retail and tourism.