Italian luxury car brand Lamborghini announced its return this month after a year of inactivity, and has named a new distributor, S&S Automotive.
The distributor, which is also a dealer for other luxury car brands like Rolls-Royce and McLaren, said a new Lamborghini showroom is being built in HCMC’s District 1 and would open this quarter.
The Porsche Center Saigon opened last year in HCMC’s District 7, and the German company called it a "key milestone in one of its fastest growing markets in the Asia Pacific."
The company also launched Southeast Asia’s second Porsche Studio in Hanoi last year, with the CEO of Porsche Asia Pacific Arthur Willmann saying the capital’s vibrant young population was the inspiration for the store.
He echoed an earlier statement by Paul Harris, director of Roll-Royce Asia Pacific, who said Vietnam has the youngest demographic of his company’s markets.
Prestige fashion brands have also been active, with Italy’s Bvlgari returning in February last year and opening a store in HCMC, and Louis Vuitton and Christian Dior launching flagship stores in 2020 in Hanoi’s central district of Hoan Kiem.
The country’s luxury goods market is set to surge by 35.7 percent from last year to $912 million this year, according to data from German portal Statista, making a strong recovery after two years of Covid-19.
In the next five years, it is set to expand by 3.3 percent annually, and will cross the $1 billion mark by 2025.
The biggest luxury segments would be fashion, leather goods and cosmetics and fragrances, Statista forecast.
Matthew Powell, director of real estate consultancy Savills Vietnam, which found the Hanoi locations for Louis Vuitton and Dior, said many luxury brands want to enter or expand their presence in Vietnam since its retail market is one of the most vibrant in the region and rentals are low compared to other Asian cities such as Singapore and Hong Kong.
The country’s rising per capita income and expansion of the middle class are also factors, he added.
Vietnam has long been hailed as a country with a fast-expanding middle class thanks to strong economic growth.
With a 56 million-strong middle class by 2030, Vietnam is set to leap eight places from its current 26th in the global ranking of 30 economies with the largest middle-class populations, British analytical NGO and data enterprise World Data Lab said.
The number of people in the country owning more than $30 million, or the ultra-rich, could reach 1,551 in 2026, a 26 percent increase from 2021, according to a report by U.K. property consultancy Knight Frank.
The company also predicts that the number of rich people, or those with a net worth of $1 million or more, including their primary residence, will soar by 59 percent from last year to 114,807 in 2026.
"We have witnessed prime apartment selling prices break the $10,000 per square meter barrier this year, driven by local demand, and with Vietnam expected to increase the number of ultra-high net worth individuals between 2021 and 2026 by 26 percent, on par with Hong Kong and Taiwan, we can see the potential for ongoing growth well into the future beyond that," Knight Frank Vietnam managing director Alex Crane said.
The company also pointed out that rich Vietnamese are buying more watches, cars and wines.
The country’s import of watches increased by 28.2 percent annually in 2016-20.
Car sales and wine imports, prior to being impacted by the pandemic, had maintained consistent growth of 12.9 percent and 9.8 percent between 2016 and 2019.
The growth potential for luxury brands remains bright as the country is expected to achieve the highest growth rates in Southeast Asia of 6.5 percent this year, and 6.7 percent next year.
Distributors of luxury brands in Vietnam seem to be doing well.
Duy Anh Fashion and Cosmetics recorded year-on-year growth of 171 percent in the last quarter of last year.
It brought two new fashion brands to Vietnam last year, Tiffany & Co and Montblanc, and opened their first stores in Hanoi and HCMC respectively.
It also brought footwear and accessories brand Christian Louboutin to HCMC in January with the first store opening in District 1.
Tran Thi Hoai Anh, founder and president of GlobalLink, which distributes luxury fashion brands in Vietnam, told The Business of Fashion in 2019 that the appetite for luxury goods is more pronounced than ever in Hanoi and HCMC.
"Only a decade ago it was all about knowing the difference between Gucci and Prada. [But] today’s new generation of wealthy shoppers are driven by the quest for quality, distinctiveness and craftsmanship."
Anh said Vietnamese consumers seem to be shopping more after the Covid-19 restrictions of the last two years.
To take advantage of this, her company plans to open a new 700-square-meter flagship store in HCMC and sell brands that have not been popular in Vietnam such as Off-White, Ambush and Amiri, she said.
"I am very positive about the future, as I am seeing demand for luxury goods after the pandemic."
By Dat Nguyen