Vietnam - Shopping malls deserted, but Hanoi says it still needs more markets

VietNamNet Bridge – A lot of modern shopping malls located on advantageous positions in the commercial hubs of Hoan Kiem, Dong Da and Cau Giay districts have been deserted for the last two years. Meanwhile, Hanoi authorities believe that the city still needs more shopping malls.

Indochina Plaza Hanoi on Xuan Thuy road of Cau Giay district made debut on August 31. The five storey shopping mall with the total area of 18,000 square meters has been 77 percent occupied. However, a lot of merchants still have not started their business. It is estimated that 80 percent of the tenant-merchants still need to make some changes to their kiosks.

One year ago, the 30,000 square meters PicoMall on Tay Son Street of Dong Da district became operational, five months later than the initially planned schedule. However, by that time, the shopping mall had been 80 percent occupied only.

In September 2011, Hang Da Galleria in the central district of Hoan Kiem district became operational. Sources said that CBRE, the distributor, had to struggle very hard to look for premises tenants.

After the first sale campaign finished, CBRE reported that it fulfilled 120 percent of the sale plan, but only 75 percent of the premises on the fourth floor had been occupied.

Observers have said that the occupancy rates at the shopping malls have been decreasing in the context of the economic downturn and weak demand.

Small merchants once rushed to register to buy the kiosks at Grand Plaza on Tran Duy Hung Street in Cau Giay district in 2009. At that time, the premises priced at 4000-5000 dollars per square meters “sold like hot cakes.” However, when it officially opened in late 2010, the occupancy rate was just 70 percent.

Just after one or two years of doing business, a lot of merchants have transferred the kiosks, shut down business or shifted to other types of business, because the low sales could not help cover the expenses.

A lot of shopping malls still have large idle premises. Despite the great preferences offered to tenants, including the rent exemption for 3-6 months, the shopping malls’ owners still cannot find clients.

Keangnam Landmark 72 on Pham Hung road of Tu Liem district is believed to be the most successful shopping mall among the ones opening recently. The shopping mall with the total area of 35,600 square meters, managed by Parkson Group, reportedly had the high occupancy rate at the end of 2011, when it made debut.

After one year, the shopping mall still has a high occupancy rate of 90 percent. However, observers said the figure does not show the business efficiency of the merchants here.

Hanoi still needs more shopping malls

According to the Hanoi Industry and Trade Department, there are some 20 shopping malls in Hanoi, accounting for 15 percent of the total shopping malls in the country, and 110 supermarkets, accounting for 19 percent.

As such, the shopping mall area per capita is now at 0.077 square meter, while the figure is 0.019 square meter for supermarket area, which are too low to meet the requirements for a big urban area development like Hanoi.

Especially, modern retail establishments (modern supermarkets, shopping malls) now just make up 20 percent of the total retail turnover, and must lower than that of traditional markets and small shops.

Nguyen Van Dong, Deputy Director of the Hanoi Industry and Trade Department, said the shopping malls have been gloomy just because of the economic downturn. Meanwhile, in the long term, the existing supermarkets and shopping malls are still not enough to satisfy the demand of several millions of people in the city.

“The slow sales are just a momentary story,” he said.

Thanh Dung

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