Hanoi, HCMC downtown stores combat to get tenants as e-commerce booms

In recent months many shops on busy streets of Hanoi’s Hoan Kiem and Dong Da Districts have been shuttered due to the lack of tenants, some even since the end of last year.

On Kim Ma Road, where many fashion stores and restaurants are located, around 30 shophouses have their shutters down, some with “for lease” signs.

At a commercial property complex to the west of West Lake, less than 10 tenants can be seen.

Shophouses in Nam Tu Liem, Ha Dong and Long Bien Districts are also vacant after people paid VND20 billion ($785,000) to buy them three or four years ago.

Property broker Minh Thu said that since 2017 there has never been as many shophouses available in Hanoi.

“Prime locations in Hanoi with rents of VND15-20 million per month used to be filled with tenants, but now many of them are vacant, even if landlords offer incentives such as reduction in deposit.”

For lease signs are seen on many shophouses in Ho Chi Minh City. Photo by VnExpress/Tran Mai

Analysts at property consultancy Savills said the high rents and growing competition from e-commerce are making tenants less willing to pay for expensive shophouses.

Rents for some shophouses in Hoan Kiem District have risen 20% since before Covid and will likely continue to increase, according to Savills.

Instead of paying rents of VND10-15 million, small business owners prefer to spend that money on online ads, he added.

In HCMC’s District 1, many shops have no tenants while others have been looking for them since the end of the pandemic.

A building that used to house a Japanese restaurant is now vacant but the landlord still wants a rent of VND300 million a month.

Vacancy signs are also seen in many places in District 7 that used to be restaurants or offices.

But their landlords have barely lowered their prices. The asking rate for a 100-square-meter shophouse on Nguyen Van Linh Road, for instance, is VND50 million a month.