Dong Khoi Street continues to be in the group of most expensive rental premises in the world

Cushman & Wakefield’s recently released World Retail Avenues 2024 report found that rents on Dong Khoi Street in Ho Chi Minh City reached $368 per square foot per year (equivalent to $330 per square meter per month). Although down 6% year-on-year, these rents were still up 32% from pre-pandemic levels, partly due to local currency fluctuations against the US dollar.

With this rental price, Dong Khoi Street continues to be in the top 15 most expensive rental areas in the world, ranking 14th, down one place compared to last year. In the top 25, Dong Khoi Street has a higher rental price than the most expensive streets in Athens (Greece), Amsterdam (Netherlands) or Toronto (Canada).

Trang Tien Street, Hanoi is also in the top 20 most expensive retail spaces for rent in the Asia-Pacific region. The rental price here has not changed compared to last year and has increased by 50% compared to before the pandemic, reaching 334 USD per square foot per year (equivalent to nearly 300 USD per square meter per month). Compared to last year, Trang Tien Street has dropped one place in terms of expensive rental, down to 18th place, but is still higher than the most expensive streets in Guangzhou, Chengdu, Chongqing (China), Kuala Lumpur (Malaysia) or Bangkok (Thailand).

This year, Milan’s Via Montenapoleone overtook New York’s Fifth Avenue as the world’s most expensive retail destination, with rents rising by nearly a third in the past two years to $1,836 per square foot per month. New York’s Fifth Avenue has remained flat for two years at $1,794 per square foot. In addition to strong retail demand and limited supply, Milan’s avenue has benefited from the euro’s appreciation against the dollar.

Retail rental prices on the most prime streets in Ho Chi Minh City and Hanoi have remained high in recent times, although some landlords have agreed to lower prices to retain tenants as the economy has yet to recover. For example, some entire houses on Dong Khoi Street have monthly rental prices of VND300-450 million, equivalent to billions of VND per year.

In Hanoi, the rental price of premises on some central streets such as Hang Bai, Hang Bong, Nha Chung is about 100-300 million VND per month, depending on the area. Particularly at the intersection of Trang Tien and Ngo Quyen, an area with many luxury brands, the rental price can be on par with Dong Khoi Street, Ho Chi Minh City.

However, the central townhouse market has also witnessed a wave of "sweeping" premises returns in recent months. Recently, Starbucks Reserve returned the premises at 13 Han Thuyen, District 1, Ho Chi Minh City when the rent was up to 30,000 USD per month (equivalent to 750 million VND). Similarly, YEN Sushi also closed its branch at 8 Dong Khoi Street.

Mr. Nguyen Quoc Anh, Deputy Director of Batdongsan, said that the demand for renting townhouses by retail brands is decreasing in the context of the boom of e-commerce, making shopping more convenient. In particular, popular industries such as fashion are witnessing a "flight" from townhouses.

The demand for retail space for rent is becoming increasingly strict, especially for luxury brands. Ms. Tran Pham Phuong Quyen, Senior Manager of Retail Leasing Services at Savills Ho Chi Minh City, said that luxury brands have many strict requirements when looking for space to rent, such as being located on the busiest streets in the city center, having a large area and a large frontage. This location requires the gathering of many other luxury brands. That is the reason why brands often cluster on some main roads in District 1. However, space that meets all of the above criteria is becoming increasingly scarce.

"Luxury brands have to compete very hard to find suitable premises in Ho Chi Minh City," said Ms. Quyen.