Thu Phuong in Hanoi recently vacated a 70-square-meter fashion store in Cau Giay District, after shutting down two outlets earlier this year.
The revenues from her three stores used to be big enough to cover rents, but as sales have plunged this year, she could no longer extend her rent contracts. She is looking for a new store location deep inside alleys so she can focus on online sales.
The capital’s downtown streets, which used to be bustling with fashion stores and restaurants, now see many vacant outlets as landlords struggle to find tenants for months.
Over 40 stores are closed on Kim Ma, a street famous for many fashion stores and restaurants.
A similar scene is seen on the nearby Nguyen Thai Hoc Street. Duc Huy, a property broker with five years of experience, said that the number of available shophouses he came across has risen by 15-20% compared to last year.
For lease sign is seen on a shophouse on Ton That Thiep Street, Hanoi, in December 2024. Photo by VnExpress/Ngoc Diem |
A five-floor house on Kim Ma has been vacant since August, even though rents have been lowered by 10% from two years ago to VND50 million (US$1,960) per month, he said.
“A few years ago landlords demanded high rents and still many tenants were willing to pay. But that is no longer the case now.”
Nguyen Chi Thanh, vice chairman of the Vietnam Association of Realtors, said that the shophouse property segment is facing major challenges as customers prefer to shop either in malls or online.
Many businesses now, instead of pouring a large chunk of cash into prime locations, are spending big on online marketing which attracts more consumers, he said.
Other analysts say that shophouses in Hanoi often do not have large parking spaces compared to malls, which is an inconvenience to customers.
The profitability of shophouse rentals has been declining, said Dinh Minh Tuan, business director at listing platform Batdongsan.
Landlords should expect an average profit margin of around 3% a year, which is the same as in 2021, he added. “This is a low margin in the rental property market.”
A VnExpress survey of 5,600 online readers show that shophouses rank least in investment attractiveness this year. Tuan said that even when the economy rebounds, a change in consumers’ behavior will still affect shophouses’ value.
As Vietnamese now spend around $1 billion on online shopping per month, businesses no longer require expensive shophouses to promote their products.
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