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The majority of the streets of Vietnam's largest city Ho Chi Minh City and Hanoi are now deserted. The businesses of these shopfronts have relocated to other areas as the economy has gotten worse yet the rent for these properties is still as expensive as it was before Covid. Le Loi Street, once home to several coffee shops and clothing retailers, is now practically deserted.
Several streets in the city's center like Hai Ba Trung, Dong Khoi, Ly Tu Trong and Le Thanh Ton are covered in banners for leasing that are displayed in front of empty storefronts. The situation appears to be the same in Hanoi where landlords have been having trouble finding renters since late 2021.
Vietnam is currently experiencing a surge in inflation and economic duress only compounded by global events. According to data published by the General Statistics office, the consumer price index rose by 3.15% year-on-year, increasing by 4.18% in the first three months of the year itself.
According to a report released by CBRE Vietnam, the cost of leasing a square metre in Ho Chi Minh City’s centre is currently approximately US$150 per square metre per month and is expected to rise to above US$200 per square metre per month in 2023 and 2024. In comparison to the US$100 per square metre per month in 2019, the Hanoi leasing rate in 2022 was close to US$140 per square metre per month. These costs are comparable to those in expensive European cities like Hamburg and Berlin (US$150 - US$160 per square metre).
At present, sources say it can cost as much as US$10,000 per month to rent a commercial store in Vietnam’s popular streets, a steep jump from the going rate of US$2,000–$3,000 in 2019. An example of the adverse effects of this has been US coffee company Starbucks decision to opt out of Ho Chi Minh City and Hanoi after eight years of running their establishments there. The official reason cited for doing so has been the increased cost of leasing.
One of the most prominent investment avenues in Vietnam is real estate and money has been steadily flowing in the form of loans into the market. As a result, landowners anticipate that the lease price will be high enough to repay their bank loans and interest. However, the vacant state of these properties won't last forever. Even though businesses may have left for the time being, several experts predict that Vietnam's economy will expand with a rise in real estate demand as more foreign businesses migrate here in search of business opportunities. Hence, whether the space is currently vacant or not, it is anticipated that lease prices will continue to rise.
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