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Vietnam Retail Market On A Green Journey

Quynh Dang • 22/03/2024

The total retail supply of Vietnam’s market started at about 30,000 sqm since the first shopping malls opened, including Trang Tien Plaza in Hanoi and Tax Trade Center in Ho Chi Minh City. According to Cushman & Wakefield’s data, from 1996 to 2019, the market welcomed 97,000 sqm of retail space on average each year. In particular, the retail market grew strongly in the 6 years 2013-2019 with 195,000 sqm of new retail space being launched each year. By 2023, the total retail supply in both cities will reach about 2.5 million sqm, coming from 137 projects.

Meanwhile, the average ground floor rental price in Ho Chi Minh City and Hanoi reached 53.1 USD/sqm/month and 43 USD/sqm/month respectively at the end of the fourth quarter of 2023, an increase of 1% compared to the previous quarter.

According to a study by Cushman & Wakefield, Millennials and GenZ are currently the main economic drivers and are constantly finding ways to make a difference in the world. Thus, they prefer companies that value social responsibility and environmental sustainability. To attract these generations of consumers, developers are not only adding new restaurants and retailers but also placing more emphasis on sustainability.

Although Vietnam does not have mandatory regulations applicable to green buildings, green building development is usually carried out in a voluntary and encouraged manner. Many old buildings have been on the market for many years with no green certification, and new buildings have the advantage of achieving green building certifications from the get-go. Up to now, the number of green buildings in Vietnam has reached over 300 projects with a total area of about 7.2 million sqm of construction floor.

Saigon Center 2 and Estella Place are examples of buildings that have been maintaining green standards with BCA Green Mark certification for many years, with the most recent recertification being in 2022 and 2023. AEON Group is also among investors who are interested in sustainable standards. Among them, the AEON Mall Hue project has just received 2 green certificates during the design phase: LOTUS Gold (according to new project evaluation standards, version 3) and EDGE; This is also the first commercial center project in Vietnam to receive EDGE certification. These certifications recognize the retail investor's efforts to incorporate sustainable features such as energy-efficient lighting, water-saving fixtures, and green spaces. At the same time, it gives developers, retailers, and customers more confidence that the building is built and operated to the highest design and “All of this is just the beginning of a long-term sustainability journey for the retail sector in Vietnam,” said Trang Bui, Country Head of Cushman & Wakefield Vietnam. “The addition of green building certifications can help enhance the developer's corporate image and the reputation of the developments. Another advantage for investors and developers is that environmentally friendly commercial buildings often have higher rents, better market prices, and also more resilient to any market downturn.”


We noted that shopping centers continue to optimize retail operations, upgrade facilities and adjust the retail brand structure in the building to attract consumers. In particular, sustainability is being valued more than ever by investors, developers, and shopping center operators.

Cushman & Wakefield forecasts that by 2027 there will be a total of 3 million sqm of retail supply serving the two largest cities. We are seeing investors of new shopping centers and retail spaces gradually paying more attention to green standards from the very first steps of development.

Projects that are in the development stage such as Lotte Eco Smart City, Empire City in Thu Thiem new urban area in Ho Chi Minh City, or projects in cell C1-CC1 of Starlake Tay Ho Tay new urban area in Hanoi are working towards LEED green building certification. Similarly, quite a few commercial centers under construction, such as Tien Bo Plaza in Hanoi, have also registered for the LEED standards assessment.

In addition to achieving green certification, shopping malls are now trying to offer consumers more reasons to visit than just shopping. Today's shopping centers are built for all generations and diverse lifestyles. In addition to the food, beverage, and fashion retailers that are considered key in the tenant structure, other retailers such as supermarkets, cinemas, children's play zones, classrooms, sports and fitness retail, exhibitions, music or outdoor green spaces and even aquariums are also being incorporated. This is happening because developers are focusing on adding retail space to extend the time shoppers spend at the premises.

Not only investors and developers, but even brands are starting to pay attention to green certificates to demonstrate their commitment to sustainability as well as their responsibility to society. For example, the Pizza 4P brand has just received LEED Gold certification for interior design and construction for their store at Lotte Mall West Lake Hanoi.

“Investors, developers and commercial property owners in Vietnam must now understand the fact that over time, the principles of responsible investing and ESG investing are becoming more and more popular. And this has also pushed investors and developers to transform their strategic goals of sustainability into a top business priority in line with capital market requirements, rather than simply developing luxurious buildings,” Ms. Trang said.

The next challenge for cities is to ensure green building practices can become the norm. This requires the market to create a business environment that values green spaces and their developers.

For existing shopping centers, there will be a need to refurbish facilities to contribute to reducing carbon emissions. Developers can apply air pollution control measures, use renewable and recycled materials, and apply technology such as green finance, smart devices, sensors, and automation to detect areas that are consuming a lot of unnecessary energy. In addition, shopping centers can restructure inefficient spaces, converting them into greener and more cost-effective spaces.

According to Cushman & Wakefield, the long-term fundamentals of Vietnam's retail market remain strong, including population growth, the increasing popularity of the internet and smartphones, the development of e-commerce coupled with changes in consumption habits. Overall, Vietnam's retail sector is gradually moving towards a more sustainable future. Moving the market towards a business environment that is “totally green” may still be difficult, but with cooperation between all parties in the market, over the next decade, green building will become the new must-have standard for all buildings in Vietnam.


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