HCMC: Street Retail Remains Under Intensive Competitive Pressure

According to Savills Vietnam’s Q1/2025 property market report, street retail in Ho Chi Minh City continues to face intense competition from modern retail formats, which offer greater product and service diversity. 

Data from the General Statistics Office shows that in Q1/2025, HCMC’s total retail sales of goods and services reached VND 317 trillion, marking a 14% year-on-year increase. Retail goods accounted for 46% of this value, reaching VND 147 trillion. The city’s retail demand remains on a solid upward trajectory. 

Savills’ report indicates that occupancy in modern retail space—including shopping malls, retail podiums, department stores, and supermarkets—remained strong at 94%, a 2 percentage point increase year-on-year. This growth is largely driven by robust demand from the F&B, entertainment, home appliance, and furniture sectors, along with healthy absorption at new retail projects. 

Newly launched shopping centres such as Thiso Mall Sala, Parc Mall, Vincom Mega Grand Park, and Centre Mall Vo Van Kiet have all entered the market with occupancy rates of at least 70%. Notably, Centre Mall Vo Van Kiet (District 6) recorded an 88% occupancy rate shortly after opening. Large tenants leasing over 500 sqm made up more than one-third of total leased space, with demand concentrated in education, healthcare, beauty, home appliance, and furniture sectors. 

In contrast, street retail is facing mounting challenges and fierce competition from modern formats that offer more diversified retail experiences. According to Savills’ observations, vacancy rates for street-level retail spaces have yet to return to pre-pandemic levels. Average rents on major retail streets in HCMC remain 10–20% lower than 2019 levels. Despite landlords offering incentives such as extended fixed-rent periods, deferred payment schedules, reduced deposits, or more flexible lease terms, vacancies persist—even in prime, high-traffic locations. 

Ms. Cao Thi Thanh Huong, Senior Manager, Research & Consulting, Savills HCMC, noted: “The retail sector is undergoing significant transformation, particularly in consumer behaviour and retail operating models.” She explained that the shift stems from changes in shopping habits triggered by social distancing during the pandemic, which accelerated the adoption of online shopping. Consumers have grown accustomed to the convenience and cost-efficiency of e-commerce—and many are continuing these habits post-pandemic. This behavioural shift is long-term and has direct implications for demand in traditional street-level retail. 

In addition to evolving consumer preferences, Ms. Huong emphasised that structural and operational differences between shophouse-style premises and shopping centres are key reasons why more brands are leaning toward the latter. When choosing between street retail and shopping malls, today’s retail brands are increasingly prioritising shopping malls. 

Shophouse units often lack professional management, rental terms depend heavily on individual landlords, and leasing conditions tend to be inconsistent and unstable. In contrast, shopping malls are systematically operated with transparent rental policies, stable commercial environments, and strong foot traffic due to strategic locations, cohesive planning, and integrated infrastructure. These factors offer retailers better risk control and operational efficiency. 

Beyond operational effectiveness, shopping malls also enhance brand equity. While not always directly boosting sales, a mall presence strengthens brand visibility and credibility thanks to the high volume of potential customers. Meanwhile, street-front locations—unless exceptionally prime—rarely deliver the same exposure. Street retail requires consumers to proactively seek out the brand, whereas shopping malls offer a form of “window shopping,” enabling spontaneous brand discovery even before a need arises. 

In the current economic climate, retailers are being forced to reassess, restructure store portfolios, and rebalance operating costs. With their advantages in management and customer attraction, modern retail formats—particularly shopping malls—are increasingly the preferred choice for brands seeking to optimise performance. 

Looking ahead, the city’s future retail supply in the remaining nine months of 2025 is expected to reach 66,244 sqm from five projects. Of this, central areas will contribute 52% of the pipeline supply, led by Marina Central Tower and Lancaster Legacy. However, limited land availability remains a constraint, posing challenges for international brand expansion and overall market growth—especially in core districts.