CBRE’s Richard Leech proposes a mix of trade centres and upgrading traditional markets for development.

City dwellers get used to shop at trading centres

CBRE (CB Richard Ellis) CEO Richard Leech said, “With the growth of Vietnam’s economy in general and its retail business market in particular along with the development of residential areas in cities, trading centres, supermarkets and hypermarkets have become an essential consuming demand in Vietnamese people’s life.”

He pointed out that large trading centres have been changing the shopping habit of Vietnamese people from traditional markets and street stores or state owned department stores to modern supermarkets and shopping malls.

Although the country’s real estate market has fluctuated, retail spaces of trading centres have been expanded steadily and will be developed strongly in the future.

According to statistics from CBRE, the retail space area in Ho Chi Minh City has doubled compared with 3 years ago and is 7 times that of what it was 10 years ago.

The total retail space area of the city is estimated to be 1 million square metres in 2013 which will be 3 times higher than present. However, retail spaces in the city’s central area will not make remarkable expansion, only in the neighbouring areas.

As a result, there will be a shortage of modern retail spaces in the city’s central area since there is nowhere to expand. This will contribute to an increase in the rental prices of modern retail spaces. There will also be an abundance of retail spaces in neighbouring areas of the central area, contributing to a decrease in the rental prices of those retail spaces.

Richard Leech believed that the combination between traditional markets and trading centres would be the right answer to this issue. According to his recommendation, traditional markets can be renovated into low-rise buildings. The first or second floors are used for business activities of traditional markets. Upper floors can be used for modern retail business activities.

He emphasised, “This is a modern and convenient retail business model.”

According to Leech, this retail business model has the benefit of ideal locations in central areas of traditional markets and a huge amount of loyal customers of traditional markets and various customer targets. Furthermore, the modern model retains loyal customers and attracts other demographics.

He also warned that in order to be successful with this new retail business model, it’s necessary to strictly control management of both traditional markets and trading centres in terms of product quality, brands or selling staff.