Covid-19 beats shops in Hanoi's commercial streets
Despite rent cuts, many shops in main streets of the city have had to shut down.
“Retail premises for rent” signboards are seen in Xa Dan, Chua Boc and Thai Ha, the bustling commercial streets of Hanoi. Suffering heavy losses in the pandemic time, many tenants have to terminate their leasing contract ahead of time and give back the retail locations to landlords.
| A fashion shop on Thai Ha street shut down and returned the premises. Photo: kenh14.vn |
Nguyen Thi Hoai, the owner of a fashion shop on Chua Boc street, told Kinh te & Do thi that due to the sharp decline in the number of customers and revenue, along with high rent, she has no other way out but to close the business and return the premises to the owner.
It is now a tough time for many landlords owning prime locations in Hang Bong, Hang Ngang, Hang Buom, Hang Gai streets as they have been unable to find tenants.
Tran Thi Minh, the owner of a shop on Hang Dao street, said that before the pandemic, she paid up to VND1.5-2 million (US$64.2 - US$85.6) per sq.m per month for rent and the landlord found no difficulty to find lessees. “However, supply is currently higher than demand as many properties have been returned before the expiration of contract,” she said.
In order to attract tenants during the post-epidemic period, many landlords are willing to reduce 20-30% of the rent. On the e-commerce marketplace Cho Tot, a 4-storey building with an area of 70 sq.m on Hang Bai street could be leased with VND150 million (US$6,419) per month along with the first two months rent-free, representing a fall in rent by 20% compared to the end of 2019.
Nguyen Hoang Anh, the owner of a street house on Chua Boc street, has lowered the rent by 30% but has not found tenants during the past months.
Economist Nguyen Minh Phong told Kinh te & Do thi that the trend of returning premises is also the process of restructuring in the post Covid-19 retail market. However, given the economic stagnation, landlords should reduce rent rates to a reasonable level, he added.
| Source: CBRE Research, April 2020 |
The latest survey by CBRE Vietnam released on April 27 showed that 79% of tenants are worried that their business would be worse in the second quarter of 2020. Of the 180 respondents, 43% of tenants anticipated drop by 10-30% of their revenue in 2020. Meanwhile, 61% of tenants have not received support from landlords and the 27% expected landlords to offer more support.
Vietnam started a social distancing campaign on April 1 and only loosened in on three weeks later. During the period, many non-essential businesses had to close to prevent the spread of the coronavirus.
