Two high-end brands, Rene Caovilla, which makes women’s shoes, and well known jewelry and watch maker, Cartier, have opened their first stores in Vietnam at the Union Square shopping center in Ho Chi Minh City. This is in line with a number of other luxury brands expanding their presences in Vietnam. High-end mobile phone retailer Vertu and Swiss watchmaker Franck Muller, for example.
This is partly due to the growing demand for luxury goods in the rapidly developing Southeast Asian nation. According to Statista, Vietnam’s luxury goods market is projected to generate revenue of US$992 million in 2024 and is expected to have a compounded annual growth rate of 3.10 percent between 2024 and 2028.
This trend, however, may be contributing to a scarcity of prime retail space for luxury brands.
Of note, high-end goods vendors entering Vietnam are drawn to central areas with established clusters of luxury brands. However, no new supply is planned for these central areas over the next two years, Trang Bui, the Country Head at Cushman & Wakefield Vietnam, a commercial real estate agency, told VTV earlier this year. This could further intensify the competition for existing retail space.
This competition may also be contributing to rising retail rents. According to commercial real estate firm CBRE, in the first quarter of 2024, prime retail locations in Ho Chi Minh City witnessed an average asking rent close to US$240 per square meter per month, an increase of 1.8 percent year over year. Moreover, the CBD area showed almost no vacant space, with a vacancy rate of just 4.7 percent.
See also: How to Open a Retail Store in Vietnam: Ultimate Guide 2024