The Regret of the Old Quarter in Hanoi
Walking around the streets known to be the most expensive in Hanoi such as Hue, Hang Bong, Hang Da, Tho Nhuom, it is not difficult to come across stores with closed signs, going out of business, and being up for rent.
Closed stores on the expensive street are not unfamiliar
Clothing and fashion used to be a booming business market in 2018-2019 with a large and fast-growing number of stores. Now, it has become the main industry for paying rent.
Many clothing stores have signs for clearance and paying rent
Ms. Thu Hang, the owner of a clothing shop on Hang Bong Street, said: “I have been renting this store for a few years, but since the Covid-19 pandemic, my business has been struggling. From the beginning of 2023 until now, it has been very slow. People are buying more online, which puts me in a difficult situation.”
On Hang Bong Street, there are many stores with clearance signs
This situation has been happening for a few months before the Lunar New Year due to a prolonged recession in business. Store owners can’t afford the rent, so they have to cease operations.
Other industries besides clothing and fashion also face these difficult circumstances.
This store located on Hang Bong Street has been closed for a long time
Mr. Tan (63 years old), living on Hang Bong Street, said: “Business on this street has cooled down a lot, and the rent here is no longer as high as a few years ago. The coffee shop next to me has changed ownership before Tet because it was losing money.
Mr. Hoa, the owner of a coffee shop on Cua Nam Street, shared: “My coffee shop has been getting fewer customers for the past two years after the Covid-19 pandemic, so I had to split the space. I sell coffee during the day and have an acoustic band at night to minimize costs.”
According to him, when the economy is difficult, people tend to cut expenses. His products are not essential, so it’s understandable that it is difficult. Many of his friends who opened shops on nearby streets have faced the same situation. Many of them had to sell their business last year.
More and more prime storefronts are closing down
Especially in recent years, there has been a clear shift in people’s shopping preferences and trends. Since after the Covid-19 pandemic, people prefer online shopping, and the demand for e-commerce platforms has greatly reduced the retail market. The fashion and beauty segments are the most affected.
According to Ms. Thu Hang, a clothing retailer, “Many stores on Hang Bong Street have closed. People nowadays find it cheaper to buy online, so why rent for millions of dong while they can rent a cheaper place in the alley and have better income by selling online.”
Hang Da Street also has many vacant storefronts waiting for tenants
However, many landlords still maintain high rental prices and even increase them, making it more difficult for businesses to afford the rent.
Many properties are left unoccupied because the owners refuse to lower the rent.
Reduced Rent but Still No Tenants
According to real estate brokering websites, a 20m2 coffee shop on Cua Nam Street can cost up to 20 million VND per month. A 23m2, five-story shop facing Hang Cot Street with a 3.2m frontage can be rented for 32 million VND. A 3-story building with a good business location on Trang Thi Street, with 18m2 per floor, is only 20 million VND per month… These prices have been significantly reduced from the beginning of 2023.
Mr. Quoc, a resident on Tho Nhuom Street who rents out his property, said: “Previously, I rented out a 15m2 shoe store on the first floor for 15 million VND per month, but now I have to reduce it by half for people to stay.”
Many vacant houses on the main streets
Assessing the current situation of leasing properties in Hanoi, Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, said: “This severely affects the real estate market, especially the commercial real estate segment, and reduces the trust of investors. Therefore, other commercial segments like shophouses will weaken.”
According to Mr. Dinh: “To overcome this situation, many things need to be changed. Firstly, the trend of townhouses should focus on commercial purposes and serve tourism activities more. Businesses and store owners need to research and adapt to the current market, which includes applying technology in sales, and also balancing prices to be more reasonable.”
