» » Seeking shop premises a headache

A lot of businesses, which have shop premises in beautiful positions on big roads and streets in the centres of cities, say they are now on the horns of the dilemma. Their business is not good enough to pay for the premises, while they cannot move to other positions for fear that they will lose prestige.

Despite the difficulties of the national economy, which have been making businesses’ performances unsatisfactory, premise leasing fees still remain unchanged. Several years ago, businesses all tried to set their shops in the most beautiful positions in order to attract clients. Nowadays, they wish they had not done this.

The owner of a computer shop on Ton That Tung street in HCM City complained that he is having to struggle to arrange enough money to pay staff salaries, electricity and water bills, and pay rent. While real estate prices are on the decrease, premise leasing fees are on the rise.

Ho The Son, representative of Foci fashion trademark, said that he now wants to relocate his shops to supermarts and trade centres to cut down expenses and get opportunities to access clients. Foci will only retain the most important premises which can serve the strategy on product development.

Bach Khoa Computer has decided to delay its plan to open a Can Tho branch. Tu Do Mobile has closed its supermart on Xo Viet Nghe Tinh street in Binh Thanh district, HCM City. P.H, a mobile phone retail system, is considering changing its business goals; therefore, it is not seeking premises with as much fervor as it did before. A lot of bread shops, fashion shops owned by domestic fashion companies and tea shops for teenagers, which once mushroomed, are now closing.

Analysts say that nowadays, a shop 4m in width will have the leasing fee of VND12-18mil a month, while the leasing fee will be bigger, VND25-35mil a month, for a shop 6m in width.

While a lot of businessmen have decided to give back premises to the owners, other businessmen are still scrambling to get new beautiful premises. A war between two mobile phone retailers, The Gioi Di Dong and A. Telecommunications, is taking place, in the race for premise leasing. Rumour has it that one of the two retailers found a beautiful premise in a district in a suburb of HCM City, and successfully signed contracts with the leaser. The other retailer decided to pay $2,000 more, trying to persuade the premise owner to refuse the retailer that came sooner. However, the owner of the premise, a lawyer, decided to respect the signed contract.

Dinh Anh Huan, Business Director of The Gioi Di Dong, said that if businesses can survive their current difficulties, they will have a bright future. Therefore, businesses still have to make heavy investment in their retail system, despite the low purchasing power.

To date, The Gioi Di Dong has 25 retail supermarts, including one specialising in Apple products. It plans to open five new supermarts in July in Ca Mau, Long Xuyen and HCM City in the south.

Nguyen Thi Anh Hoa, Director of Thanh Thao Fashion, said that if businesses dare not spend money to lease premises now, they will not be able to lease premises in the future, when the difficult period of the national economy is over.
Vietnam Real Estate

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