Luxury shopping centres are being threatened with closure in Hanoi due to a lack of customers.

Many trade centres have low occupancy rates  

Opened in September 2011, Hang Da Galleria is located in a densely-populated and high-income area; therefore, the investor expected the shopping centre to become an ideal area for service and entertainment activities. However, Hang Da Galleria has seen a very low occupancy rate, forcing the centre to temporarily close for an upgrade.

The investor sold its space to tenants, leading to the situation that the centre has many different owners. This has resulted in difficulties in managing the centre. Earlier, Grand Plaza trade centre halted operations in late 2012 for the same reason.

A representative from a real estate consultancy firm said initially the project was planned to be turned into a tourism spot which would only sell traditional products, however, the investor did not agree to the solution and instead decided to select a multi-ownership model for the centre.

Leanne Mitchell, an expert from CBRE, said that many projects had failed due to failure to reach a consensus between owners.

Mitchell said shopping centres were wrong to sell their property to additional investors. The owners should completely control their premises. In cases, where they have to sell their centres, they must have contracts with firm and specific regulations on the responsibilities of any other investor.

Meanwhile, the consumer confidence index has been declining since 2012, and is forecast to further drop in 2013. This will seriously affect the retail market.

Shopping centres are facing fiercer competition, with Parkson and Lotte expanding operations. Parkson has announced it intends to open an additional 3-4 centres in Hanoi. Lotte is working on opening a 65-floor building costing USD400 million. While the Vingroup will open Vincom Royal City and Vincom Mega Mall Times City covering a total area of 460,000 square metres. AeonMall Vietnam has been licensed to invest in a USD200-million retail centre project.

In the current difficult economic situation, shopping centres should have long-term investment strategies following pre-feasibility studies and market surveys. It is also important to survey the incomes of people who live near the project area.