Developers should consider resource-rich countries for long-term retail investments

Developers should target resource-rich and heavily-populated countries like Vietnam for long-term investments in the retail sector.

Some property analysts said such nations also see increasing spending power among the young.

Vietnam and Indonesia have a young population with a median age of about 27.

And analysts said large shopping malls will meet the basic needs of such consumers in a developing nation.

Such malls will include a mix of department stores and retail chains.

The booming tourism industry in Southeast Asia will also help drive growth in the retail sector.

Chua Yang Liang, head of research, Southeast Asia, Jones Lang LaSalle, said: “With other countries like Thailand, they are looking at achieving 15.5 million tourist arrivals by next year. And in Indonesia, it is about 7 million. And all that will stack up and influence the retail market in the respective countries.”

CapitaMalls Asia said it is looking at Ho Chi Minh City as its first stop when entering the Vietnam market.

It said this is due to the spending habits of the locals in the most populated city in the country of some 85 million people.

Compared to Hanoi which is up north, CapitaMalls Asia said residents of Ho Chi Minh City are more open to shopping and eating out.

Lim Beng Chee, chief executive officer, CapitaMalls Asia, said: “That difference actually can translate in terms of the business. When they entertain outside, it means that they will go to shopping malls, spend money at the restaurant…so I think based on this habit, I think our first stop will actually be Ho Chi Minh City.”

Mr Lim added that mixed-developments comprising both residential and commercial space will be one way to enter the Vietnamese market.

But he said challenges include strict legislations within the countries for foreign developers.

Source : Channel NewsAsia – 29 Jul 2010

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