Rents for retail space could rise by 17-18% this year in downtown Hanoi and by 8-9% on the city’s outskirts, property consultancy CBRE has forecast.

They might grow by 10% and 3% annually in the next three years, it added.

CBRE said the average monthly rent in the downtown area in the first half was US$180 per square meter after rising by 11% from a year earlier.

According to real estate agency Avison Young, in the second quarter the average retail rent rose by 15% in outlying districts. Ground-floor rents saw the highest average hike of nearly 15%.

Reports from multiple real estate agencies and consultancies suggested that retail rents in the capital are on the rise due to low supply and growing demand from large international brands.

In the first half it only saw one new project in Ha Dong District, which added 10,000 square meters of space to the market.

Savills, another property consultancy, said the retail segment saw many transactions in the food and beverage sector in the second quarter.

Japanese restaurant chain Pizza 4P, for instance, leased additional space to double the size of its current store in the Lotte Center Hanoi skyscraper.

Gyu Shige, another Japanese restaurant, rented a property in Dong Da District to open its first store in Hanoi.

As rents increase, the retail space occupancy rate in the city is inching down. According to Savills, it fell by two points year-on-year to 84% in the second quarter.

David Jackson, CEO of Avison Young Vietnam, said tenants are shifting away from the downtown area to find cheaper and bigger places in the outskirts.

Savills said six shopping malls and 11 ground-floor retail spaces would be launched in the next two years, mostly in Tay Ho, Dong Da and Hoang Mai districts.