iar story of new openings, declining revenue, a weak bottom line and a chronic vacancy problem – like a toothache that won’t go away. And it has only itself to blame. For the quarter, Vincom generated total revenue of 2128 billion Vietnamese dong (VND), down 9.2 per cent from the fourth quarter of 2023. Leasing revenue increased 3.9 per cent from a year ago, due to the opening of new malls and improved occupancy over the portfolio, but Vincom’s revenue crown jewel, the sale of inventory properties (shophouses), has been hollowed out. The company managed to eke out a 1.7 per cent increase in after-tax profit, to 1085 billion VND. For the whole year, total revenues reached 8939 billion VND, down 8.7 per cent on 2023, with leasing revenues up 1.1 per cent but the sale of shophouses cut roughly in half. After-tax profit of 4096 billion VND represented a decline of 7.1 per cent. Overmalled or underdemolished? Someone remarked a while ago in reference to the excess of retail space and an alarming number of dead malls in the US that the country was “not overbuilt, but underdemolished”. Is this a conclusion that can be applied to Vietnam as well? Vincom’s vacancy issue persists, despite some incremental improvement from a low base. Occupancy for the portfolio was down again in 2024, to 84.2 per cent. Compare that WITH the portfolio occupancy of Vincom’s US peer, Simon Property Group, which operates more than 200 malls and outlets and has an occupancy rate north of 96 per cent. Of course the two are not directly comparable but the juxtaposition gives you a flavoUr of how far off the pace Vincom is by the best international standards. It put too many malls where it shouldn’t have and now its best performers are covering up for the dozens of bad ones. Luckily, the Vincom Center format that services high-density neighbourhoods in the main cities enjoys stable occupancy at a high level (just under 96 per cent). However, occupancy at the Mega Mall format, Vincom’s great hope for the future, is still marooned below 90 per cent. However, the newly arrived Vincom Mega Mall Grand Park in District 9 east of Ho Chi Minh City’s CBD has been successful in securing 99 per cent occupancy and boasts global brands such as Nitori, Uniqlo, Muji and Decathlon.  In contrast, the two formats Vincom operates in secondary locations – Vincom Plaza and Vincom+ – have persistent vacancy rates in the 20-30 per cent range, which isn’t a good look. Aside from Vincom Mega Mall Grand Park, the company opened four malls in 2024, three in the far north of the country and one in the central area, all of which the company said opened with occupancy well above 90 per cent. All four were also the first modern retail facilities in the provinces in which they opened. These openings brought the total portfolio to 88 and maintained Vincom’s position as the dominant mall operator in Vietnam by a long way. The company is also busy with renovations and attempts to freshen up the tenant mix at some centres, as all mall operators must. Three new Vincom malls are scheduled to open in 2025: Vincom Mega Mall Ocean City (in Hung Yen, south of Hanoi) and Vincom Mega Mall Royal Islands (in Haiphong), both of which snuggle up with residential developments built by Vinhomes; and Vincom Plaza Vin (in Nghe An in the far north).  Retail is booming and rents are, too, in the main cities Vincom’s performance took place against the backdrop of booming retail sales. National retail sales tabulated by Vietnam’s National Statistics Office (NSO) grew by a hefty 9.0 in 2024, although for perspective this is normal for a developing country with growing household incomes and a tourist boom. The economy grew by 7.1 per cent for the year, exceeding the government’s plan and eclipsing the performance of its Southeast Asia peers. Forecast growth is 6.1 per cent in 2025, which would again give it the best performance in ASEAN. Inflation has been reasonably well-behaved, averaging 3.6 per cent over the year and coming down sharply in the second half. Borrowing costs are also coming down, from nearly 10 per cent.  For its part, international tourism is back with a bang. There were 17.5 million visitor arrivals in 2024, up 40 per cent from 2023. Retail rents are rising as one would expect, but the increase is disproportionately focused on the CBDs of Hanoi and Ho Chi Minh City, where space in prime retail sites is being matched or outpaced by demand. Elsewhere, rents are rising but more slowly and from a much lower level.  In 2023, more than half of the major leasing transactions in Hanoi and Ho Chi Minh City were fashion and accessories retailers, compared with 15 per cent in food and beverage. In 2024, the situation reversed and food and beverage accounted for a massive 45 per cent of leasing transactions CBRE data showed. Fashion has dropped to 30 per cent of the transactions. Slim pickings The cupboard is getting bare for fashion retailers, which don’t fancy opening in second- and third-tier locations where spending power is limited, and the malls are at best dreary, at worst substandard. Vincom’s decades-long strategy of sowing up every meaningful local market, even if it meant getting well ahead of local spending power, has left it with an enduring problem, though not an unusual one in a developing country with a large population, rapid urbanisation and huge potential. What’s different here though is that Vincom’s core competencies don’t seem to extend to the design, customer experience and other skills that define the best shopping-centre developers. The 20th birthday party was a well-staged event, but it doesn’t paper over the cracks.