In recent years, shophouse prices have seen growth but have yet to fulfil their original purpose and their initial investor attraction as a source of rental income.

The shophouse segment has not generated rental income for owners  

Shophouses located within urban townships, particularly in major cities like Ha Noi and urban satellite areas, continue to attract strong interest from individual and institutional investors. Their appeal lies in the combination of steady capital appreciation and the dual-purpose potential for residential and business operations. 

Savills Market Brief Q1/2025 reveals that over the past five years, Ha Noi’s shophouse growth averaged between 11–16% pa. In the first quarter of 2025, the average primary price for shophouses reached approximately VND 278 million per sq m. While this reflects a modest 12% decline QoQ, it is stable in comparison to the same period in 2024. In the secondary market, prices rose by 9% QoQ, reaching VND 266 million per sq m,  reflecting a long-term holding demand and future expectations of capital gain.  

Despite favourable pricing trends, the current business performance and rental yields for shophouses indicate more challenges ahead.  

Amid rapidly shifting consumer behaviours and evolving expectations, shophouses are facing obstacles, namely a reduced appeal to professional retailers, low occupancy rates, and unstable operating models.  

Several key factors contribute to low rental yields for shophouses

1. Intense competition 

First, there is intense competition from shopping centres. Malls offer large-scale, professionally managed spaces with stable footfall and diverse amenities, which are more appealing to retail and F&B brands. In addition to media and marketing support, mall tenants benefit from stable rental rates over longer lease terms. In contrast, shophouses tend to operate on an individual basis, with terms and conditions heavily dependent on the owner, leading to a lack of long-term consistency. 

2. Lack of flexibility 

Second, the leasing model for many shophouses lacks flexibility. In numerous cases, tenants must lease the entire property, even if they intend to use only the ground floor for business purposes. This often results in higher rental costs than necessary, combined with the deterrent of sharing access with the landlord or common-use facilities (such as restrooms) for many brands.

Shophouse rental prices remain volatile, largely influenced by fluctuations in property values. In contrast, shopping centres provide tenants with clear pricing frameworks and lease durations, offering greater predictability for long-term business planning. 

3. Legal and operational limitations 

Third, legal and operational limitations remain unclear. Unlike shopping malls, which have dedicated management teams to handle administrative procedures, business licensing, and technical support, shophouse operations rely entirely on the tenant or owner. This lack of professional support poses significant challenges, particularly for chain businesses or those requiring standardised operations

Key considerations for sustainable shophouse investment 

Despite ongoing challenges, the long-term potential of shophouses remains promising, particularly in urban areas. These areas are experiencing rapid population growth, stable income growth, and shifting consumer demand. 

However, to ensure sustainable investment returns, the Savills Director recommends that buyers carefully consider key fundamentals, including location, legal status, developer reputation, and product design. These criteria will reduce the risk of purchasing substandard, overpriced properties that are difficult to lease and unlikely to deliver the expected capital gains.

1. Location 

Location plays a pivotal role. Beyond visibility and accessibility from main roads, successful shophouses require high population density, consistent foot traffic, and real consumer demand. Properties situated near public amenities, schools, and office clusters are more likely to attract tenants.

2. Product design 

An ideal shophouse design should have a frontage of at least 5 metres and a layout flexible enough to accommodate residential use, commercial leasing, or a hybrid combination. Separate entrances for landlords and tenants are also essential to minimise disruptions to business operations. Additionally, technical infrastructure such as fire escapes, ventilation, and odour extraction must be well-planned, especially to attract F&B tenants. 

3. Legal status and developer reputation 

For off-plan or future developments, investors should carefully review the legal documents, including land allocation and construction permits, as well as commitments on land use rights and ownership certificates, after full payment. Projects developed by reputable developers or involving experienced design, construction, and supervision teams have a higher likelihood of success. Conversely, with newer or less established developers, it is crucial to review all involved parties to ensure quality and transparency.

Shophouses remain a high-potential segment, particularly in major cities where population growth and consumer spending are increasing. However, in a market undergoing increasing segmentation, the key to long-term profitability and liquidity lies in selecting well-located, legally sound, and optimally designed products. Today, investing in a shophouse is no longer just about choosing the right asset; it's about choosing the right operating model. Without this alignment, investors may face prolonged concerns if decisions are based solely on capital gain expectations while overlooking operational viability.