eration where they were sorely needed. For the first quarter, Vincom generated revenue of 2131 billion VND (US$82 million), down 5.5 per cent year on year but that top line isn’t indicative of operations. What is more relevant is that leasing revenue increased 5.1 per cent from a year ago due to the opening of new malls and improved occupancy over the portfolio: revenues were only down because of the sale of inventory properties (shophouses) in the base year that were non-recurrent. The company produced a solid bottom line with an 8.8 per cent increase in after-tax profit to 1.17 trillion VND ($45 million). Some positive news on the vacancy problem Vincom’s vacancy issue, which seemed for a long time to be intractable, is now showing signs of improvement. Occupancy for the portfolio showed material improvement in the first quarter compared both month on month and year on year. Across the portfolio, occupancy is now 85.4 per cent, up from 82.8 per cent a year ago. If you like international benchmarking, you can look to the portfolio occupancy of the world’s biggest retail developer, Simon Property Group, which operates 236 malls and outlet centres and has an occupancy rate in the high 90s. To be fair though, Vincom isn’t operating in the same set of advantages as Simon: having your mall network exclusively in a developing country like Vietnam can make it hard to attract good tenants, and outside the main cities this is one of the big problems that Vincom faces. Even so, Vincom, in its efforts to sew up the market before anyone else arrived on the scene, committed itself to some projects that probably wouldn’t have seen the light of day if the company had its druthers. Luckily, the Vincom Center format that services high-density neighborhoods in the main cities enjoys stable occupancy at a high level (more than 96 per cent). Meanwhile, occupancy at the Mega Mall format, Vincom’s crown jewel for future growth, has risen sharply to breach 90 per cent. This progress has been largely attributable to the newly arrived Vincom Mega Mall Grand Park in District 9 east of Ho Chi Minh city’s CBD, which achieved 99 per cent occupancy and includes a host of global brands, including three heavy hitters from Japan: Nitori, Uniqlo and Muji.  In contrast, the two formats Vincom operates in secondary locations ― Vincom Plaza and Vincom+ ― have chronically high vacancy rates of around 20 per cent, but even they are getting pleasingly better. Three new Vincom malls are scheduled to open this year. First cab off the rank will be Vincom Mega Mall Ocean City (in Hung Yen, south of Hanoi) in July, followed by Vincom Mega Mall Royal Islands (in Haiphong) in the third quarter, and Vincom Plaza Vin (in Nghe An in the far north) in the fourth. Both of the first two will be conjoint with residential developments by Vinhomes, formerly a sibling company under Vingroup.  Retail is unstoppable and rents are rising in the big metros Vincom’s performance took place with the backdrop of a galloping retail sales. National retail sales tabulated by Vietnam’s National Statistics Office (NSO) grew by a hefty 9.9 in the first quarter, although as always the reader should bear in mind that big growth numbers are not at all abnormal for a developing country with growing household incomes, urbanization, and a healthy tourism industry.  The economy grew by 6.9 per cent in the first quarter for the year, and the IMF expects it to keep growing at something like the same pace for the rest of the year. If so, it would be the best-performing economy in Southeast Asia, beating out Philippines by a nose. Inflation has been reasonably well-behaved and is sitting just below 3 per cent after being reduced materially beginning in the second half of last year.  Retail rents are rising as one would expect, but disproportionately focussed on the CBDs of Hanoi and Ho Chi Minh City where space in prime retail sites is being matched or outpaced by demand. It should be noted, however, that rental growth metrics apply only to ground floor and first floor space for the measured projects, and don’t include what is happening in the loftier heights of vertical malls, where the light can get gloomy and the tenancies marginal. Major leasing transactions continue to reflect the transition of Southeast Asian malls from transactional merchandise platforms to community hubs. Food and beverage, lifestyle and entertainment all feature heavily in leasing enquiries and completed lease transactions, while fashion and accessories are declining somewhat in importance.   For Vincom, its five most recently-opened malls (all in 2024) are about 60 per cent leased to food and beverage and entertainment tenants. That compares with about 40 per cent of space leased to those same categories in its 83 malls opened pre-2024. That represents a huge shift in leasing strategy.  Aeon wants a slice of Vincom’s cake Vincom no longer has the luxury of having Vietnam as its private playground. Japan’s Aeon Mall is encroaching and it brings a qualitative improvement to the market that Vincom needs to take seriously.. Aeon’s operating revenues in Vietnam grew by 13.5 per cent to 17.3 billion yen ($120 million) in its latest financial year ending February 28. Operating income was also up strongly. Both metrics were driven by same-centre sales growth for specialty stores of 7.4 per cent, and to a lesser extent by the opening of a new mall in Hue. Aeon is a highly professional mall developer with excellent connections to brands. So, for Vincom, the heat is only just starting to come on.