M a r ke t   I n s i g ht s   f ro m   CBRE’s

C ’
HCMC Quarterly Report Q4/2011
HCMC Quarterly Report 
Presented by:

ADAM BURY
Senior Manager
Opening Remarks from:
CHRISTOPHER CURRIE
CHRISTOPHER CURRIE
Director

CB Richard Ellis (Vietnam) Co., Ltd.
Tuesday, January 10, 2012

Opening Words
2012: The real estate market
is alive and kicking……just!

Š Inflation slowing and economy beginning to

stabilise;
Š Property market is continuing to reform;
• Developers and investors assessing their
positions;
positions
• Some developments continue to move forward;
• Some
S remain
i ffrozen;
Š But, foreign and domestic investor interest remains
and deals are happening:
• WCT invest in Southern Land
• Daibiru purchase Saigon Tower
Š Leasing market sees renewed activity as landlords
become more p
proactive;

2 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 VIETNAM ECONOMIC OVERVIEW
Q4 & 2011 PERFORMANCE
25 3.5 CPI, VN (% y-o-y))
CPI, VN (% m-o-m)
CPI ((% y-o-y) / Interest ratess (%)

Inflation surged 3
20
Monetary controls took effect 2.5 Refinancing rate (%)
Rediscounting rate (%)

CPI (% m-o-m)
15 2

10 1.5
1
5 Monetary controls 0.5
on interest rates
0 0
Jan-10 Mar-10 y
May-10 Jul-10 Sep-10
p Nov-10 Jan-11 Mar-11 May-11
y Jul-11 Sep-11
p Nov-11

Q4 2011p
GDP (% y-o-y) 6.1% 5.9%
December CPI (% y-o-y) N/A 18.16%
Exchange rate (e-o-p) 20,828 20,828
E t (US$ BBn))
Export 26 23 (31.7%
26.23 (31 7% y-o-y)) 96 3 (33.3%
96.3 (33 3% y-o-y))
Import (US$ Bn) 28.9 (23.4% y-o-y) 105.8 (24.7% y-o-y)
FDI Implemented (US$ Bn) 2 8 (-5.1%
2.8 (-5 1% y-o-y) 11 (0% y-o-y)
International Arrivals (million arrivals) 1.7 (29.3% y-o-y) 6.0 (19.1% y-o-y)

Retail and Services Turnover (trillion dong) 611 5 (47.2%

611.5 (47 2% y-o-y) 2 004 (24.2%
2,004 (24 2% y-o-y)
Source: General Statistics Office

3 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

VIETNAM ECONOMIC OVERVIEW

2011 REVIEW

2011f Real GDP

growth (%)
Emerging East Asia 7.1
Š Inflation rules – Government implements and Pacific
y policy
monetary p y tightening;
g g; China 91
9.1
Š Interest rates, exchange rates, reserve ratio’s Indonesia 6.4
become key;
Vietnam 59
5.9
Š Dong devaluation. 9.3% in February, highpoint of
VND20,703/USD in Q1. VND20,828/USD by year end; Malaysia 4.3
Š Banking sector reform underway; pp
Philippine 4.2
Š SJC gold to be under the control of the Government Thailand 2.4
Š VNIndex closed 2011at 351.55 ((27.5% y-o-y
y y decline)) Source: World Bank

4 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 VIETNAM ECONOMIC OVERVIEW
2012 FORECAST
2012 Forecast World Bank IMF ADB
GDP (% y-o-y)) 61
6.1 63
6.3 65
6.5
CPI (% y-o-y) 10.5 12.1 11

Š Vietnam’s economy is expected to pick up as the

macroeconomy stabilises, while the smaller ASEAN
economies will continue to improve”
- ADB, Asia Economic Monitor, December 2011 -

5 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

OFFICE
Q4/2011 SNAPSHOT

* All rents are quoted on GFA, exclusive of VAT and service charges.
Source: CBRE Vietnam

6 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 OOFFFFI IC
CE
GRADE A, Q4/2011

Š Bitexco Financial Tower and Vincom Center put downwards pressure on Grade A rents;
Š Seven more mature buildings still over 95% occupied and
have been able to maintain rental rates at
at, or usually higher
higher, than market average;
Š Attractive Grade A rents have placed pressure on Grade B and Grade C rents;
Š Some of the most attractive deals have already been done in Q4 2011 and landlords
are showing less flexibility at the beginning of 2012;
7 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

OFFICE
GRADE B, Q4/2011

Š Due to the amount of new supply in recent

quarters, the vacancy rate outside of the city core
quarters
for Grade B buildings has increase significantly;
Š Average Grade B rents in District’s 1 and 3 are
on average US$4 – 5 higher than other
properties;
Š Grade B rents decreased 1.5% q-o-q,
q o q, less
decrease compare with Grade A and Grade C;

8 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 RETAIL
Q4/2011 SNAPSHOT

DEPARTMENT STORES SHOPPING CENTRES TOTAL

Total supply (GFA, sm) 113,820 370,650 484,470
Vacancy rate (%)
( ) 0% 23.2% 17.8%
CBD average asking rents (US$ psm per month) $109.35 $112.90
Q-o-q change (%) 0 0%
0.0% -5 3%
-5.3%
Y-o-y change (%) 6.1% -10.0%
Non-CBD average asking rents (US$ psm per month) $49.28 $31.83
Q-o-q change (%) 0.0% -3.7%
Y-o-y change (%) -10.9% -8.1%

All rents are quoted on NLA, average rents on the ground and 1st floor, exclusive of VAT and service charges.
Source: CBRE Vietnam

9 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

RETAIL
New Openings/Re-Openings
at the end of 2011

Š New mall opening- Crescent Mall, District 7:

• 45,000 sm NLA
• 75% space was committed
• Anchor tenants: Giant supermarket, Megastar cineplex,
tiNiworld and Bamboo food court

Š Re-opening of Kumho retail component, branded as

Kumho Link,
Link District 1:
• 80% space was committed
• F&B concept with a good mix of restaurant and fast food
Æ right solution for the space

Š New retail entrant - Index Living Mall, District 4:

• Single retailer operating 7,000sm
• Homeware and furnishings;
• Success
S will
ill b
be kkey ffor other
th similar
i il concepts;
t

10 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 RETAIL
STILL ATTRACTIVE!!!
Š NEW BRANDS – 2011:
• Coach
C at Parkson SSaigon Tourist
• Charles David, DKNY at Crescent Mall
• Warehouse and Zara Outlet at Vincom Center
• Burger King at Tan Son Nhat Airport
• Lyn Around at Crescent Mall and Saigon Centre

Š NEW SUPPLY – 2012: Much more to come:

• Potentially 190,000sm during 2012,
(though delays possible);
• Saigon One, Eden A, Pico Saigon Plaza;
• Will c
create
ea e op
options
o s for
o retailers;
e a e s;

Š MOST AGGRESSIVE – 2012:

• Although it has been said before, F&B remains the most
active;
• F&B operators expanded in 2011 and will do more in
2012: Pizza Domino , Coffee Bean, Baskin Robbins;

11 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

RESIDENTIAL FOR SALE

Q4/2011 SNAPSHOT

LUXURY HIGH-END MID-END AFFORDABLE TOTAL

Total supply (units) 417 15,740 13,042 14,213 43,412
New completion (units) - 1 091
1,091 348 1 918
1,918 3 357
3,357
New launch (units) - - 498* 598** 1,096
Primary market - Average asking price (US$ psm) $4,183 $1,628 $920 $663
Q-o-q change (%) -9.1% -1.6% -3.2% -1.3%
Secondary market - Average asking price (US$ psm) $4,136 $1,803 $910 $722
Q
Q-o-q change
h (%) -2.2%
2 2% -1.5%
1 5% -3.9%
3 9% -0.6%
0 6%
Y-o-y change (%) -6.0% -4.4% -7.5% -0.7%
Note: *: Launched by Saigon Mekong; **: Officially launched

All prices are quoted exclusive of VAT and service charges.

•“Existing supply”: is the total number of units that have been handed over for occupation.
•“New completion”: the total number of units that were handed over for occupation in the review quarter – these are added to existing supply.
••“New
New launch”:
launch : the number of units that were released to the market by developers (official start of sales for a project) in the review quarter.
quarter
All units in each development are included in the calculations, however, the developer may divide sales into numerous phases and thus not
all units may come online at launch date.

Source: CBRE Vietnam

12 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 RESIDENTIAL FOR SALE
THE BIG STORIES OF Q4
– DISCOUNTS

2. Gold House - Nha Be District

Š Saigon Mekong launched 498 units of

1. Petro Vietnam Landmark - District 2
Š The first project to explicitly announce
a sizeable price discount;
Š Advertised discount in excess of 30%;
Š HOWEVER,, it was:
Block B with a price from US$690 –
$719 psm, 20%-25% lower than
original price (as sold by HAGL);
Š Warmlyy welcomed by y the market
thanks to its clear discount together
with flexible payment structure;
Š Approximately 70% - 80% of launched
units were sold;

• Lucky draw and auction format;

• Lucky draw in Hanoi while the
project in HCMC;
• 100% payment upfront;
Š Understood to have generated few
sales;
Š Initial offer appeared to be a
marketing ploy;
Š BUT, auction price was maintained in
the long run and thus the discount
was effective;
3. New Saigon (HAGL 3) - Nha Be District
Š Located next to the Kenton
Residence and also near to Gold
House;
Š Prices decreased byy 22% at units
which had been sold to an investor,
(Van Phuc Hung Co., Ltd.)
Š In addition to price reduction, also
offered interest free loans for the
fi t four
first f months;
th

13 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

RESIDENTIAL FOR SALE

DELAYED OR
CHANGE TO BUY-TO-LET?

Š Projects under planning/constructions; some are delayed or

possibly looking for partner :
Æ (DISTRESS OPPORTUNITIES ARE HERE……NOW!)
Š More condominium projects to be turned to buy-to-let / serviced
apartment:
• Diamond Island – District 2:
• Blocks A and C for serviced apartment;
• Managed by The Ascott Limited;
• Only Block B (249 units) is currently for sale ;
Ben Thanh Luxury – District 1 • Block B: to be handed over in June 2012;
• The Vista – District 2
• 2 blocks of The Vista previously sold to an individual
investor;
• Approx. 250 units to be for lease in the near future;
• XI Riverview Palace – District 2
• 40 units converted to serviced apartment;
• The third block (258 units) on sale and for lease as a buy-
t l t
to-let;
• Other projects:
• Ben Thanh Luxury Apartment (District 1);
• Saigong Complex p ((District 4);
);
XI Riverview Palace – District 2
• Saigon Mansion (District 1);

14 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 RESIDENTIAL FOR SALE
AFFORDABILITY(Something to
think about for the year ahead)

YEARS
S TO
O AFFORD
O
Annual Annual
Social % of Total An Affordable A Mid-end A High-end A Luxury
Income Saving A Villa A Townhouse
Grouping Households Condo Condo Condo Condo
(US$) (US$) ($350,000) ($90,000)
($42,000) ($72,000) ($135,000) ($342,000)
A2 1% 22,845 4,341 10 17 31 79 81 21

A1 10% 11,423 2,170 19 33 62 158 161 41

A 9% 7 996
7,996 1 519
1,519 28 47 89 225 230 59

B 47% 7,425 1,411 30 51 96 242 248 64

C 21% 2,856 543 77 133 249 630 645 166

D 9% 1,713 326 129 221 415 1,051 1,075 276

E 3% 1,428 271 155 265 498 1,261 1,290 332

F 1% 571 109 387 664 1 244

1,244 3 152
3,152 3 225
3,225 829

Data Sources: TNS, Neilson and CBRE Assumptions

Š Figures consider the major cities of HCMC and Hanoi;

Š Assumes that 19% of household income is saved;
Š Generalised, as assumes no mortgages/family contributions
– though majority off purchases are still without a mortgage;

15 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

INDUSTRIAL PARK
Q4/2011 SNAPSHOT

HCMC BINH DUONG DONG NAI LONG AN

Total supply (Number of IPs) 14 24 30 30
Supply basket (Number of IPs) 5 6 6 3
Supply basket (NLA in all phases, hectares) 1,056 3,477 1,890 467
IP - Average land rates (US$ psm per term) $194.00 $56.57 $71.67 $73.33
QQ-o-q
o q change (%) 41.6% 7.3% 35.2% 47.7%
IP - Occupancy rate (%) 90.1% 70.0% 75.5% 68.3%
Q-o-q change (pts) -4 pt -5 pt -0.3 pt 1.7 pt
RBF - Average
A asking
ki rates (US$ psm per month)
h) $4 14
$4.14 $3 04
$3.04 $3 60
$3.60 $3 00
$3.00
Q-o-q change (pts) -3.7% -7.9% 0.0% 0.0%
Only major stabilised industrial parks are tracked in each province/city in the Southern Key Economic Region (SKER).
Land lease term is usually up to 50 years..

Source: CBRE Vietnam

16 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 INDUSTRIAL PARK
Why does CBRE keep
According to Accenture the top reasons for selecting a talking about industrial?
manufacturing location are:

Š Infrastructure & Connectivity

• The re are many established parks available with
good connectivity to key infrastructure;
• Major hubs / IP’s
IPs with large/
large / availableland
available land within
20 – 30Km from the city centre, international
airports / sea ports very attractive e.g. Binh
Duong, District 7, Bac Ninh, etc;
• Challenges at domestic level with lengthy
delays between, planning, approval and
delivery, e.g. Thu Thiem Tunnel; –
UNAVOIDABLE and NOT UNIQUE TO
VIETNAM;

Labour Costs : Vietnam, China, Thailand (US$ /mth)

3000.0
2500.0
Nanjiing, China Binh Duong, Vietnam Chon Buri, Thailand
2000.0
1500.0
1000.0
500.0
.0
0
Unskilled Skilled Engineer Plant Manager
Sources: Nanijing Chemical Industrial Park, China - My Phuoc Industrial Park, Vietnam - Board of Investment, Thailand - Compiled by Business-in-Asia.com

17 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

The Proof – As Announced in 2011

BIG MOVES2011 –
More to come!
Kyocera Mita - Japan Rieker - Germany
10 hectares
20 hectares land

7 hectares RBF
US$14 million
US$187 million
Footwear product
Printer/Photocopier VSIP Hai Phong–
Machine Hai Phong Province To come to operation in late Tinh Phong IP – Quang
Largest Kyocera’s factory in the world 2012 Ngai Province

TBC-Ball Beverage Can (Hong Kong) Nestlé - Switzerland

8 hectares
Coffee processing
factory
US$50 million

850 million US$270 million

products per year Start construction in June
Al i
Aluminum can VSIP II – 50k tons of product To be put into operation in 2013
factory Binh Duong Province per year Amata IP – Dong Nai Province
18 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 SERVICED APARTMENTS
Q4/2011 SNAPSHOT

GRADE A GRADE B GRADE C

Total supply (units) 782 2,048 1,037
N supply
New l (units)
( it ) 93 122 0
Vacancy rate (%) 4.4% 16.2% 16.2%
Q
Q-o-q change
h (t)
(pts) -0.5
0 5 pp -1.1
1 1 pp -0.9
0 9 pp
Y-o-y change (pts) -3.5 pp -0.9 pp 0.7 pp
A
Average asking
ki rents
t (US$ psm per month)
th) $36 54
$36.54 $26 25
$26.25 $17 59
$17.59
Q-o-q change (%) -2.8% 2.6% -0.8%
Y change
Y-o-y h (%) -0.6%
0 6% -5.0%
5 0% -3.9%
3 9%
* All rents are quoted on NLA, inclusive of VAT and service charges.
Source: CBRE Vietnam

19 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

SERVICED APARTMENTS
SHIFT IN DEMAND

units, fewer bedrooms – 1-2 bedrooms preferred;

Æ Smaller units
Æ For the younger single staff – no budget required for their family;
Æ Project-based expats for shorter assignment – lease term <1 year;
Æ From the CBD to neighboring districts: District 2, 7 and Binh Thanh
Æ Operators offer daily rates to compete directly with hotels;
Æ Tenants prefer a home-like apartment (vs. hotel-style living) with low-foot traffic and a
quiet environment;

Proportion of Requested Area (sm) Proportion of Housing Budget (US$/month)

0 - 60 60 - 100 100 - 160 160+ $0 -$1200 $1200 - $2500 $2500 - $3500 $3500+
100%
Q4/2010 10.0% 40.0% 40.0% 10.0%
80%
Q1/2011 17.9% 41.5% 29.2% 11.3%
60%
Q2/2011 20 5%
20.5% 48 2%
48.2% 24 1%
24.1% 7 2%
7.2%
40%

20% Q3/2011 11.7% 52.1% 26.6% 9.6%

0% Q4/2011 14 0%
14.0% 40 9%
40.9% 30 1%
30.1% 15 1%
15.1%
Q1/2011 Q2/2011 Q3/2011
Source: CBRE Residential Leasing TOP DEMAND
Source: CBRE Residential Leasing
20 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 SERVICED APARTMENTS
NEW TRENDS AFTER GFC
Š An expansion of ‘hybrid’ product: These are units which were originally developed as
apartments for sale but have subsequently
subsequently, owing to limited sales success
success, been operated by
the developer (possibly through a management agent) as serviced apartment units –
XI Riverview Palace and The Vista in D.2, Ben Thanh Luxury Apartments in D.1
Æ to provide
provideaa long-termstable
long term stable source of income;

Š Rise of international operator in Vietnam: i.e. the continued expansion of the Ascott
group and the opening of 53 Grade A serviced apartment units at the five-star Hotel Nikko
S i
Saigon (Di
(District
t i t 1)
1);
Š HCMC sees the continued emergence of boutique projects, especially in its CBD.
Some p
projects
j will be able to p
provide a combination of central location,, five-star service,,
attractive design, and a luxurious fit-out similar to that of Grade A projects;
Š Fierce competition from villas and buy-to-let apartments expected to continue
Æ This will stabilise oreven
or even reduce achievablerents
achievable rents in many servicedapartment
serviced apartment projects
projects, especiallythose
especially those with limitedservices;
limited services;

21 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012

SUMMARY
THE SEVEN TAKE HOMES

Š The market is alive and kicking, though may be different to the one you have known in
years gone by;
Š “One man’s misfortune is another man’s gain” – for some, this is THE Vietnam
opportunity you have been waiting for;
Š There are deals to be done in the office market – but if construction is slowed on new
supply, these will not be around for long;
Š Retailers want to be in Vietnam, we must facilitate this with the right product, in the right
locations and with a regulatory environment which works for them;
Š The
Th residential
id ti l market
k t will
ill continue
ti tto reform.
f B
Buying
i and
d selling
lli will
ill occur, b
butt iin th
the
short term it may be projects and land as oppose to units. Longer term – think about true
market demand;
Š Industry – keep it coming. 2011 has seen notable action, more to come, the
fundamentals are apparent to all;
Š Serviced apartments – a growing market but with a new refined product;

22 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012
 To subscribe, please contact…
Q4/2011 released
Friday, January 20, 2012
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THANK YOU
© 2012 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CB Richard Ellis (Vietnam) Co., Ltd. We obtained some of the
information above from sources we believe to be reliable.
reliable However,
However we have not verified the accuracy of the information which we obtained from other sources and make no
guarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us for
example only, and they may not represent current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be
reproduced without prior written permission of CB Richard Ellis.

23 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2012