Vietnam Real Estate Newsletter - No. 65, Week 2 Jan, 2009

Weekly Newsletter Vietnam Real Estate A65

Week 2, January

The first weekly electronic newsletter issued to registered members, approximately 100,000 reads per month

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Market situation (p.2)

Real estate foreign investment (p.2)

Vietnam in the world (p.3)

Real estate agents (p.3)

Websites of real estate companies in Vietnam (p.4)

Real estate projects and prices (p.5)

Real estate supply for customer groups (p.7)

Real estate Legislation (p.8)

Construction material market last week (p.8)

Stock market last week (p.8)

Research - Consulting (p.9)

Market forecast, statistics expert opinions (p.10)

This weekly newsletter is shared with partners, clients, members (registered) and internal VietRees together with those who are concerning or interested in Vietnam real estate market changes. Although the information is selected, synthesized from all reliable sources, this newsletter is only for reference and VietRees is not responsible for the occurring damage. Please visit the website www.VietRees.com for further Vietnam Real Estate information. When individuals and organizations quote or publish the information from our newsletter, please cite the source VietRees. According to the statistics on registration for the newsletter, the subjects making reference to the newsletter includes real estate investors; companies or units of government performing management tasks, business marketing, consulting, broking, assessment, real estate finance, construction, banking, architecture, interior decoration; domestic and foreign press agencies; and full of professional investors or individuals who have demand for real estate throughout provinces and cities nationwide; typically Ho Chi Minh, Ha Noi, Da Nang, Can Tho, Hue, Nha Trang, BRVT, Binh Duong, Dong Nai, Ha Tay… We would like to say thanks to the sponsors and all of the readers. We expect to continue to receive your support as well as your comments to improve our newsletter.

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VietRees – Vietnam Real Estate www.VietRees.com Viet Nam Real Estate Newsletter A65 Page 2

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MARKET SITUATION

Ice still not thaw on the real estate market Vneconomy – 05 Jan, 2009

The decreasing real estate prices, an inconsiderable number of transactions and the period for paying the capital and interests have created the most difficult situation for investors. The previous loan contracts have also mortgaged the properties. When the investors have no money to pay the debts, the banks will put on sale of the collateral. As a result, the real estate supply on the market increases and the decreases in the real estate prices are more likely to happen. The real estate market will be caught in a vicious circle and the market is less likely to heat up within the next year. The main cause is that the market lacks the capital for further developments. Therefore, the solution that attracts most interest and can save the market is the capital. The solutions to rescuing the market such as transferring the projects, cooperating with the foreign investors or using the State-owned capital are very hard to implement due to the decline of the global economy. To intensify the market, the essential solution is encouraging the development of the investment trusts and the joint stock companies to mobilize the investment of the public and the domestic and foreign investments for the market. The investment institutions will play the intermediary role between the unprofessional investors (public, kinds of insurance funds, etc) and the professional investors on the real estate market.

Pressures for price decreases Nhip Cau Dau Tu – 05 Jan, 2009

2008 was a successful year for the owners of grade A office buildings for rent in Hanoi and Ho Chi Minh City when the rents and occupancy rate has continued to be the highest until now. The early 2007, the rent of grade A buildings was 35 USD/ m2/ month in Ho Chi Minh City. One year later, the rent exceeded 60 USD/ m2/ month. Until the second quarter of 2008, a new threshold was set to be 75 USD/ m2/ month. And at the approach of New Year’s End, the record price was set when there was a lease accepting the rent of nearly 100 USD/ m2/ month (calculated following the real rental area). Although Hanoi did not have the great leaps like HCMC, the average rent of the grade-A office buildings also went up accordingly. The average rent exceeded 50 USD/ m2/ month and the highest rent was 68 USD/ m2/ month. The fact that the prices of grade A buildings dramatically increased while the new supplies have not yet appeared has pushed the rent of grade B and C buildings higher. However, in Ho Chi Minh City, the grade-B office market has started to reverse its direction when the economic difficulties clearly appeared in March 2008. The rent also leveled off and tended to decrease. The main reason was that the new supply rapidly increased in the year while the demand started to saturate and the difficulties in the business also forced the companies to review the rent of offices. According to consultants, in 2009, the market of offices for rent will reverse its direction as compared to the year 2008. The total office space for lease will increase by about 60.000 m2, which will make the investors obliged to reduce the prices to attract and hold the tenants in 2009. However, the majority of the small and medium companies, especially the domestic ones, have tended to choose cheap offices. Especially houses, apartments or other types of real estate were converted from the other purposes into the offices with the rents of below 15 USD/ m2/month. Regarding the companies that cannot afford the rent in the CBDs, the buildings in the environs can be a reasonable solution with the prices of 20 - 30 USD/ m2/ month.

35 million invested in building welfare houses VietRees – 06 Jan, 2009

The project of investment in building welfare houses in the period of 2009 - 2010 which is one of the solutions to kicking the demand and dealing with the economic decline has been completed. Accordingly, the total capital of this solution is 35,000 billion. In which, it includes an investment of 15,000 billion in the welfare houses, the capital for kicking the housing demand of the people with the medium and low incomes and 20,000 billion VND for socialized housing program. The project is targeted at the people with the medium & low income and housing demand, including the workers in the industrial zone, export processing zone; the staff, civil servants and officers that are working at the enterprises; contributing to increasing the house supply and stabilizing the property market and meeting the social security. Financial supports aim at attracting the economic sectors to investing in building the houses for the people with medium and low income.

REAL ESTATE FOREIGN INVETSMENT

HCMC leads the top 10 localities in attracting FDI in 3 years Sai Gon Giai Phong – 07 Jan, 2009

According to the Ministry of Planning and Investment, within 3 years (from 2006 - 2008), there are 63 localities attracting the FDI, in which Ho Chi Minh City has leaded the list of 10 localities attracting most FDI, with 13.7% of the total registered capital. Ba Ria-Vung Tau has come second with 13.2%, the next include Ninh Thuan and Ha Tinh, Ha Noi, Thanh Hoa, Phu Yen, Dong Nai, Binh Duong and Kien Giang. The recent foreign investments have dramatically moved to the central coastal provinces and The Mekong Delta.

Total FDI in Vietnam in 2008 Source: General Statistics Office The FDI in 2008 has continued to reach a high result. The average registered capital in this year has reached 51.5 million USD, increased by 39 million USD as compared to the year 2007. From the beginning of the year to 19th December, 2008, the whole has had 1,171 projects licensed with the total registered capital of 60.3 billion USD which is 3.2 times bigger than 2007.

FDI record in 2008 Until the end of 2008, the implementation capital has reached 11.5 billion USD, which is the highest figure within 21 years. The registered capital in 2008 has exceeded 60 billion USD, which has also been a record figure until the current time.


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VIETNAM IN THE WORLD

Vietnam is one of the countries seeing the positive signs Sai Gon Giai Phong – 06 Jan, 2009

Grant Thornton International Corporation has announced the global ranking board in terms of the prospects for the economic development and clearly indicated the reduction in the positive signals in the private enterprises through the observations of over 7,000 enterprises at 36 countries. Grant Thornton has come to the conclusion that the decreasing demand is the biggest threat to the private companies. According to Grant Thornton, while the big economies such as the United States, Japan, the European Union have fallen into the economic crises, Vietnam has still maintained the strong growth rate in 2008. The main reason for the decline is the impact of the inflation and the global financial crisis. This has made the positive signal of the enterprises drop from 87% (in 2008) to 32% in 2009. With this result, Vietnam has ranked 7th in terms of optimism level in 2009. The private companies have been more advantageous in the time of the economic recession because the management board of the companies can make the decisions quickly due to the simple system and flexible policies. Therefore, these companies will operate more effectively than the organizations with the bureaucratic management style.

REAL ESTATE AGENTS

Hung Thinh to build a high-grade apartment BDS & TS – 05 Jan, 2009

Joint Stock Investment - Real Estate Business Hung Thinh has shown that it would start the construction of Hung Thinh Apartment invested by the company in the second quarter, 2009. The project is located in the heart of District 10, Ho Chi Minh City, including 49 apartments with a total investment of 150 billion VND. The project is estimated to be completed in 2010.

20 enterprises join building welfare houses Tuoi Tre – 06 Jan, 2009

Ministry of Construction has said that 20 enterprises of the total company of the company and 5 shares of real estate register for investment projects to develop social housing for rent to buy. To participate in the development program in the society, the business must be clean and the land fund has invested infrastructure. Projects in the society must meet certain conditions on the type, scale apartments, the object is leasing and principles refund loans and the cost for leasing the regulations of Federal housing.

Opening a real estate transaction center at Thu Duc VietRees – 07 Jan, 2009

On 5th January, 2009, 135 Investment and Construction JSC held a opening ceremony for the property transaction center at 31/21 Kha Van Can, Quarter 5, Hiep Binh Chanh Hiep Ward, Thu Duc Distric, Ho Chi Minh City. The transaction center is 450 m2 in size and 2 floors in height, including the departments such as: customer care, legal procedures, making transactions, property transfer and land procedures to provide all-in services real estate.

CoteCons starts building two projects VietRees – 07 Jan, 2009

Construction Joint Stock COTEC (CoteCons) held a ceremony to rule in the project by Tower Vinamilk Milk Joint Stock Vietnam (Vinamilk) on 05/01/2009 past. The project is located at Lot C6A - 02, KDT Phu My Hung, Tan Phu, Q.7, HCM City, including 2 basements and 14 floors high, built area 2500 m2. Previously, the company also has the rule in construction and factory warehouse of Vinamilk on 9,000 m2 area in the industrial zone in Tien Son, Tien Du district, Bac Ninh province.


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Websites of real estate companies in Vietnam Property developers

Ho Chi Minh Company 585 - www.585.com.vn Company 584 - www.congty584.com.vn An Phu - www.anphugroup.vn BCCI - www.bcci.com.vn Daewon - www.daewon.vn Him Lam - www.himlam.com Hoang Anh Gia Lai - www.hagl.com.vn Linh Phong Conic - www.conic.com.vn Nam Long - www.namlongvn.com Phu Long - www.phu-long.com.vn Phu Quoc Land - www.phuquocland.net SacomReal - www.sacomreal.com Sadeco - www.sadeco.com.vn Resco - www.rescovn.com Thai Thinh Capital - www.richlandhill.com.vn Thu Duc House - www.thuduchouse.com Phu My Hưng - www.phumyhung.com.vn Van Phat Hưng - www.vanphathung.com.vn Vietnam Land SSG - www.saigonpearl.com.vn

Ha Noi FPT Land - www.fpt-land.com C.E.O - www.ceoholdings.com.vn Gia Tue - www.giatue.com.vn HUD - www.hud.com.vn HDB Viet Nam - www.hdbgroup.com.vn Keangnam - www.eng.kne.co.kr Nam Cuong - www.namcuong.com.vn Song Hong Land - www.songhongland.com.vn Vinaconex - www.vinaconex.com.vn Vincom - www.vincom.com.vn Viet Hung - www.ecopark.com.vn

Other cities Becamex IDC - www.becamex.com.vn Biconsi - www.biconsi.com.vn Tuan Chau - www.tuanchau-halong.com.vn GNSVINA - www.cozyvill.com Company 579 - www.cecico579.com.vn Duc Manh - www.ducmanhco.com

Brokerage

Ho Chi Minh An Gia - www.angia.com.vn ACBR - www.acbr.com.vn Dat Xanh - www.datxanh.com.vn Dia Loi - www.nhadatdialoi.com.vn Dat Cat - www.datcat.com.vn FICO - www.ficohome.com.vn Kim Son - www.kimson.com.vn Phuc Duc - www.phucduc.com Hung Phu - www.hungphunhadat.com Hung Thinh 2 - www.diaochungthinh.com.vn Hoang Quan - www.hoangquan.com.vn Intresco - www.intresco.com.vn Loc Dien - www.nhadatld.com Nova - www.novahomes.com.vn Phat Hung - www.phathung.com.vn SacomReal - www.sacomreal.com Tan Dien - www.tandien.com.vn

Ha Noi Cland - www.cland.com.vn Dong Do - www.dongdobds.com Phu Thai Group - www.phuthaigroup.com Petrowaco - www.petrowaco.vn Petrolimex – www.pland.com.vn

Other cities Dieu Hien - www.dieuhien.com.vn Thien Loc - www.thienlocnhadat.com.vn

Research CBRE - www.cbrevietnam.com Savills Viet Nam - www.savills.com.vn VietRees - www.VietRees.com

Consulting CBRE - www.cbrevietnam.com Dong Duong - www.indochina-consulting.com Eden Real - www.edenreal.com Hop Nhat - www.uniland.com.vn Indochina Land - www.indochinacapital.com Long Gia Khang - www.longgiakhang.com Savills Viet Nam - www.savills.com.vn Vina Capital - www.vinacapital.com

Evaluation AREV - www.arev.com.vn Hoang Quan - www.thamdinhgia.com Vietland - www.thamdinhgia.com.vn VVFC - www.valuation.vn

Construction Ho Chi Minh CIC8 - www.cic8.com Coteccons - www.coteccons.com.vn Cosaco - www.cosaco.com.vn Hoa Binh - www.hoabinhcorporation.com Hai Thanh - www.haithanh.com.vn Toan Thinh Phat - www.toanthinhphat.com.vn

Ha Noi Constrexim - www.constrexim.com.vn Cavico - www.cavicovn.com HANCIC - www.hancic.com.vn HUD - www.hud.com.vn Incomex - www.incomex.vn

Architect and Interior Decoration Ho Chi Minh A2 Visualization - www.a2viz.com.vn Cat Moc - www.catmoc.com.vn Nha Vui - www.nhavui.com Nha Viet - www.nhavietdecor.com Nha Dep - www.nhadep.com.vn Pho Xinh - www.phoxinh.com.vn

Ha Noi ACT - www.act.com.vn ADKientruc - www.adkientruc.com Ashui – www.ashui.com Kien Truc Ha Noi - www.kientruchn.com

Other Countries Architects 61, Sing - www.a61.com.sg DP Architects, Sing - www.dpa.com.sg SWA, USA - www.swavietnam.com Ong&Ong, Sing - www.ong-ong.com RSP Vietnam, Sing - www.resp.com.sg Surbana Vietnam, Sing - www.surbana.com


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REAL ESTATE PROJECT AND PRICES

Works start on Tan Mai high-rise apartment block TheSaiGonTimes – 06 Jan, 2009

On 6th January 2009, Tan Binh Construction and Investment JSC held the groundbreaking ceremony for the construction of Tan Mai high-rise apartment block for the customers with the above – medium incomes in Tan Tao Ward, Binh Tan District. The project consists of 5 apartment blocks ranging from 18 to 21 floors with a total of 752 apartments. In addition, it also includes the commercial area, the general activity room, nursery and tennis courts. The project is expected to be completed in the end of 2011 and the apartments will be offered for sale on the first phase in the end of February 2009 with the price of 12 million VND/m2.

Nguyen Cu Trinh quadrangular area to be a modern complex VietRees – 08 Jan, 2008

The project of Nguyen Cu Trinh quadrangular has a total area of 8.2 hectares, bounded by Nguyen Cu Trinh - Tran Dinh Xu - Nguyen Trai - Cong Quynh in Nguyen Cu Trinh ward, in district 1. A complex will be built in the Nguyen Cu Trinh quadrangular area, including many works with multi functions such as: offices, trade-service, apartments, hospitals, schools and large scale entertainment areas. Vietcombank and Agribank will support 2.650 billion VNDs for Bitexco group (the investor of the project).

In general, the prices of the high-grade apartments in HCM City continue to decline VietRees – January, 2008

The price change level of high-grade apartments in HCMC

According to the statistics of VietRees, the prices of the high-grade apartment in December continued to decrease by about 6% as compared to November 2008. This has been considered to be the highest decrease from June 2008 until now. VietRees has recorded that in 2008, April and May had the highest decreases with 15% and 10% respectively.

Announced prominent real estate developments during the last 2 weeks*

Week 1, January 2008 Week 2, January 2009

Ho Chi Minh City Comeco Building (Dist.3) Ngoc Lan apartment block (Dist.7)

Hung Thinh Apartment (Dist.10) Vinamilk Tower (Dist.7) Tan Mai (Binh Tan)

Other Areas Cuu Long trade center (Ca Mau) Viettel Building (Hue) 5-star The Westin Resort & Spa (Khanh Hoa) Complex building (Hue)

Approved prominent real estate developments in HCM City*

December January

Housing, apartment, residential area Truong Tho apartment building (Thu Duc) ReA building An Phu – Binh Khanh (Dist.12) Cecico 135 apartment building (Thu Duc)

* Note: RA=Residential Area, AP=Apartment Building, HA=Housing Area, RuA=Reurban Area, TA=Tourism Area, IA=Investment Area, UA=Urban Area, ReA=Resettlement area

Websites of properties in Vietnam

Ho Chi Minh Blooming Park - www.bloomingpark.com Saigon Paragon - www.saigonparagon.com Dragon City - www.dragonland.com.vn Preche - www.preche.com SaigonPearl - www.saigonpearl.com.vn V-Star - www.v-star.com.vn Time Square - www.timessquare.com.vn The Everrich - www.theeverrich.com Tan Da Court - www.tandacourt.com Lancaster - www.lancaster.com.vn The Vista - www.thevista.com.vn

Ha Noi Viglacera Tower - www.viglaceraland.vn My Dinh – Me Tri RA - www.sudicosd.com Bac An Khanh RA - www.vinaconex.com.vn Ha Noi Plaza Hotel - www.charmvit.co.kr Phap Van – Tu Hiep RA - www.hud.com.vn

Other cities

Furama Resort - www.furamavietnam.com Sai Gon – Mui Ne Resort - www.saigonmuineresort.com Sunspa ResortVietnam - www.sunsparesortvietnam.com

Other cities Cozyvill - www.cozyvill.com Flamingo Dai Lai - www.flamingodailai.com Van Phu township - www.dothivanphu.com Dam Vac Golf - www.damvacgolf.com Sanctuary - http://sanctuary.com.vn Ho Tram Strip - www.hotramstrip.com Sai Gon Sunbay - www.ctc-corp.vn Eden Lagi Resort - www.edenreal.com Van Quan – Yen Phuc township - www.hud.com.vn Quoc Te Do Son - www.vietlandgroup.com


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Property Retail Price Updated on information from ACBR, Van Phat Hung, Hung Thinh, Phuc Duc, Tuoi Tre Newspaper and developers (VietRees gathered by direct surveys), listed prices can be original prices or transfer prices at current or at one week prior from the date this newsletter is issued.

Typical apartments in HCM city Other apartments and land lots

Cantavil, Dist.2 * 75m2 – 1,717 USD/m2

V- star, Dist.7 * 85m2 – 16 million VND/m2

* 110m2 – 15.5 million VND/m2

Sky Garden , Dist.7 * 71m2 – 29million VND/m2


Blooming Park, Dist.2 Area: 95 – 398m2 Price: 1,800 – 2,400 USD/m2 Direct contact with the investor1

Phu My, Dist.7 * 85m2 – 19.1 million VND/m2 * 117m2 – 19.45 million VND/m2

The Everich, Dist.11 * 115m2 – 1,750 USD/m2 * 150m2 – 1,600 USD/m2

Preche, Dist.2 * 147m2 – 2,222 USD/m2

Panorama, Dist.7 * 166m2 – 36.7million VND/m2

Saigon Pearl, B.Thanh * 89m2 – 2,100 USD/m2

* 133m2 – 2,000 USD/m2

The Vista, Dist.2 * 101m2 – 1,575 USD/m2 * 135m2 – 1,650 USD/m2

New SaiGon, Nha Be * 99m2 – 17 million VND/m2


The Manor, B.Thanh * 74m2 – 1,810 USD/m2

* 113m2 – 2,050 USD/m2

Dist. Area (m2)

Price (million VND/m2) +/-

Apartment building – HCMC BMC – Ben Chuong Duong 1 101 24.5 - Central Garden 1 81.9 28.5 - Binh Minh 2 108 16.3 +

Screc Tower 3 89.5 24 Orient Apartment 4 71.72 20 + Hung Vuong Plaza 5 121.6 28.5 Tan Thinh Loi 6 73.5 13.5 Carina Plaza 8 78 15 An Suong 12 75 8.5 + Tan Kien BC 112.6 7.3 - Le Thanh BT 72 9 PN Techcons PN 133 23.9 + Sacomreal 584 TP 81.9 14.5 - Phuc Yen TB 106 15 Development land lots – HCMC Thanh My Loi 2 100 13.5 + Phu Thuan – VPH 7 220.5 22.5 ADC – Phu My 7 100 14.5 - Gia Hoa 9 100 11 Khang An 9 132 6.6 + Tan Kien BC 100 6.5 Lang Viet Kieu BC 100 12.2 + Phu Xuan - VPH NB 120 6.9

Sai Gon Moi NB 138 7.6 Apartment building - Ha Noi M5 – Nguyen Chi Thanh BD 133 28.5 Nam Trung Yen CG 88 17.5 - Dich Vong CG 62 19 + Thai Ha DD 70 23 Thai Thinh DD 68 26 - Bac Ha TX 85 15.3 - Vuon Dao TH 126 23.4 Development land lots – Other provinces My Phuoc 3 BD 300 1.25 Viet – Sing BD 300 2.9 Tay Nam BR-VT 100 1.8 Licogi 16 DNI 240 3.6 Samco DNI 230 4.5 HUD DNI 300 1.4 - Lang chuyen gia Tan Do LA 130 3.5 +

1 Kien A Investment & Services Co., Ltd. - An Phu Ward, District 2, HCMC - Tel: (84.8) 740 6688, Fax: (84.8) 740 6949

Danang: 225 Huyen Tran Cong Chua - T: (84) 511 836 216 * HCMC: 390 Nguyen Cong Tru, D.1 - T: 8 821 7509 * Hanoi: No.6-1D Trung Yen New Town, Caugiay - T: 4 783 1598


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PROPERTY SUPPLY FOR DIFFERENT TARGETS OF CUSTOMERS

Social welfare houses for worker VietRees

* Saigon Construction Corporation investor two apartment blocks high 5-storey for workers in Quarter 1, Linh Trung Ward, Thu Duc Dist, HCMC. * Hung Vuong JSC has just put a 5-storey apartment building into use for cadres and workers. The company continues to petition Tien Giang Provincial People’s Committee to grant a 5.000m2 land area to construct more apartment buildings for workers with an investment of 100 billions VND. * Saigon Paper JSC has put an apartment building into use for workers at My Xuan Commune, Tan Thanh suburban district, Ba Ria - Vung Tau province. The stage 2 of the apartment building is about to be implemented with a scale of 8 storey. * Morning of August 28th, 2008, the Ministry of Construction has signed a memorandum for the cooperation in the field of welfare housing with Korean Ministry of Land-Traffic and Marine. * Ha Noi Construction Investment JSC (Hancic) has finished 4/10 units of the 5-storey house which belongs to the housing project for workers at Kim Chung Commune (Dong Anh). * Construction and Import-Export JSC (Vinaconex) has transferred and put into use 4 blocks of houses among the total 16 blocks of the housing project for the workers at Thang Long industrial zone. * The housing area of 7,000 m2 (380 rooms) for 1,500 workers of Dong Quang Knit Limited Company at Hai Son industrial cluster (Duc Hoa Ha commune, Duc Hoa suburban dist., Long An province) has just been put into use. The total investment cost of this housing area is 20 billion VND. (02/10/2008) * The 4-storey apartment building at cluster 5, ward 8, Vinh Long town that serves the cadres, employees, professional serviceman and etc has been ratified by Vinh Long Provincial People's Committee with a total investment of over 37 billion VND. (03/10/2008)

Real estate for the low income VietRees

* Sai Gon – Gia Dinh Real Estate Company and Hoa Binh Phu Yen Company build Thoi An Apartment Building in District 12 with 1,000 apartments. * Construction Co. No.8 (CIC8) will invest in construction of 10,000 Keppel Land apartments & Tien Phuoc Co. will build a resettlement area including 1,900 apartments at An Phu, Binh Khanh, District 2. * HCM City People’s Committee will advance 50.5 billion to carry out the project of Vinh Loc B, Binh Chanh residential area for resettlement with hundreds of townhouses and 40 apartment blocks. * Construction Co. No.5 will invest in construction of 500 apartments at Ward 22, Binh Thanh District. * HCM City Cooperative Alliance has developed its construction investment project of housing area at Le Minh Xuan Commune, Binh Chanh Suburban District on a site of 67.49 hectares. * 50% of the house reserve at The Splendor apartment area (Go Vap Dist.) will be intended to serve resettlement demand in the district. * Dat Lanh Co. will offer 1,500 apartments to the market with the prices of 500 - 700 millions VND/unit. * People‘s Committee of HCMC has approved the project of the resettlement area on a site of 55.24 hectares at Dong Nam Cu Chi industrial - residential area in Cu Chi. * House management of Dist.1 is assigned to construct the resettlement area at 7/4ª Kha Van Can, Thu Duc district. * In early 2010, Hai Thanh company will complete 352 apartments of Hai Thanh 1 resettlement area project, Binh Tan District for the civil servants at Binh Tan District. * People’s Committee of Binh Chanh has just cooperated with Hung Vuong university Investment & Development JSC to construct resettlement area at Tan Kien commune, Binh Chanh suburban district. * People’s Committee of HCM City has just licensed Cho Lon Real Estate JSC to invest in the construction of the apartment building at No. 99 Ben Binh Dong, ward 11, district 8 in order to make the house reserve at the social welfare housing program. * People’s Committee of HCM City has promulgated the decision about reclaiming the land areas at Phuoc Kien, Nhon Duc and Phuoc Loc communes, Nha Be suburban district for the construction of the resettlement area in order to serve the project of Nhon Duc - Phuoc Kien new urban area. * The HCM City Union of Housing Co-operatives has prepared to commence the construction of Thanh Loc apartment building with 238 apartments on a site of 6.600 m2 in District 12. The Union intends to construct another apartment building with over 200 apartments at Truong Tho ward, Thu Duc district. * HCMC People’s Committee has ratified the planning of Binh Khanh residential area (Dist.2) which is built on a site of 384,019 m2 to serve the resettlement of the locals in Thu Thiem new urban area. * Dat Xanh has cooperated with Truong Son Vanguard Youth General Squad to build apartments for low-income people at Dist.12 * Go Vap People’s Committee and Go Vap Public Benefit Service Co. have bought back the house reserve belonging to Phu Gia Hung high-end apartments, Duong Quang Ham Street, Ward 15, Go Vap Dist. and Dong Hung Thuan 1, 2 apartment buildings, Dist. 12 to serve the resettlement of the locals at Tham Luong project - Ben Cat - Nuoc Len ditch. * Approximately 184,000 apartments belonging to the investment program in the construction of the social welfare houses in the stage of 2009 – 2015 with the total investment of about 49,000 billion VND have been submitted to the government for approval. (30/09/2008) * 800 social welfare houses for lease - lease to purchase will be built at 19A and 21A plots, Viet Hung urban area in 2009, which have been ratified by The People’s Committee of Ha Noi City. (16/10/2008) * 462 units of Khang Gia 3 apartment building (Go Vap Dist.) invested by Khang Gia Real Estate Investment – Development JSC will be used for the resettlement demands. (27/10/2008)

Dwellings for overseas Vietnamese and foreigners VietRees

The Committee for overseas Vietnamese in HCMC has showed that there have been 130 overseas Vietnamese buying houses, mainly in HCMC. Those who brought houses are those who come back to the country for their long term and direct investment, scientists, culture researchers invited to come back to the country to become experts and repatriating overseas Vietnamese. To buy houses, beside documents verifying priority subjects, the buyer must present their passport (issued in Vietnam). In the case that house buyers bring foreign passports, they must have certificates of Vietnamese nationality or documents confirming their losing Vietnamese nationality, or certificate of citizenship registration.


Free register for weekly newsletter: Please send your email to [email protected] * Sponsor and advestising: T: (08) 3948 5574 - E: [email protected]

REAL ESTATE LEGISLATION

Foreign-owned companies allowed to pay annual rent Sai Gon Giai Phong – 05 Jan, 2009

HCM City People's Committee has had a document on dealing with the difficulties of some procedures for land lease, purpose converting and the relevant financial obligations for the enterprises. Accordingly, the organizations and individuals in the country (including equitized State-owned enterprises) are allowed to select the forms of transferring the land (that include paying for land using or leasing and paying the annual rent) when converting the purpose of using the land that is directly managed by the State to build the office buildings, commercial – service centers, hotels ... except for building houses. The foreign-owned enterprises are allowed to choose the forms of paying the rent for a period of land leasing or paying the annual rent.

5 More methods of assessment VietRees – 06 Jan, 2009

On 31st December, 2008, the Ministry of Finance has decided to promulgate one standard of classifying the properties and 5 methods of assessment that are applied for real estate, movables, enterprises and property rights. The decision will take effect after 15 days since its publication in the Official Gazzttee. The methods of price assessing including: comparison, costs, income, surplus and profit. The assessing enterprises, price assessor, customers and the third parties using the certificates of assessment should follow the regulations of the standards in the process of assessing the properties. The surplus method is applied for the land that is used for farming or building or has the works able to be improved or renovated. The profit method is mainly applied for cinemas, theaters, hotels, restaurants, gas stations, golf courses, entertainment centers, discos, parks ... The criteria for classifying the properties associated with the property rights in the assessment include 4 types of real estate, movables, enterprise and property rights.

From 19th Jan onwards, transferring ownership and mortgaging properties executed at districts and suburban districts Nguoi Lao Dong – 06 Jan, 2009

The Center of Environment & Resources Information and the land registration branch of Natural Resources - Environment has shown that from 19th Jan 2009 and later, the district and suburban districts will receive the documents registering for transactions and correcting and editing the changes of the properties (transferring the ownership) for the property owners that include households, individuals, overseas Vietnamese allowed to buy houses together with the land-use rights. In the meantime, the districts and suburban districts will deal with the documents for all types of ownership certificates for the properties that were granted periodically. On 19th January, if the customers want to register for deleting mortgages, capital contribution in the previous transactions and the properties that were formerly registered for the secured transactions at the Center of Environment & Resources Information, they should submit the documents to the Department of Natural Resources and Environmenl or the offices in charge of registering for land use rights in districts.

CONSTRUCTION MATERIAL MARKET Steel industry overcomes the difficult period – Cement will be sufficient for the market Edited by VietRees

In the previous year, at the time of Chinese New Year, the steel consumption and prices often strongly fluctuate but in this year, the market is very quiet. According to many construction materials stores in HCMC, only in September and October, the steel consumption and prices slightly increased as compared to the time of previous dramatic decreases. Currently, the retail prices of steel range from 11.5 to 11.8 million VND/ ton, dropping by 300,000-500,000 VND per ton. In general, some steel enterprises are about to consume the steel inventory bought at the high prices and start the new cycles of the product. Many steel enterprises have shown that in 2009, the steel industry remains difficult due to the economic declines in the countries. The global steel output in 2009 may decrease by 5 - 10% as compared to 2008 and the steel industry is expected to recover completely in 2012. According to the Ministry of Construction, until now, the Ministry has carried out checking the cement projects implemented and invested following the plan of developing the cement industry in Vietnam by 2010 and the orientations until 2020. By the end of 2009, the total designed capacity of the cement factories of the whole country will reach 60 million tons which will be sufficient for the consumption demand nationwide (forecasted to be 45 million tons). Ministry of Construction is continuing to review, guiding the implementation of the project that will be completed in 2011, 2012 and later. By the end of 2008, the prices of construction materials such as cement, steel, sand and stone in Ho Chi Minh City had significantly decreased which has somewhat helped the investors to speed up the progress of the unfinished projects.

STOCK MARKET

Contrary movements: VN-Index down and HASTC-Indez slightly up Edited by VietRees Chart Source: Vietstock Up to date: 09 Jan, 2009

The trading volume at the beginning of the session is very gloomy. In the first order-matching phase, only 978,700 shares are traded, equivalent to over 21 billion. VN - Index has lost 0.4 points to close at 313.75 points. Entering the second order-matching phase, a series of shares with the high capital value have decreased points, pulling many other share codes down. VN-Index has dropped more dramatically, losing 1.13 points to close 313.02 points. Closing the week on 9th January, VN-Index has slightly slid by 0.75 points to record at 313.4 points. The trading volume has been low with 7.58 million shares worth 179.94 billion VND. In sum, after 2 upward sessions and 3 downward sessions in the week, VN-Index has increased by 0.06 points (or 0.02%) as compared to the last week. At the Hanoi bourse, in spite of the slight decreases in the session, HaSTC-Index has closed the week with the slight increase of 0.5 points (or 0.47%) to record at 106.17 points. The trading volume on the whole market has reached 4845 million shares worth 143.28 billion. After a trading week, with 3 upward sessions, HaSTC - Index has added1.7 points as compared to the session on 2nd January.



RESEARCH – CONSULTING Solutions to enhancing the competitive abilities of the Vietnamese real estate enterprises

1. Why should the Vietnamese real estate enterprises enhance their competitive abilities? Enhancing the competitive abilities of the Vietnamese real estate enterprises is an indispensable thing in the process of integration especially in the difficult situation of the current real estate market and the decline of the economy, helping the real estate enterprises stand firm on their feet & develop in the coming years. Thereby, it has contributed to enhancing the competitive power of the whole economy. On the other hand, in the current situation of the market, if the competitive abilities are not enhanced, the enterprises will be able to suffer the losses, close down and go bankrupt. According to VietRees, to assess the competitive ability of one real estate enterprise, firstly the real estate enterprises need to identify the internal factors and external factors impacting on their competitive abilities. According to VietRees, the essential internal factors that the enterprises need to use to assess the competitive ability of one real estate enterprise include: • The quality of service products • The diversity of provided services • Human resources • The ability to develop the market • Trademarks and the prestige of the real estate enterprises • Financial ability • Organizational and management ability of the real estate enterprises • The real estate information system • The level of using the information technology The external factors influencing the competitive abilities of the real estate enterprises can include the macroscopic policies of the government – the law factor, the domestic and foreign competitors, the capital market, the psychology of the subjects joining the market, etc. For these external factors, the real estate enterprises are very hard to intervene, change or adjust. Therefore, the enterprises only need to thoroughly study and understand the external factors and focus more on the internal factors. 2. How to enhance the competitive abilities of the Vietnamese real estate enterprises To enhance the competitive abilities, one of the things that the enterprises need to do is to actively evaluate their real ability and find out the most basic strength in order to promote the flexibility in each economic period. According to VietRees, only when the real estate enterprises possess, construct and promote their key competitive abilities in comparison with other competitors, they can have the sustainable and long-term development. This definition will help the enterprises build the effective development and competitive strategies. 3. The weaknesses in the competitive abilities of most of the current real estate enterprises • The quality and competitive abilities in terms of management are poor. • The human resources are not methodically trained in terms of the real estate field. • The real estate information lacks transparency. • The quality of work is bad. • The financial ability is low. • The weakness in terms of brand. • Not really aiming at their right customers. • Not understanding and strictly execute the law. 4. Solutions to enhancing the competitive abilities

4.1. Enhance the management ability and train the leaders of the enterprises. To develop the above abilities, the decisive factors are the activeness and positive striving of every businessman. According to VietRees, firstly, the leaders of the enterprises should pay attention to enhancing the essential skills and update the modern knowledge. Some knowledge and skills should be updated and systematized. If the basic skills are combined with the effective management knowledge, there will be the decisive impacts on the managers of the real estate enterprises. Thereby, this contributes to improving the competitive abilities of the real estate enterprises. 4.2. Improve the quality of service products and the diversity of the provided services When the source of real estate products is growing, the quality of service products is getting more attention of the customers. The quality of the real estate service products should deserve the money that customers have paid. The enterprises have to rearrange the structure of the products in many segments, direct the products at the current needs of the customers and take the quantity to offset the profits (for example: investing in the housing segment for the medium - income and low-income people). 4.3. Build up the market information department; regularly follow and fully update the movements of the market through the mass media channels and the actual surveys. This is not work that any enterprise can also well perform while the real estate market information has become less transparent as now. When there have not been State agencies that can organize, collect and analyze the market information, the real estate enterprises should choose the prestigious units to agree on providing suitable and essential information for their enterprises. In fact, according to the VietRees, it has been so hard for many businesses to carry out this work on their own. In the case that they cannot build up and effectively operate a team to handle this work, they can perform this through professional units that specialize in researching, providing the market information and consultancy in terms of real estate. 4.4. Expand the business investment market following the specific routes depending on the scientific results of the market research surveys. 4.5. Build up the legal department in each enterprise having the function of offering legal consulting to the managers and hold the works of preventing the crisis risks. 4.6. Improve the real estate knowledge of the current employees and attract the good employees. This is the weakness of most of the Vietnamese enterprises in general and the real estate enterprises in particular. To have highly professional staff, the enterprises need to have the strategies for holding and attracting talents. To enhance the work effect, every enterprise should offer professional training courses to the key staff in order to suit its requirements in each period. Therefore, the effective training programs and plans have been one of the methods that the enterprises have used to enhance the competitive abilities. Meanwhile, the enterprises should pay attention to building up the reasonable treatment policies such as salary policy, bonuses to keep the stability in their volume of staff, especially the excellent staff.

In addition, the enterprises should combine with universities and colleges to recruit excellent undergraduates in order to build the active young team to undertake the important professional positions in the near future. 4.7. Build up a good image to the public. Any enterprise understand clearly that if it wants to have a good public image, firstly, it has to win the customers’ trust by the quality of its service products, the marketing business activities and after-sales service, etc. Through the marketing and after-sales strategies to promote the enterprises’ own brands, if this work is well implemented by real estate enterprises, it would be very convenient for them to raise the capital through issuing their shares and bonds to the public. However, the real estate marketing activities on the current market have not received the proper investment from the investors, including the big real estate investors. When the market was eventful as in 2006 - 2007, the investors mainly focused on the phase of organizing the sales, the events and introducing the products and the marketing activities through media took place very incoherently and inconsistently. The investors have not created the difference or prominence for their real estate products besides the architectural design elements. Many investors have had many large real estate projects and traded products on their own but they have not had the marketing/business departments, marketing departments or the professional staff that are in charge of marketing. In the current difficult situation, a few real estate companies have had many new marketing ways, aiming at the real customers. 4.8. Expand the channels of raising capital for the real estate enterprises. The current capital source of the real estate enterprises has mainly come from the commercial banks. Although the banks have reduced the loan interest rates, the loan conditions have become more difficult than before. As a result, only a few real estate enterprises can borrow money from this main capital channel. A few companies have issued the shares on the stock market but they could not raise much capital because the stock market has been freely falling. In addition to the capital borrowed from the banks and mobilized from the stock market, the enterprises should expand issuing the enterprise bonds and real estate bonds from the real estate projects that they invested, meanwhile, promoting the works of the joint-venture, cooperation and merger for development. Summary: In the current market situation, if the competitive abilities have not been enhanced and there have not been the basic strategies, the enterprises will be able to suffer the loss, close down and go bankrupt. To ensure the objectivity in assessing the competitive abilities, VietRees would like to advise the enterprises to perform this work seriously and probably need the help of the prestigious consultants on the market. On the other hand, no matter how they assess, they also need to have the bases to compare with other enterprises that are in the same operation field, market segment and directly and indirectly compete with them. VietRees – December 2008



REAL ESTATE MARKET FORECAST * Note: Information on market forecast is only updated every 4 periods (after one month) by VietRees – January, 2009

General tendency of Ho Chi Minh City market

The transaction situation of apartments, townhouses and project ground bases in December has continued to decrease. According to VietRees’s forecast, the real estate prices can continue to go down with the decrease of approximately 5% per month in December and before Lunar New Year. The property prices in 2009 are hardly likely to be on the upturn. The successful transactions at the end of December last year was a little bit higher than the previous months. However, the transactions have just focused on the segment of low-value townhouses and apartments. For the group of the high-grade apartments, the rate of the successful transactions was quite low and inconsiderable. The amount of overseas national currency exchange at the end of this year has dramatically dropped and not been invested in the real estate field as in the previous years but it has been used for the production or paying the debts. The difficulties in the credit situation, the deflation of the economy and the coming maturity of the contracts mortgaged by the properties have made many properties to be sold out at the prices that are quite low, even lower than the initial selling prices of the investors. The total outstanding real estate loans have accounted for nearly 10% of the debts of the whole the banking system, therefore, the banks demand payment of the debts. And as a result, many investors have to sell their projects and products at the low prices. Many real estate enterprises have lacked the cash to maintain their business and it is very hard to borrow more money from banks. On the other hand, currently, some banks have consigned the mortgaged high-grade properties of the customers for sale and extended the debts so that the customers have more time to sell their properties in order to pay the loan contracts.

Apartment market The supplies of the apartments belonging to the medium and low segment have been quite limited;therefore the market belonging to this segment has also seen no changes as compared to the previous month. Many high-grade apartments with low prices (mainly belonging to those who sell out their properties) are hunted for. Meanwhile, the situation of checking the prices of the sellers has appeared on the market through the self-listed selling prices that are quite low. The sellers have really not wanted to sell because they will suffer considerable losses if they do so. However, if they offer the high prices (though suffering little losses), it will be very hard for their properties to be sold at this time. The high-grade apartments have seen few customers, especially many apartments in Phu My Hung and many other areas in District 2 and 7. Although the prices have dramatically declined (over 50%), there have been few buyers. With the movements of the current market, according to VietRees, the prices of the high-grade apartments will continue to go down after Lunar New Year.

Project ground base market Although the prices of the project ground bases have considerably dropped, they have still been too high to those who have real housing demands. As a result, the transactions have been are also very low. If these people have real housing demands, they will choose the apartments or townhouses, not buying ground bases. Therefore, the transactions have still been very slow. The prices of many ground base projects in some areas of District 7, Nha Be have declined by 60% but the successful transactions have still been very scarce. Many investors are worried about the ability of selling their real estate in the current difficult situation of the economy and the frozen market.

Real estate companies Many previous companies that expanded their real estate business investment have now come back to their main business fields. Many secondary investors have faced many difficulties such as no cash and no customers. If this situation continues, the real estate investors who lack the capital will face bankruptcy risk; have to sell the projects at low prices and withdraw from the market in 2009. In fact, according to VietRees, there are a lot of middle-ranking and senior managers have withdrawn or temporarily withdrawn from this field or reciprocally convert their assignments between the real estate companies. According to VietRees, the real estate investors should switch to the apartment projects with suitable prices for the medium-income people, instead of aiming at the projects with the high prices like before. The medium-price projects can be sold quickly; help turn over the capital and take back the capital quickly. Then, the capital has been continued to be used for reinvesting in serving the customers who have the real demand because the demand of this group of customers has still drawn little attention and not been properly exploited yet.

Forecast in 2009 The real estate market with the current movements under the growing impacts of the financial crisis and global economic recession, the Vietnamese real estate market has seemed to be gloomier. VietRees has shown that there is a faint possibility that the market will recover in 2009. The market in 2009 will have more difficulties than in 2008. Many real estate investors and speculators will face the bank payments while the real estate prices have still not seen any signs of the recovery. According to VietRees, after Tet holidays, the real estate market will be an attractive playground and opportunity for the investors with the large capital and long-term investment strategies. The decline of the market will minimize the speculation. The market will be under the control of buyers, not sellers like before. For this reason, the potential real estate enterprises should build the long-term development strategies and actively work in the research and development, especially seriously investing in researching the market and customers; sustainable developing and avoiding the investment on a large scale in the current difficult situation.

The coming investment trends for Vietnamese real estate enterprises

The tendency of switching to the investment and development of the low-and-popular-price houses to attract the majority of customers is getting clearer. Many enterprises are planning to promote their investments in this market segment. It is expected that those who have medium and low incomes have many opportunities to approach this supply in the future. According to VietRees, enterprises should invest in the apartments with the relative areas of 40 – 60 m2, good structure, relatively good materials and equipments – (not need to be high-level ones), the selling prices of nearly 10 million/m2. The apartments with the value of around 400 – 600 million VND/flat will be likely to attract many customers. The customers that should be aimed at include the young families, students, workers and civil servants in Ho Chi Minh. In fact, some foreign investors are interested in this market segment. Therefore, the domestic investors should be quicker because, according to VietRees, Vietnamese enterprises can have more advantages than other foreign enterprises in this market segment.