Hanoi Quarterly Report Q3/2012 - CBRE Vietnam...Presented by: CB Richard Ellis (Vietnam) Co., Ltd. Wednesday, October 3, 2012 Market Insights from CBRE’s Hanoi Quarterly Report Q3/2012

Presented by:

CB Richard Ellis (Vietnam) Co., Ltd.

Wednesday, October 3, 2012

Market Insights from CBRE’s

Hanoi Quarterly Report Q3/2012

Richard Leech

Executive Director

Thanh Tran

Senior Manager

2 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | OCTOBER 2012

VIETNAM ECONOMIC OVERVIEW

Q 3 / 2 0 1 2 PER F O R M AN C E

Source: General Statistics Office

Q3/2012 Q2/2012

GDP (% y-o-y) 5.4% 4.7%

CPI (% y-o-y, e-o-p) 6.5% 6.9%

Exchange rate (e-o-p) 20,828 20,828

Export (US$ Bn) 30.7 (+10.7% y-o-y) 28.6 (+23.9% y-o-y)

Import (US$ Bn) 29.9 (+7.4% y-o-y) 29 (+8.7% y-o-y)

FDI Implemented (US$ Bn) 2.7 (-6.9% y-o-y) 2.9 (+4.3% y-o-y)

International Arrivals (million arrivals) 1.5 (+10.7% y-o-y) 1.5 (+1.9% y-o-y)

Retail and Services Turnover (trillion dong) 575.7 (+19.7% y-o-y) 567.7 (+23.4% y-o-y)

CPI, VN (% y-o-y))

CPI, VN (% m-o-m)

Refinancing rate (%)

Rediscounting rate (%)

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

0

5

10

15

20

25

Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12

CPI (%

m-o-m

)

CPI (%

y-o

-y)

/ In

tere

st r

ate

s (%

)

Monetary contraction

Inflation surged

Monetary expansion


Interest rates:

• Interest rates have been lowered by a total of 5% since

the beginning of the year – it is widely considered that

further cuts in 2012 are unlikely.

• The Governor of the State Bank of Vietnam has re-

enforced this point highlighting that extreme caution must

be taken if interest rates were reduced further.

Inflation:

• Increased at the quarter end with rising costs in

healthcare, education, transports costs and food prices.

• M-o-m inflation in September was the highest since May

2011, with interests rates softened the situation must be

carefully managed.

Continued weakness in imports:

• Imports growth rate in the 9M/12 was 6.6%, which is a

notable decrease y-o-y (9M/2011: 26.9%)

VIETNAM ECONOMIC OVERVIEW

K EY EC O N O M I C D R I VE R S

SBV Interest rates (%)

Source: State Bank of Vietnam

0

5

10

15

20

2009 2010 2011 2012

Base rate Re-discounting rate

Re-financing rate

Vietnam Trade Deficit (US$ Billions)

Source: Vietnamese General Statistics Office

-14

-12

-10

-8

-6

-4

-2

0

2

T1/12 T3/12 T5/12 T7/12 T9/12 T11/12

2010 2011 2012


Q3 GDP growth: 8.5% (Q1: 7.3%, Q2: 7.9%); 3Qs GDP

growth: 7.9%

CPI 09/2012: 2.47% higher than August – highest since

May 2011. CPI for the first 9 months 9.24% higher y-o-y

• Sharp increase in Sep 2012 heavily influenced by gas

and petrol prices, tuition fees, etc. - Seasonal pattern or

a sign of another inflation hike?

Exports slow down in Q3/2012 (US$2.39 bil.) whilst Imports

slightly go up (US$6.13 bil.)

Registered FDI US$919 mil. for the first 9 months (88% of

same period 2011). Implemented FDI for the first 9 months

– US$700 mil. (15% higher y-o-y)

Retail Sales first 9 months 2012 increases 20.7% y-o-y

Point worth considering: Real Estate Investment Trust

(REIT) officially in operation Mid-September – a good signal

for investors who need financial resources for real estate

investment

BOTTOM LINE: Confidence still low, Tough business

environment

HANOI ECONOMIC OVERVIEW

Q 3 / 2 0 1 2 PER F O R M A N C E

Chart 1: Real GDP growth (y-o-y % change)

Chart 2: CPI (% m-o-m)

0%

2%

4%

6%

8%

10%

12%

2009 2010 2011 2012

-1%

0%

1%

2%

3%

4%

2010 2011 2012


Highway: Many projects off schedule, mainly due to site clearance:

• Hanoi-Lao Cai behind schedule at least 1 year

• Noi Bai-Nhat Tan 88.8/115 hectares cleared

• Hanoi-Thai Nguyen 214.51/218.34 hectares cleared

• Nhat Tan Bridge 114.22/116.22 hectares cleared

Ring Road and Elevated Highway

• Ring Road No. 3 (Phase 2) with Mai Dich – Trung Hoa and Trung

Hoa – Thanh Xuan 95.5% and 96.5% completed (expected

completion in Oct 2012)

• Ring Road No. 2.5 Phase 1 (Nguyen Phong Sac-Trung Kinh) main

components completed in Aug 2012

Overpasses: Aim to completie 6 overpasses before Tet 2013

• Le Van Luong-Lang to be finished in Oct 2012

• 4 projects under research: Chua Boc – Pham Ngoc Thach, Dai Co

Viet – Tran Khat Chan, Bach Mai – Le Thanh Nghi, Daewoo

intersection

Urban MRT

• Line 3 (Nhon-Ga Hanoi) total cost extended by 400 mil. Euro

• Line 2A (Cat Linh-Ha Dong) 3 months off schedule due to site

clearance. Line 2B (Nam Thang Long-Tran Hung Dao) approved

INFRASTRUCTURE

H I G H L I G H T S

Tran Phu – Kim Ma

Expected extension Nov/2012

Noi Bai-Lao Cai

264 km, off schedule at least 1 year


INFRASTRUCTURE

S I G N I F I C A N T PR O J E C T S

SAL E PER F O R M A N C E – N O T D E AD ! !

Nhat Tan – Noi Bai

Site clearance deters progress

Metro line 3 (Nhon-Ga Hanoi)

12.5 km; ready for use 2015

Lang-Le Van Luong overpass

315.5m, expected delivery Oct 2012

Dai Co Viet-Tran Khat Chan overpass

332m, expected construction end of Q3/2012


LUXURY HIGH-END MID-END LOW-END TOTAL

Total launch supply

(units)

2,460 22,090 66,680 20,310 111,540

New launch (units) 0 120 990 1,610 2,720

Primary market –

avg. asking priceN/A $1,570 $1,100 $640 $1,100

•Q-o-q change N/A 1.5% -9.9% -8.4% -4.1%

•Y-o-y change N/A -15.6% -2.5% -28.6% -24.3%

Secondary market

– Avg. asking price

$3,050 $1,720 $1,230 $900 $1,730

•Q-o-q change 1.3% -2.7% -4.6% -5.5% -4.0%

•Y-o-y change -11.1% -12.3% -13.9% -13.1% -13.3%

Few signs of trend

reversal:

increasing new

supply coupled

with large price

decline in both

primary &

secondary

market

CONDOMINIUM FOR SALE

Q 3 / 2 0 1 2 SN AP S H O T

Note: All prices are quoted on NFA basis and exclusive of VAT

Source: CBRE


0

5,000

10,000

15,000

20,000

25,000

2007 2008 2009 2010 2011 2012YTD

Q1 Q2 Q3 Q4 Whole year

Launch supply picked up in Q3 vs. Q2

• Despite the historical quiet Q3 with the lunar July

• Almost all are existing projects:

• Which have tested the market with previous launches; &

• Have good visible construction progress

• Bare shell finishing option: quickly adopted by many

developers in Q3

Launch Price continued the downward trend that started

from early 2011

• Mostly of US$1,000 psm and lower price range

• Q3/12: provide the most affordable options since 2008

• Some are real price reductions; some are just lower level of

finishing; some are a combination of both


L AU N C H SU PP L Y & L AU N C H PR I C E

2,700

2,400

Chart 3: Launch Supply (Units)

Chart 4: Distribution of Primary Prices

0%

20%

40%

60%

80%

100%

2008 2009 2010 2011 2012

Below $1,000 psm $1,000-$1,250 psm

$1,250-$1,500 psm Above $1,500 psm

Source: CBRE


Dampened demand:

• The continuing tendency to SAVE than to INVEST,

affected by concerns over the economy

• Buyers' wait-and-see attitude & herd mentality

Sales are mostly reported with units:

• At the lower price range (~ $1,000 psm);

• Small unit size (50 sm-70sm);

• Lower floors (below Fl 20)

• Besides concerns about Location, Construction, & Quality


D EM AN D

Source: Nielsen

Do you think this is the right time to buy houses?

Yes, prices are very reasonable

Not yet, prices will decline further

Others

Source: Vnexpress online survey


Secondary price: no signs of price flattening

• Continued the large quarterly reduction that started in

Q4/2011

• Larger reduction observed in

• The LOWER price range (Mid-end & Low-end) vs. UPPER

price range (High-end & Luxury)

• COMPLETED units vs. UNDER CONSTRUCTION units

• These are market segments with most transactions observed

• The majority observed a price reduction of ~5% q-o-q

Outlook

• This is a buyer market => buyers' purchasing power &

mentality: the key to market recovery

• Dim economic outlook through to 2013 will further dampen

buyers' confidence

• Flight to safety will mean more SAVINGS than INVESTMENTS

• The market is expected to pick up when the economy

shows clear signs of improvement


SEC O N D A R Y PR I C E & O U T L O O K

Chart 5: Secondary Price Change

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2008 2009 2010 2011 2012


Total completion

continued to rise

although at a

slower pace than

originally

scheduled.

Meanwhile prices

are still under

pressure to fall.

LANDED PROPERTIES ( in NUAs)

Q 3 / 2 0 1 2 SN AP S H O T

VILLASTERRACED

HOUSESTOTAL

Total Completion (units) 4,917 7,126 12,071

Secondary Asking Prices (mil VND psm)

• Land Plots 43.84 38.15

Market-wide q-o-q change (%) -7.08% -2.81%

• Units 86.53 96.11

Market-wide q-o-q change (%) -5.26% -2.67%


Valuation approaching new values perceived, diversified in different projects

• New levels of property prices have been established;

• Prices have decreased by 18% on average y-o-y in most projects.

• The current levels are still under pressure to go down: low confidence levels and

affordability

• Capital values of completed and near completion projects saw

minimum declines, while projects with little progress saw zero liquidity

• Several projects aggressive in investing in supporting facilities to

attract residents and buyers

Developers: Challenges and Moves

• Challenges:

• All projects: stagnant demand => zero to low sales

• Local developers: financial pressure (bad debts, unsold stock) => halt of

construction

• Moves:

• Restructuring business: several local developers with non core competencies in

real estate exited or looked to exit

• Revising strategy: rethink target customers and types of products offered

• Active developers put a lot more efforts in sales and customer service; willing to

compromise on prices and payment structure


C H AL L E N G E S

Chart 7: Secondary Asking Prices - Villas

Chart 6: Development Progress

0

40

80

120

160

200

240

Millions

VN

D

Q3/2011 Q3/2012

Q3/2011 Average Q3/2012 Average

Fully Completed

Partially Completed

Frame Construction

Infrastructure Stage

Planning


<VND2 billion

VND2-3 billion

VND3-5 billion

VND5-7 billion

VND7-10 billion

VND10-15 billion

>VND15 billion

VND1-2 billion

VND2-3 billion

VND3-5 billion

VND5-7 billion

VND7-15 billion

>VND15 billion

Possible mismatch between Supply and Demand: a recent survey by CBRE's

• 86% customers are interested in / can afford units < VND5 billion

• In contrast:

• 68% projects pricing > VND5 bn ; 80% of these are completed or near completion

• In the other 32% projects (pricing <VND5 bn), only 20% are completed or near completion

• Buying purpose has shifted from capital appreciation (now only

17%) to owner occupation and rental income (83%).

Outlook

• Est.7,000 units completed in 2012 (originally scheduled ~9,400)

• 34% of this from Vincom Village & Van Phu NUA

• Completed projects will continue to be widely empty

• Restructuring business and revising strategy: a main focus to most

developers in the next 2 years as the market expects better

products and service at more reasonable prices.

• New laws and stipulations are expected to release to better regulate

the housing market and minimize impacts of a similar housing

bubble in the future (tax scheme, price indices , REITs, etc.)


D EM AN D & O U T L O O K

Chart 8: Customers’ Housing Budget

Chart 9: Projects by Price Levels


Rents reaching

new lows, the

market has not

seen a bottom !

OFFICE

Q 3 / 2 0 1 2 SN AP S H O T

Note: All rents are quoted on NLA, inclusive of service charges but exclusive of VAT.

Source: CBRE

GRADE A GRADE B GRADE C TOTAL

Number of buildings 16 49 59 124

NLA (sm) 268,676 529,128 251,907 1,049,711

Vacancy rate (%) 27.47% 18.64%

Q-o-q change -0.04 pp -1.35 pp

Y-o-y change 22.78 pp 1.42 pp

Average asking rent

(US$/sm/month)

$32.30 $21.16

Q-o-q change (%) -3.93% -5.18%

Y-o-y change (%) -18.76% -19.48%


Office space influx continued in Q3: +48,500 sm (+4.6%

q-o-q)

• 1 Grade A building: Indochina Plaza Hanoi (14,344 sm)

• 3 Grade B buildings: Vinafor Building (16,000 sm); HL

Tower (8,400 sm); 28-storey Towers in Thang Long Int’l

Village (9,756 sm)

Rents continued to drop further, not yet a sign of a

bottom! => Landlords prioritized occupancy

• Grade A: some CBD buildings start to see price cuts up

by 3.6% on average and by up to 9% in some projects;

West-side seemed to be temporarily resilient after a

sharp fall in Q2.

• Grade B: downward trend continued across all

submarkets, West-side & Other fringe areas saw most

significant drops at 6.7% and 6.9%, respectively.

Occupancy slightly improved, highlighting increasing

demand

OFFICE

M AR K ET O VER V I EW

Chart 10: Office Asking Rents

Chart 11: Office Vacancy

0%

10%

20%

30%

40%

50%

2009 2010 2011 2012

Grade A Vacancy Grade B Vacancy

Source: CBRE

$0

$10

$20

$30

$40

$50

$60

2009 2010 2011 2012

Grade A Rents Grade B Rents

Source: CBRE


-20,000

-10,000

-

10,000

20,000

30,000

40,000

50,000

2009 2010 2011 2012

Q3 Net absorption: still strong at 34,300 sm

Enquiries for office space

• By size: 50-200 sm as most popular

• By industry: IT, banking & finance, law, pharmacy

• Big occupiers: Nissan (10,500 sm) @ Keangnam

Outlook

• Large new supply still anticipated until year-end, pushing

rentals further down.

• Office acquisitions are expected to increase in the coming

quarters

• To big occupiers who need large floor plates & prefer for-lease

buildings to built-to-suit ones.

• In underperforming properties as an 'exit strategy' in the

economic recession.

OFFICE


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Q4/2012f 2013f 2014f

Grade A Grade B

Chart 13: Office Future Supply

CornerStone Building

Chart 12: Office Net Absorption


Vacancy

intensified,

following large

tenants’ moving

out while

consumers

continued

tightening their

budget.

RETAIL

Q 3 / 2 0 1 2 SN AP S H O T

Note: All rents are quoted on NLA, in ground floor areas, inclusive of service charges but exclusive of VAT.

Source: CBRE

DEPARTMENT

STORES

SHOPPING

CENTRES

RETAIL

LOBBIES

TOTAL

Total supply (NLA, sm) 46,000 217,309 10,310 273,619

New supply (NLA, sm) 0 17,209 0 17,209

Vacancy rate (%) 7.0% 18.1% 2.9% 15.7%

Avg. asking rents

(US$/sm/month) $62.8 $37.8 $76.8 $45.9

* CBD (US$/sm/month) - $54.2 $145.9 $88.1

Y-o-y change (%) - -4.1% 4.9% -0.1%

Q-o-q change (%) - 3.8% 0.0% -0.4%

* Non-CBD (US$/sm/month) $62.8 $34.4 $24.6 $34.5

Y-o-y change (%) 16.3% -8.6% 16.9% -1.4%

Q-o-q change (%) -1.7% 11.1% 0.0% 9.1%


Indochina Plaza Hanoi (17,209 sm) opened, a new mall

design

Average rents in non-CBD shopping centres increased

11.1% q-o-q due to the fact that IPH's rent is higher than the

average level. Except for this change, rents in other retail

formats stablized.

Vacancy intensified

• CBD: some projects struggling with increased vacancies.

• Non-CBD: Vacancy rose to 16.8% due to new project's

entrance.

RETAIL

M AR K ET O VER V I EW

Indochina Plaza Hanoi (IPH) opening

$0

$20

$40

$60

$80

$100

$120

2008 2009 2010 2011 2012

CBD non-CBD

Chart 14: Retail Ground Floor Rents

Chart 15: Retail Vacancy

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2008 2009 2010 2011 2012

CBD non-CBD

Source: CBRE

Source: CBRE


Consumers still more conservative with their spending -

Retail sales growth rate in 9M/12: 10.2% y-o-y after inflation

Tenant movements

• 169 tenant/brand changes in Q3 (+ 36 q-o-q) : More

closures than openings

• Opened: 65 = 39%; -5% q-o-q

• Refurbished/ fitting out: 22 = 13%; +10% q-o-q

• Closed: 81 = 48%; +5% q-o-q

• By industry: Garment & Textile saw most new openings

but also most closures; no new openings in Electronics as

seen in Q1 & Q2

Foreign retailers still show aggressive expansion plan

• Parkson to open in Léman C.T Plaza (HCMC) in June

2013

• AEON to invest $109 mil. to open AEON - Tan Phu

Celadon (HCMC) in 2014

RETAIL

D EM AN D

-3,000

-2,000

-1,000

0

1,000

2,000

COS ELE HHF JEW TXT SH F&B OT

opened (sm) closed (sm)

Chart 16: Retail shop openings/closures by size

and by sector

-50

-40

-30

-20

-10

0

10

20

30

1 - 20 21 - 50 51 - 100 101 - 250 251 - 500 1,001 -

2,500

opened (sm) closed (sm)

Chart 17: No. of retail shop openings/closures

by size

Source: CBRE

Source: CBRE

COS = Cosmetics; ELE = Electronics; HHF = Household & Furniture;

JEW = Jewellery; TXT = Textiles; SH = Shoes & Handbags;

F&B = Food & Beverage; OT = Others


RETAIL

C O N ST R U C T I O N PR O G R E S S I N Q 3

15.06.2012 09.09.2012

Eurowindow Multi Complex

15.06.2012 09.09.2012

Habico Tower

15.06.2012 09.09.2012

Lotte Center Hanoi

Delayed Construction Medium Progress Good Progress

14.06.2012 08.09.2012

Vincom Times City

14.06.2012 08.09.2012

Mo Market

The Pride

15.06.2012 09.09.2012

Vincom Royal City

30.07.2012 15.09.2012

Star City Le Van Luong

15.06.2012 09.09.2012

Golden Land Building


Large new supply in Q4/2012 & 2013

• Melinh Plaza Ha Dong (45,000 sm)

• Trang Tien Plaza (14,000 sm)

• Vincom Mega Mall Royal City (230,000 sm)

• Ho Guom Plaza (23,380 sm)

Sub-urbanisation of retail

• 10 years after the opening of Trang Tien Plaza (Hanoi's

first shopping centre), modern retail formats have reached

the city's furthest boundaries !

• Hiway Supercenter Ha Dong and 2 more until year-end

• Ebest Mall on National Road No. 32

Newer projects especially those in fringe areas are

expected to struggle

F&B to be the main occupiers

RETAIL

O U T L O O K

Melinh Plaza Ha Dong - Largest retail

centre opening in the year 2012

0

200,000

400,000

600,000

800,000

1,000,000

2012f 2013f +2014f

Fitting-Out Under Construction Under Planning

Chart 18: Retail Future Supply by status

Source: CBRE


Asking rents

remained stable,

but vacancy at

high levels

compared to

previous year,

primarily due to

new projects.

SERVICED APARTMENT

M AR K ET SN AP S H O T

INTERNATIONAL

OPERATORSELF-MANAGED TOTAL

Total supply (units) 887 1,890 2,777

New supply (units) 0 0 0

Vacancy rate (%) 11.84% 30.45% 23.95%

• Q-o-q change -3.6 pp -1.1 pp -2.0 pp

• Y-o-y change -11.2 pp 13.0 pp 4.4 pp

Average asking rents (US$

psm per month)$39.32 $28.39 $31.67

• Q-o-q change (%) 0.10% 0.11% 0.11%

• Y-o-y change (%) -0.30% 0.14% -1.09%


Supply

• No new fully serviced apartment projects, although a

few residential projects launched units for lease

• Vincom Village, Vincom Park Place, Indochina Plaza Hanoi

• Candeo Hotels Hanoi delayed its opening scheduled in

August

Asking rents almost the same q-o-q

• Actual rents are typically lower

• New projects struggle to maintain asking rents as demand

has been stable rather than expanding.

Vacancy still at high level: ~24% market-wide

• Challenges primarily in new projects (Landmark 72)

• Occupancy among older projects generally stable (>80%)

SERVICED APARTMENT

SU PPL Y & PER F O R M A N C E

Chart 19: Vacancy Rate (%)

Chart 20: Asking Rents (USD psm per month)

0%

10%

20%

30%

40%

50%

2008 2009 2010 2011 2012

International Operator Self-managed Average

$0

$10

$20

$30

$40

$50

$60

2007 2008 2009 2010 2011 2012

International Operator Self-managed Average


Demand

• Enquiries remained stable with a little higher budget of

$2,000 on average; ~44% budgets are between $2,000-

$4,500.

• Japanese clients a large group, typically enquiring 2-3BR units

• Demand still strong in CBD & West Lake area

• Demand in the West still comparatively low but on the rise: more

offices in the West

Outlook

• Apartments / houses for rent might receive more attention

as condos struggle to sell.

• Such a model may target a wider customer pool than the

traditional serviced apartment model, i.e. both local and expats.

• Existing serviced apartment projects might see relatively

stable performances in near term, although to remain

competitive they might have to either renovate or

compromise on rents.

SERVICED APARTMENT


Keangnam Landmark 72

Serviced Apartment

0

500

1.000

1.500

2.000

2.500

3.000

3.500

2007 2008 2009 2010 2011 2012-

YTD

2012f 2013f

Chart 21: Total Supply by Year (Units)


ADR continues to

decline, owing to

the economic

recession and

increased

competition from

new supply &

budget options.

HOTEL

Q 3 / 2 0 1 2 SN AP S H O T

1 – Total Supply include all trackable 3-5 star hotels in Hanoi (officially & not yet ranked by VNAT)

with room capacity of above 40 rooms/hotel

2 – ADRs are quoted exclusive of service charges & VAT

Source: CBRE

5-STAR 4-STAR 3-STAR TOTAL

Total Supply (rooms) 3,768 1,945 2,820 8,533

•Number of hotels 12 13 41 66

•Change in supply (rooms) 0 0 -58 -58

Average Occupancy Rate (%) 55.57% 50.16% 50.49% 52.97%

•Q-o-Q change -5.39 pp -2.31 pp -2.03 pp -3.81 pp

•Y-o-Y change 5.01 pp 2.21 pp -4.35 pp 1.80 pp

ADR (US$/room/night) $101.11 $58.04 $35.68 $73.69

•Q-o-Q change -4.59% -6.62% 2.13% -4.25%

•Y-o-Y change -6.01% -14.98% -2.64% -6.44%

RevPAR (US$/room/night) $56.19 $29.12 $18.01 $39.03

•Q-o-Q change -13.02% -10.74% -1.82% -10.67%

•Y-o-Y change 3.30% -11.07% -10.37% -3.14%


SUPPLY

• Current: 8,533 three-to-five star rooms in 66 hotels

• 5-star hotels remained the largest segment

• Over half of Total Supply is located in Hoan Kiem & Ba Dinh

• Change in supply

• 3-star Vesna (Cau Giay Dist) closed for redevelopment

• Officially ranked: 3-star Minh Cuong (Dong Anh Dist)

DEMAND

• Number of visitors to Hanoi YTD

• International: 1.14mil YTD ( 28% y-o-y)

• Domestic: 6.35mil YTD ( 10% y-o-y)

• Key markets

• Largest visitor source: Asia region (>50% of total visitors YTD)

• Top 5 markets:China, Japan, Australia, France, Taiwan

• Arrivals from key markets, incl. China, Korea & Japan grew strongly

by 29%, 58% and 33% y-o-y, respectively

HOTEL

C U R R E N T SU PP L Y & D EM AN D

Historical Supply by Grade

0

10

20

30

40

50

60

70

0

2,000

4,000

6,000

8,000

10,000

1995 2000 2005 2010 2011 2012 YTDN

o. of hote

ls

Supply

(ro

om

s)

5-star 4-star 3-star No. of hotels

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2010 2011 2012

International Domestic

Visitor Arrivals to Hanoi (Millions)


Market Performance Y-o-Y: Occupancy vs. ADR

• 4-5 star hotels are aggressively competing against one

another to gain market share through reducing their rates

to maintain a stable occupancy

• ADR reduced market-wide but we still observe large ADR

improvement ($5-$15 y-o-y) of few 3-star hotels

At least four 3-4 star hotels have worsened performance

Y-o-Y (ADR & Occupancy) for several quarters

• This signals the need of more effective operational

strategies or these hotels are to face very tough time

HOTEL

C U R R E N T M AR K E T PER F O R M A N C E

Market Performance (Q3/2012)

Y-o-Y Changes by Grade (Q3/2012)

46%

48%

50%

52%

54%

56%

$0

$20

$40

$60

$80

$100

$120

5-star 4-star 3-star

ADR RevPAR Occupancy (%)

-20%

-15%

-10%

-5%

0%

5%

10%

5-star 4-star 3-star

Occupancy ADR RevPAR

Grade Occupancy ADR RevPAR

5-star (5pp) ($5-$10) ($1-$3)

4-star (2pp) ($3-$25) ($2-$15)

3-star (4pp) ($5-$18) ($3-$15)


DEMAND & PERFORMANCE

• Short-term

• The market is coming into a high season until April next year

demand might increase but not as fast as the increasing number of available rooms in Hanoi.

• Occupancy and ADR are expected to improve accordingly in the next two quarters

• 2013-2014

• Market performance remains mediocre due to the ongoing economic recession & large new supply

• New hotel projects might slow down their completion process or opening dates.

• If the situation lasts for few more years, Capital Value of existing hotels would certainly be weakened.

HOTEL

2 0 1 3 O U T L O O K

FUTURE SUPPLY

• Q4/2012 (≈ 300 rooms): 3-star Eastin Easy GTC (70

rooms); 3-star Hilton Garden Inn (86 rooms); 3-star Hong

Ha (70 rooms); 4-star Candeo Hotels Hanoi (68 rooms)

• 2013 (≈ 1,000 rooms): 5-star InterContinental Hanoi

Landmark (359 rooms); 5-star JW Marriott (450 rooms);

Huong Lua Hotel (200 rooms) @ 684 Minh Khai St.

• 2014 (≈ 550 rooms): 5-star Lotte Hotel (300 rooms); 5-

star Novotel Ciputra Hanoi (250 rooms)

Future Supply by Grade

0

1

2

3

4

5

0

300

600

900

1,200

1,500

Q4/2012 2013 2014N

o. of pro

jects

Futu

re S

upply

(ro

om

s)

5-star 4-star 3-star No. of projects


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F r i d a y , O c t o b e r 1 9 , 2 0 1 2

© 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. 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.

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Documents

Hanoi Quarterly Report Q3/2012 - CBRE Vietnam...Presented by: CB Richard Ellis (Vietnam) Co., Ltd. Wednesday, October 3, 2012 Market Insights from CBRE’s Hanoi Quarterly Report Q3/2012