HCMC Quarterly Report - Viet Nam Supply Chainvietnamsupplychain.com/assets/files/5189c2b0f010a130405...6 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT

Presented by:

CBRE (Vietnam) Co., Ltd.Thursday, April 4, 2012

Market Insights from CBREHCMC Quarterly Report Q1/2013

Dung DuongSenior Manager

2 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | APRIL 2013

VIETNAM ECONOMYQ 2 / 2 0 1 2 P E R F O R M A N C E

Source: General Statistics Office

Q1/2013 Q4/2012Q-o-Q

Q1/2012Y-o-y

GDP (% y-o-y) 4.9% 5.4% 4.6%

CPI (% y-o-y, e-o-p) 6.6% 6.8% 13.9%

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

Export (US$ Bn) 29.7 -3.7% 19.7%

Import (US$ Bn) 29.2 -4.5% 17.0%

FDI Implemented (US$ Bn) 2.7 14.4% 7.1%

International Arrivals (million arrivals) 1.0 -9.6% 8.0%

Retail and Services Turnover (trillion dong) 636.1 4.1% 11.7%

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

Refinancing rate (%)Rediscounting rate (%)


VIETNAM ECONOMYM o r e c o m p e t i t i v e b u s i n e s s e n v i r o n m e n t

Decrease in lending rate

Lending rates decreased to 11% - 12%

More psychological support, real effect remain to be

seen.

Decree 02

SBV provide VND30 trillion loan at 6% interest rate for:

• Governmental employees and people of the armed

forces to rent and buy social houses.

•Or rent and buy commercial houses with small area of

over 70 sm

Current % y-o-yVN-Index 505.9 12.5%

Real Estate Holding & Development - listed stocks 46.2 4.3%

Real Estate Services - listed stocks 24.1 -5.1%

Gold price (VND mil per tael) 43.6 -0.5%

Source: Stockbiz, FPTS, SJC


VIETNAM ECONOMYI n t e r e s t r a t e s a r e f i n a l l y a t l e v e l s w h i c h e n c o u r a g e

p e o p l e t o m o v e m o n e y o u t o f d e p o s i t s .

Cut main policy rates 100bp

•Refinance rate: lower to 8% from 9%•Discount rate: to 6% from 7%•The cap on VND deposit interest rate: cut to 7.5% from 8%

Petroleum price adjusts upward

• Increase VND1,430 per litre in March

Gradual recovery in domestic demand

•Better credit conditions•Robust inflow FDI (2 times y-o-y)•Improved retail sales (11.7% y-o-y)•Better income from rising exports (19.7% y-o-y)

Pressure

G r o w t h i s s t u n t e d – B U T, m o n e t a r y p o l i c y e a s i n g i s i t s e l f a d r i v e r f o r g r o w t h .


Non performing loans:

• NPL ratio: decreased from 8.6% (by end of 2012) to 6% (Feb 2013) of outstanding loans as the latest public number from SBV

VIETNAM ECONOMY

= > N P L ’ s h a v e f i n a l l y b e e n a c k n o w l e d g e d w i t h t h e A M C – s t i l l a l o n g w a y f r o m b e i n g r e s o l v e d b u t b e t t e r t h a n h i d i n g u n d e r a r o c k l i k e a s p e r 2 0 1 2 .

The government will establish an Vietnam Asset Management Company (VAMC) in April 2013

• Initial capital: USD 4.78 billion

• Target to resolve NPL (less than 3%) by VAMC bond


$0

$20

$40

$60

$80

$100

Singapore Taipei Kuala Lumpur

Ho Chi Minh Ha noi Bangkok Manila

Prime rent in key cities – Asian Pacific Region (US$/sm/month)*

Rent of prime offices in HCMC has approached closer to neighbouring cities -> the city is more attractive in terms of cost and pricing for foreign companies.

Demand are mainly for Grade B office space due to availability, reasonable price for a good location and good quality.

Tenants keep being active in the review quarter given the movement from buildings with high rental rate to new place with more reasonable price and acceptable management services.

HCMC OFFICE MARKETC O M P E T I T I V E R E N T S

Budget for office lease of 20 US$ -25US$/sm/month

dominate the market

* Prime Rent represent the top open –market tier of rent that could be expected for a unit of standard size, of highest quality and specification and in the best location in a market at the survey date


Market-wide asking rent continues increasing slightly by 2.5% q-o-q

to US$21.8 psm per month.

Vacancy rate in Grade A market keeps

decreasing whilst this rate in Grade B market

increases owing to new office space added by

two new buildings launched in the quarter.

HCMC OFFICE MARKETR E N T S P A S S T H E B O T T O M

HCMC Office Market Performance – Grade A & B

$15

$17

$19

$21

$23

$25

0

200,000

400,000

600,000

800,000

1,000,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2011 2012 2013

Ave

rage

Mar

ket R

ent (

US

$/sm

/mon

th)

Are

a (s

m, N

LA)

Leased Area Vacant Area Asking Rent


STRONG take up in both Grade A and Grade B segment, especially in those new buildings.

Demand mainly derived from existing tenants who want to UPGRADE or EXPAND office spaces rather than new entrant.

Deals get BIGGER in term of SIZE in this quarter (over 1,000 sm ). Consolidation need of different office into one place continues happened in this quarter, creating more demand for graded office space.

Demand comes from LEGAL FIRMS, phamaceutical, oil & gas, garment and sourcing companies, especially legal firms because these companies are playing an important role in the depress stage of the overall market.

HCMC OFFICE MARKETS T R O N G T A K E - U P

17,133 sm(Q4/2012)

(Q1/2013)31,873 sm


HCMC OFFICE MARKETL I M I T E D A V A I L A B I L I T Y

Options of office space in term of size and location are AVAILABLE but LIMITED due to tighteningsource of supply given constant source of demand in the market.

DECENTRALISATION trend continues taking place due to limited options of large floor plate within CBD area compounded with high asking rent offered in the area.

Only FEW office buildings in the market can provide large floor plate over 1,000 sm GFA


HCMC OFFICE MARKET

January 2013 – PresidentPlace, the first LEED officebuilding was launchedofficially. At the press time,nearly 50% of total spacehas been occupied

Q 1 M A J O R E V E N T S – N E W L A U N C H


No new supply observed within the next six months.

Given tightening supply and existing demand, market wide average asking rent is expected to be stable or increase marginally and steadily until the new wave of new supply come into the market.

Even though vacancy rate in Grade B segment increased a little bit in Q1/2013, this rate is believed to decline and not diminish market rents further as there is still source of demand for those buildings, especially those offer

reasonable price as well as various options of locations and leasing area inside the buildings.

HCMC OFFICE MARKETO U T L O O K

Lim Tower– D1

Grade A

Area: 22,000 sm NLA

Times Square– D1

Grade A

Area: 12,704 sm NLA

Saigon Airport Plaza – Tan Binh District

Grade B

Area: 11,000 sm NLA

Le Meridien – D1

Grade A

Area: 9,125 sm NLA

FUTURE SUPPLY


More newly launched projects: 4 projects in Q1/2013 vs3 in Q4 2012;Units launched: up by 21% y-o-y; but down 11.9% q-o-q to 784 units owing to smaller scale of the project.• High-end: 70%;• Affordable: 30%;Developer’s positive view about the market;Lunar New Year had certain positive impacts;

HCMC RESIDENTIAL MARKETN E W L A U N C H E S

March 2013 – The Prince Residence developed by Novaland launched in PhuNhuan District.

March 2013 – Happy Valley launched in Phu My Hung NUA.

March 2013 – Nhat Lan 3 developed by BCCI launched in

Binh tan District.

Jan 2013 – SCRE 2 developed by Saigon Corp. + Hung Thinh

launched in District 2.


Good transaction at newly-launched projects thanks to competitively pricing;Transactions also witnessed at existing projects whichi have good location, significant construction

progress and attractive payment schedule: Sunrise City, City Garden, Thao Dien Pearl,;Affordable segment: continued to see stable demand;

HCMC RESIDENTIAL MARKETT R A N S A C T I O N S

Project Location Segment Total unitlaunched

Sold rate

Happy Valley (P1) Phu My Hung NUR High-end 163(total 541)

80%

The PrinceResidence

Phu Nhuan District High-end 277 7.2%(38.6% committed)

Metro Apartment (SCREC 2)

District 2 Affordable 104 85%

Nhat Lan 3 Binh Tan District Affordable 240 72%

Source: CBRE


Primary market:Newly launched developments: launching prices more

realistic and competitive: • High-end apartments in Phu My Hung: from

US$1,300 psm (bare unit);• Affordable apartments: price close to US$600 psm;

• Low management fee (Phu My Hung case)

Secondary market:Luxury : 2.2% q-o-q; 8.9% y-o-y

High-end: by 0.8% q-o-q; 5.3% y-o-y

Mid-end: by 0.1% q-o-q; 7.1% y-o-yAffordable stayed flat through out the year.

HCMC RESIDENTIAL MARKETP R I C E S

Secondary price changes (q-o-q change)


HCMC RESIDENTIAL MARKET2 0 1 3 O U T L O O K

Delta River Tower SSG Tower Happy Valley – P2 Ehome 3 (Phase 2)District 1 Binh Thanh District District 7 Binh Tan District~182 luxury units ~78 high-end units 143 high-end units ~150 affordable units

2013 FORECASTChallenges remain, investments opportunities exist.

Finance continues to be developers / investors’ major challenge;

The effects of the solutions for saving real estate i.e. the VND30 trillion credit package to be seen until Q3 2013 at the earliest;

There would have no room for further price reductions in the primary market but flexible payment, gift, some discounts expected to be continue;

Trading floors will continue to look for buying either under construction or planning projects;

Hand-over condition: shift from semi-finished to bare unit.

Expected major condominium launches in 2013:


High street leasing dominates the market .

Mainly F&B and fashion brands

Hot spots no longer limit to D1 streets (Nguyen Trai , Nguyen Hue, Le Loi, Dong Khoi, Mac ThiBuoi…) but also expand to other districts such as D7 (Nguyen DucCanhstr.) and D10 (BaThangHaistr.)

HCMC RETAILQ1 2013 HIGHLIGHTS


Saigon Square bazzarconcept continues to be a preferable alternative for weak-performing shopping centre. (Saigon Superbowl, ThuanKieuPlaza)

Shopping centres that failed to attract tenants are changing their design and unit size to meet demand (Crescent Mall)

Zen Plaza will expand space for more F&B

HCMC RETAILNEW CONCEPT TO BE MORE COMPETITIVE


Shopping centreswith high rental rate start to suffer from tenant turnover => PRICINGis key factor.

CBD rent stayed stable for both shopping centre and department store during the quarter.

In non-CBD, shopping centre’s rent increased 6.2% q-o-q owing to the introduction of Pico Plaza while department store’s rent stayed unchanged.

HCMC RETAILQ1 2013 HIGHLIGHTS

Q1/2013(q-o-q)

Shopping centre

Department store

Rent –CBDRent –Non CBD

Vacancy


In spite of the increased supply

and downward trend in vacancy,

it may take a while for new

comers to prove their long term

success.

HCMC RETAILQ 1 / 2 0 1 3 H E A D L I N E S

HCMC Retail Market

* All rents are quoted on NLA, exclusive of VAT and service charges

Source: CBRE


• Open: 10 January 2013

• Retail GFA: 18,000 sm

• Number of floor: 5

HCMC RETAILN E W L A U N C H E S

Pico Electronics Supermarket

PICO PLAZA – TAN BINH

• Re-launch: 28 January 2013



BITEXCO FINANCIAL TOWERIcon 68 Shopping Centre


• Leasing

• Expected open: September 2013



HCMC RETAILC O M I N G S O O N

SAIGON AIRPORT PLAZA – TAN BINH

• Leasing

• Expected open: Q4/2013



THAO DIEN PEARL – DISTRICT 2


SUPPLY:

• Q4 welcomed two international branded projects:

RENTS:

• Grade A rent continued to see a minor decrease of 1.2% q-o-q as 8/9 projects adjusted their quotation

downwards in Q1. Grade A rent has witnessed a drop by 16.8% from its recent peak.

• Grade B average rent decreased by 4.5% q-o-q. However, if taking one non-CBD newcomer into account, which provice very small room size, the

average rent per sm will be distorted and increased by 2.5% q-o-q instead.

HCMC SERVICED APARTMENTSQ 1 R E V I E W

District 7175 units

District 2100 units (20 of which are ready for move in)


With continued declines in rents, Grade A saw an

increasingly better take-up while

Grade B sufferred from high vacancy due to continuous large new supply.

HCMC SERVICED APARTMENTSP E R F O R M A N C E

Historical Market Performance, HCMC


Japanese continued as key tenant: 27% of CBRE total enquiries.

Villa options (budget over US$4,000; unit size over 160 sm): double than last quarter. However, it’s seasonal!!

• Families looking at District 2 and District 7 accommodations.

• Western tenants, especially American, Australian and Italian: by 6.3 percentage points q-o-q.

• From big MNCs and consulate sectors.

• Lease term: from 1 year to 3 years.

HCMC SERVICED APARTMENTSD E M A N D


BIGGEST & FIERCEST COMPETITOR:

Decent accommodations

At cheaper and very flexible rents

Individually owned, so landlord is flexible on leasing terms and conditions

FAVOURABLE BUY-TO-LET OPTIONS:

CBD projects – CEO/Management level tenants: Vincom Center B, Avalon, The Lancaster

Non-CBD projects:

• Top favourite with frequent unavailability: Xi Riverview Palace, City Garden , Saigon Pearl

• Newer options with good performance: The Vista, The Estella, Imperia An Phu, etc.

HCMC SERVICED APARTMENTSC O M P E T I T I O N F R O M B U Y - T O - L E T

$


INDUSTRIAL & LOGISTICSQ 1 / 2 0 1 3 M A R K E T O V E R V I E W

Government to halt the opening of new economic zones and industrial parks and closed down empty industrial parks across the country.

2012 has seen inefficient FDI projects axed.

Foreign companies not financially viable / not proceeding on projects have investment certificates withdrawn.


The declining demand from both local and FDI business have

forced developers at less desirable locations to drop their rent

significantly to attract more interest while average land rental rates in key industrial parks and locations

remain steady or slightly down compared with 2012.

INDUSTRIAL & LOGISTICSQ 1 / 2 0 1 3 M A R K E T O V E R V I E W


Expansion from existing established projects continue to drive FDI in Q1/2013

• Panasonic expanded to Binh Duong out of Hanoi’

• Sanofi Aventis expanded to SHTP out of D4 / Thu Duc

• Samsung started construction of the 2nd campus in Thai Nguyen out of its existing campus in Bac Ninh.

First tier cities such as HCMC, Hanoi and Danangcapture the lion share of the emerging industries including R&D, labs, software development and Business Process Outsourcing.

Third tier provinces such as Long An (South Vietnam) and Bac Giang, Hung Yen (North Vietnam) or QuangNam (Central Vietnam) continue to attract traditional sectors like garment, footwear, furniture thanks to their more relaxed industry restriction and inexpensive resources (land & labors).

Logistics operators are in expansion mode to meet rising demand from FMCG & F&B

INDUSTRIAL & LOGISTICSO U T L O O K


INVESTMENTSQ 1 / 2 0 1 3 D E A L S

Property Pix Transaction Value(USD million) Seller Buyer

Kumho AsianaPlaza

https://www.rcanalytics.com/

93.9 Kumho AsianaGroup Asiana Airlines

Legend Hotel

http://english.hankyung.com/news/apps/news

62.5 VinaCapital Lotte Hotels & Resorts

Property Pix Seller Buyer

Vincom Center A Vingroup To be

confirmed

GemadeptTower Gemadept To be

confirmed

https://www.rcanalytics.com/

http://english.hankyung.com/news/apps/news.view?c1=&newscate=1&nkey=201208310100381

http://english.hankyung.com/news/apps/news.view?c1=&newscate=1&nkey=201208310100381


To subscr ibe, p lease contact…Q 1 / 2 0 1 3 r e l e a s e d A p r i l 2 2 , 2 0 1 3

© 2013 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 theinformation 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 noguarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us forexample 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 bereproduced without prior written permission of CB Richard Ellis.

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HCMC Quarterly Report - Viet Nam Supply Chainvietnamsupplychain.com/assets/files/5189c2b0f010a130405...6 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT