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Residential Property Market: Real Buyers look for Real Value
Presented by Mr. Thai Nguyen NguyenAssociate Director, Residential Project Marketing
16th April 2009
CB Richard Ellis | Page 2
Stock Market Rising - 30 Day Trend
Graph from VNDirect
CB Richard Ellis | Page 3
1. Fewer local white-collar lay-offs
2. Stock Market picking up… cautiously
3. Vietnam does not have pension/provident fund – only Cash, Gold & Land
4. Little debt with savings in hand
5. Prices coming off in both primary and secondary markets
6. Job hopping is back as expatriates are replaced
7. Real buyers have cash
Overview of 30 Day Trends
CB Richard Ellis | Page 4
New wave of construction at Residential Condo Sites
The Everich, The Flemington, Lu Gia, Xi Grand Court Districts 10 & 11
Splendor Go Vap
The Manor, Saigon PearlBinh Thanh
H2, Orient District 4
Riverside Residences, Sunrise City, Sky Garden 3, An Vien
District 7
The Vista, Estella, Blooming Park, Xi Riverview Palace, An Khang, Petro Vietnam Landmark, HA Riverview, River Garden, Preche
District 2
Ben Thanh Tower, M&C Tower, Golden Hill, Saigon Mansion
Districts 1 & 3
ProjectsDistrict
Construction Activity Begins to Move in HCMC
Total Number of Units (Overall) = 10,779
CB Richard Ellis | Page 5
M&C Tower
Ben Thanh Tower
Saigon Mansion
Golden Hill
District 1 & 3 – HCMC Center
CB Richard Ellis | Page 6
District 2 – the HOT spot
The Vista
Estella
Hoang Anh Riverview
River Garden
XI Riverview Palace
Preche
CB Richard Ellis | Page 7
District 11 – Park Life in the City
The Flemington
The EverichLu Gia
XI Grand Court
CB Richard Ellis | Page 8
Sky Garden 3 Sunrise City
Riverside Residence
District 7 – Saigon South
CB Richard Ellis | Page 9
Projects are Selling - New Launches/Re-launches Q1 2009
PHU HOANG ANH-HAGL Saigon South
SKY CITY TOWERS (HN)
More on the way….
ECOLAKES MY PHUOC (BD)
BECAMEX CITY CENTER (BD)
RIVERSIDE RESIDENCES-PMH D7
HOANG ANH RIVERVIEW D2
CB Richard Ellis | Page 10
Hanoi is moving too…
Keangnam, My Dinh Apartment Towers, Intracom, Hoang Quoc Viet Residentials
Tu Liem
Nguyen Trai - Thanh Xuan ComplexThanh Xuan
Golden WestlakeTay Ho
Telin CondoLong Bien
Lilama Complex, Song Da, Nguyen Tam TrinhHoang Mai
Tricon TowerHoai Duc
201 Minh Khai, Le Dai Hanh ComplexHai Ba Trung
NCG Residentials, Hattoco ComplexHa Dong
Thanh Cong 2, Mipec Tower, Kim Lien CondoDong Da
Thang Long Int'l Village Complex, N05, N04Cau Giay
Hanoi City Complex, Doi Can CondoBa Dinh
ProjectsDistrict
Total Number of Units (Overall) = 13,220
CB Richard Ellis | Page 11
Primary Market – the market in which buyers have the first opportunity to purchase a newly issued residential unit directly from the developer’s sales team or its agent
Secondary Market – the market where a buyer purchases a residential unit from another buyer rather than the issuing organization (developer) typically done by a broker, an agent, and FSBO, utilizing information from the internet (real estate websites)
Deals
Price & Terms
Financial Support
Developer Commitment
People are Buying – Primary & Secondary…
CB Richard Ellis | Page 12
What are real buyers looking for?
Deals
Discounted price from the peaks of Jan 2008
More promotion
Price & Terms
Original or affordable price
Difference between the primary and secondary market prices
Better payment terms – longer and more flexible
Financial Support
Loan support from Developers and Banks
CB Richard Ellis | Page 13
What are real buyers looking for?Reliable Developers who Care
Customers must have faith and belief in the Developer when buying
A commitment from Developers for the on-time completion and handover
Flexible and comfortable designs – affordable sizes
Better service from the Developers – support resale transactions
Completed foundations at the time of sales with monthly updates on construction – a show of consistent on-site activity
Clearly defined fees such as service, management, parking, etc.
Track record
Show-flats on-site and a well-trained Marketing Team
CB Richard Ellis | Page 14
The Market - how big is it?
• Total Completed Units (2008) = 19,578•First time buyers•Up Graders•Investors•Viet Kieu•Foreigners based in Vietnam
Assume 5% Buyers385,000373,500362,500352,000
HCMC Average Growth Rate 3.1% pa7.77.477.25
2012F2011F2010F2009FEstimated Population Growth
7.04
All Planned Projects24,50022,00021,00016,500Status2012F2011F2010F2009F
Estimated Future Supply of Completed Condominiums pa
CB Richard Ellis | Page 15
Market begins to separate into 2 different segments• Group 1 High-end Buyers (emotional/social benefits)
Concerned with: brand / image, design, material, car park, retail & recreation area, capital value, liquidity, amenities
• Group 2 Price Sensitive Buyers (functional benefits)Concerned with: asking price, unit size (as it relates to overall price of unit as well as function), basic facilities, living areas, and finance package
Common Concerns: timing – delivery vs. payment, payment terms, loan issues, ownership delivery, resale conditions & support
Current Buyer Profile
CB Richard Ellis | Page 16
Developers - How to reduce the risks?Widen the Sales Profile• Create demand during the foundation/piling stage• Branding – spend early, save later• More use of Marketing Companies• Greater allocation of marketing budget
Build to the Market• Listen to the market• Control the construction progress
Price Right• Flexible payment and loan support
Time Your SaleExpand your Distribution NetworksUse the Data• Analytics• Database Managers
Think out of the box• Sell off one tower• Convert one block to Serviced Apartments (or Hotel)
CB Richard Ellis | Page 17
How to widen the sales profile?
On-site Webcam to show live site
activity
Web Profiling analytics by age,
address, education, car ownership, etc…
TV / Cinema / Radio Ads &
Editorials
Mobile Phone Marketing
Social NetworksOnline - Facebook,
My Space, LinkedIn, Blogs
Typical FormsSignage, Brochures,
Showroom/Units
Web AdvertisingLinking to other sites, ads on main engines Yahoo, Google, etc.
Payment Terms & Overall Price
PromotionsOffer a car to buyers
on certain units
Marketing to First Time Buyers & Up-Graders
CB Richard Ellis | Page 18
Developers - What to Build?Affordable sizes – High-End Buyers particular to leasabilitywhile Price-Sensitive Buyers sensitive to overall sales price• Real buyers can’t afford 200 sm even if it is only at US$ 1,300 • Suggested sizing from 50 to 130 sm.
Small is beautiful
Ask the buyers; market surveys & Focus groups
Villas (lot sizes) & Condos – the Mix
End of ‘high end’
Facilities and amenities
SoHo (live-work units)
Ease of leasing
CB Richard Ellis | Page 19
Developers - What Price to Sell At?
Cost Analysis Approach – critical in this market
Analyze land prices, contractor quotes, low-interest loans (bank partners) and suitable margins
Consider discounts
1st Benchmarking other developments
2nd Cost Analysis Approach
Final = Adjust for Market Factors
CB Richard Ellis | Page 20
First, before the guys next to you
Competition analysis
Timing, Terms, Price
Sales strategy – best / worst case scenarios
Plan
What are you selling?• Low, middle, high• Emotional appeals• Timing of marketing / branding efforts
Developers – When to start Selling?
CB Richard Ellis | Page 21
Sales Distribution Network
Brokers vs. Agents• An Agent is employed by a Developer directly and is
therefore directly accountable to the Developer and the Buyer (an extension of the Developer)
• A Broker sells products from anyone to anyone –accountable only to himself – mass market
Models of Distribution
Brokers and Agents offer greater benefits to both end buyer and Developers
The Developer community has not learned the benefits of Brokers & Agents
CB Richard Ellis | Page 22
Web Analytics
On-line Data gives you real numbersInteraction with potential buyersInteractive numbers over millions of page viewsOn-line marketing / Digital marketing (‘soft’ copies – e.flyers) On-line real estate advertising expected to account for 1/3 of the entire marketing budget by 2010Real-time, statistical view into real estate market for each district and many developmentsThousands of new listings added each month to the databaseIn Vietnam, on one site alone, over 2,000 property searches a dayDemographic data which has not previously been available
CB Richard Ellis | Page 23
This heat graph shows the individual listings and the color shows the number of views. Lighter blue is fewer views, darker purple represents more views.
Web Analytical Data – Heat Graph
Apartments for Sale: Jan – Dec 2008
Heat Graph provided by MetVuong.com
CB Richard Ellis | Page 24
Other important things to consider
Property management – in house or outsource
Usable area within the units – hallways, corridors, angles
Parking – ratio of spaces per units, buy / lease
Owners management committee – make up and responsibility
Resale market – ease of secondary sales
Security, cleaning, lifts, energy usage
Green issues
Reasonable management fees
Infrastructure and flooding
CB Richard Ellis | Page 25
Current status of major infrastructure developments in HCMC
District 2 (Cat Lai port area)District 7 (Phu My Hung)
Phu My bridge – to be completed early September 2009
Khanh Hoi bridge connecting District 1 & 4 Calmette bridgeDistrict 1
District 4
Ben Nghe Canal
Located next to M&C Site
Completed in late January 2009 Completed late January 2009
CB Richard Ellis | Page 26
Current status of major infrastructure developments in HCMC
Thu Thiem area
District 2Thu Thiem tunnel
District 1
East – West Highway
East - West highway to be completed Q1 ‘10
Calmette bridge
CB Richard Ellis | Page 27
Market Analysis
Why Q1 2009 re/launches were successful?
Developers need to rethink their approach to buyers
Real Demand exists – Real Buyers are out there
Act now, or risk the future? Office market example
Branding and Marketing are much more important than ever before
Vietnamese use the internet to collect Real Estate information
Professional advice can affect your bottom-line • Research, Marketing, Agents/Brokers
CB Richard Ellis | Page 28
National and City Economic Overview
Office
Retail
Hotel
Residential for Sale
Investment
Serviced Apartments
Construction Costs
Quarterly Reports for Ho Chi Minh City and Hanoi
Available for each city, in English or Vietnamese
CB Richard Ellis | Page 29
Over 300 markets in more than 50 countries
Thank You
49
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www.cbrevietnam.com