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THE NEW BEGINNINGTHE NEW BEGINNINGPresented by: Marc Townsend, CBRE VietnamJanuary 8, 2014
2013 IN REVIEW
CBRE ‘Running men’CBRE ‘Running men’
Heaviest snowfalls ever seen in Sapa Typhoon Nari attacked Central Vietnam
And the winner is…
2 CBRE | FEARLESS FORECAST 2014
2013 IN REVIEW
THE NOT-SO-GOOD NEWS THE GOOD NEWS NEWS FROM CBRE
M t b d d bt ll t d• A record 37 companies delisted from exchanges in 2013 (22 delisted in 2012);
• 411 real estate projects
• Lowest interest rates since 2005;
• Lowest CPI in ten years;
• Stock market increased 22% y-o-y,
• Most bad debts collected
• Monthly Dashboard
• Weekly Residential 411 real estate projects (6,645 ha) have been halted in 38 localities (MoC*)
• Retail sector growth falls to
the best performing in SEA
• Gold price fell 24.8% y-o-y;
• Residential prices down to levels
Launch Newspaper Update
• Sunday site tours
four-year low but net growth remained
last seen in 2006 (MoC*);
• VAMC has disbursed over VND566 trillion by Dec2013;
• Flying visit from Kazakhstan colleagues
• 8 trips to Yangon
• Registered FDI up 32.3% y-o-y;
• Cell phones topple garments as Vietnam’s top export;
• 2 more Vietnamese staff RICS accredited
*MoC: Ministry of Construction
• 50% - 60% import duty reduction on cars from Asean countries;
3 CBRE | FEARLESS FORECAST 2014
ECONOMIC WHEELS TURNINGKey driver: lowest inflation & interest rates since 2005
Policy ratesBank rates (%)
20%
25%
12
16
%)
y( )
5%
10%
15%
4
8
eres
t Rat
es (
%
0%
5%
2011 2012 2013Mortgage rate (%) Deposit rate (%)
0
4
2005 2007 2009 2011 2013
SB
V In
te
g g ( ) p ( )
Base Rate Rediscounting Rate
Refinancing Rate
2Y 1Y 6M 3M 1M Current
Note:• Mortgage rate is the average lending rate surveyed at ten banks, applied for home loan only. However, the back-dated numbers are the average rate which was announced
publicly at that point of time, applied for all sectors and all banks . • Deposit rate is the average deposit rate of a basket of ten banks in which the rates are announced publicly on their websites and can be tracked backwards. Applied for one-
Mortgage Rate (%) 20.0 14.5 15.3 13.3 12.8 12.9
4 CBRE | FEARLESS FORECAST 2014
p g p p y ppyear term only.
ECONOMIC WHEELS TURNINGGold or Stock?
2,00050
ce
D
LOCAL GOLD GLOBAL GOLD
1 200
1,400
1,600
1,800
34
38
42
46
Glo
bal g
old
pric
(US
$)
old
pric
e (V
ND
mill
ion)
The first time in 13 years that gold price remains
Source: SJC, gold.org
1,000
1,200
30
34
Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13Loca
l g
that gold price remains on a sustained downward trend at the year-end
R i l t k k t t i 2013Regional stock markets, y-o-y return in 2013:
Thailand (SET) down -7.4%;
Singapore (SGX) up 6.9%;
( C ) % Indonesia (JCI) up 1.5%;
VNIndex (VNI): up 22%, the highest level was nearly 527 on 31 May.
Source: Bloomberg
REAL ESTATE INDEX 2Y 1Y 6M 3M 1M Current
Real Estate Holding & Development Listed Companies 39.8 39.5 45.4 41.5 43.4 44.9
Real Estate Services Listed Companies 70.0 25.6 26.6 21.1 22.0 32.2
gSource: Stockbiz
5 CBRE | FEARLESS FORECAST 2014
p
ECONOMIC WHEELS TURNING… and Stronger FDI
2010 2011 2012 2013
9 000
12,000
15,000
18,000
ster
ed F
DI
lion
US
D)
-
3,000
6,000
9,000
R l E t t M f t i C t ti Oth
Reg
is(m
il
Real Estate Manufacturing Construction Others
Project Nationality LocationIncreased capital
(US$ bil.)Newly registered
(US$ bil.)
Formosa Steel Mill Project Taiwan Ha Tinh 10.0
Nghi Son Refinery Oil Japan Thanh Hoa 2.8
Samsung Electronics Korea Bac Ninh 1.0
Coal-Fired Thermoelectric Power Plant China Vinh Tan 2.0
Samsung Electronics Korea Thai Nguyen 2.0
LG Electric & Electronic Project Korea Hai Phong 1.5
Samsung Electro-mechanics Korea Bac Ninh 1.2
Bus Industrial Center Russia Binh Dinh 1.0
6 CBRE | FEARLESS FORECAST 2014
Source: Ministry of Planning and Investment
INVESTMENT OPTIONSReal Estate Becoming Increasingly Attractive
Return by Asset Classes
20%
25%
d
2012 2013
5%
10%
15%
urn
to y
ear
end
-10%
-5%
0%Stock Market (VN
Index) (*) Bank Deposit (**) Gold (SJC) (***) VND/USD Exchange
rate Rental Yield of High-
end Condo (****)
% c
hang
e/re
tu
Source: CBRE; SJC; SBV
-25%
-20%
-15%
%
Source: CBRE; SJC; SBV
(*) VN Index change, 31 Dec 2013 against 2 Jan 2013(**) For term deposit less than one year(***) Gold price per tael change in 31 Dec 2013 against 2 Jan 2013(****) Gross yield of The Vista, The Estella, Xi Riverview Palace in District 2, HCMC
7 CBRE | FEARLESS FORECAST 2014
BCI NUMBERSDown!!!
Projects under construction, y-o-y change All future projects (2014 – 2025), y-o-y changej , y y g p j ( ), y y g
50%
100%
ge (
%)
Jan 2013 July 2013 Jan 2014
150%
200%
ge (
%)
Jan 2013 July 2013 Jan 2014
-50%
0%
50%
HCMC Hanoi Da N
Can Th
Nha T
Vung T
Hai Ph
Y-o
-y c
han
-50%
0%
50%
100%
HCMC Hanoi Da N
Can Th
Nha T
Vung T
Hai Ph
Y-o
-y c
han
g
All Future Projects
(2014-2025) HCMC Hanoi
DaNang
Can Tho
NhaTrang
VungTau
HaiPhong
Projects Under
ConstructionHCMC Hanoi
DaNang
Can Tho
NhaTrang
VungTau
HaiPhong
-100% Nang Tho Trang Tau Phong Nang Tho Trang Tau Phong
Office 208 434 63 34 12 27 18
Retail 95 236 33 2 8 24 21
Hospitality and SA
35 54 31 6 38 20 9
Office 111 124 11 13 1 8 8
Retail 48 48 1 1 2 6 18
Hospitality 18 11 8 2 3 9 0 and SA
Residential 308 473 159 17 24 34 19
Total 646 1197 286 59 82 105 67
and SA18 11 8 2 3 9 0
Resi 123 116 17 3 3 4 3
Total 2013 300 299 37 19 9 27 29
8 CBRE | FEARLESS FORECAST 2014
Updated: January 3, 2014Source: www.bciasia.com; CBRE
INFRASTRUCTURE2013 Bridges rise to ease traffic congestion
HAI PHONG
HA NOI (Capital)2 bridges completed“ In 2013, US$603
million has been invested to develop
DA NANG
PHONG
4
2 steel flyovers
pnew bridges/ flyovers in Hanoi, Da Nang and HCMC.
” DA NANG4 bridges completed”Source: CBRE
Dragon Bridge Tran Thi Ly Bridge
9 bridges completed
Nguyen Tri Phuong Bridge
Hoa Xuan Bridge
HO CHI MINH CITY
CAN THO
9 bridges completed
9 CBRE | FEARLESS FORECAST 2014
6 steel flyovers Saigon 2 bridge Binh Loi bridge Kinh Thanh Da bridge
INFRASTRUCTUREMore international flight routes open
3 new international air carriers have entered Vietnam - Etihad Airways, Air Macau and Nordic GGlobal.
12 new international routes opened in the year.p y
Most of newly opened international routes are between Danang, Nha Trang and China,Danang, Nha Trang and China, Russia, South Korea.
In 2013, Vietjet Air became the first private Vietnamesethe first private Vietnamese airline to fly internationally (HCMC – Bangkok).
10 CBRE | FEARLESS FORECAST 2014
RESIDENTIAL FOR SALEIncreasing number of projects completedSaigon Airport
om
ple
ted
om
ple
ted
Airport Plaza
Celadon City – P1
Th h D Vi
33 u
nit
s co
20 u
nit
s coThanh Da View Mulberry Lane
s w
ith
28,
53
s w
ith
7,0
2
Ehome 3 – Phase 1Royal City Mandarin Garden
39 p
roje
cts
25 p
roje
cts
Harmona Times CityAu Co Tower
Han
oi,
3
HC
MC
, Harmona
11 CBRE | FEARLESS FORECAST 2014
Him Lam RiversideGood House Hillstate Times City
CONDOMINIUM FOR SALEMarketing spend demonstrating a market that has turned
Advertised by District, HCMC, 2013Advertised by Month, Southern Vietnam*
17%18%
District 7Thu DucDistrict 9District 2
160
200
40
50
sem
ents
ojec
ts
Number of projects Number of advertisements
11%
9%4%
7%
4%
District 2Go VapNha BeTan PhuTan Binh40
80
120
10
20
30
mbe
r of
adv
ertis
Num
ber
of p
ro
8%8%7%
7% District 8 Binh TanOthers
0
40
0
10
Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Num
N
Note: Selected newspapers include Tuoi Tre, Mua & Ban, Vietnam News, Thi truong Bat dong san & Tai san, Saigon Times Daily, Note 2: No statistics available for January and February.
(*): HCMC, Binh Duong and Dong Nai, BR-VT
Number of adverts in December was already 240% higher than March 2013
Projects in District 7 were the most actively promoted
12 CBRE | FEARLESS FORECAST 2014
RESIDENTIAL FOR SALE2013 HCMC Review – The New Normal
Payment terms forfinished, unsold products:
35% - 50% upfront toHand over conditions:
Bare shell option
2013
35% 50% upfront tohand-over; 50%-65%
in 1 or 2 years
Bare shell optionSmaller sized units
Promotion/
2013The most flexible year
All media channels are employed for advertsTV, Radio, Youtube, mobile
Promotion/Incentive:
Gift voucher,furniture package, , , ,
phone, flyer, mass-emailair tickets, gold
13 CBRE | FEARLESS FORECAST 2014
CONDOMINIUM FOR SALEUnsold stock diminishes thanks to reasonable pricing
Unsold units in HCMC, excluding new launches in 2013Unsold units in D2 & D7 (excl. new launches in 2012 & 2013)
30%
50%
10,000
20,000
ng
e (%
)
So
ld
2012 2013 2013 vs. 2012
12 000
15,000
18,000
Luxury High-end Mid-end Af fordable
-30%
-10%
10%
-10,000
0
Launch Sold Unsold Launch Sold Unsold
District 2 District 7
nso
ld u
nit
ch
an
Un
it la
un
ched
/
0
3,000
6,000
9,000
12,000
Un
itU
nit
-50%-20,000
UnU
Source: CBRE
0
Q1 2013 Q2 2013 Q3 2013 Q4 2013
Affordable units made up the largest proportion of sales (Q4 2013: 49%; Q4 2012: 35%);
Mid-end sales improved as prices soften;
Excluding 2013 new launches, unsold units decreased for four consecutive quarters;
Accumulative unsold units down by 7.9% q-o-q and 16.6% y-o-y;
Most unsold stock is concentrated at unfinished projects.
14 CBRE | FEARLESS FORECAST 2014
RESIDENTIAL MARKETHCMC Condominium: 2013 y-o-y price change: -3%
Selling price 2012 2013
15 CBRE | FEARLESS FORECAST 2014
Y-o-y change -6% -3%
Strongest decreaseBinh Chanh
Thu DucDistrict 3
Strongest increaseD10D11
Thu Duc
REGIONAL MARKET COMPARISONOffice and Residential market
Asian Pacific, Office Prime Rent in Key Cities, Q3 2013
100
60
80
100
(US
$/sm
/mth
.)
-
20
40
Ask
ing
rent
Asia Pacific, Condominium Price, CBD, Q3 2013
Singapore Jakarta Hanoi HCMC Kuala Lumpur Bangkok Manila
18,000
m)
6 000
9,000
12,000
15,000
g P
rices
(U
S$/
s
0
3,000
6,000
Singapore Bangkok* HCMC Manila* Kuala Lumpur Hanoi Jakatar
Ask
ing
(*): Q1/2013
16 CBRE | FEARLESS FORECAST 2014
( ): Q1/2013Source: CBRE
OFFICECompletions in 2013
HCMC HANOI
President Place, D1 Corner Stone, Hoan Kiem PVI Tower, Cau GiayTimes Square, D1 Hong Ha, Hoan Kiem319 Tower, Cau Giay
Lim Tower, D1 Eurowindow Multicomplex, Cau Giay
Empress Tower, D1 Song Hong Park View, Dong Da
Hapulico Complex, Cau Giay
Ngoc Khanh Plaza, Ba Dinh
17 CBRE | FEARLESS FORECAST 2014
Saigon Airport Plaza, Tan Binh
Pico Saigon Plaza, Tan Binh
Royal City, Thanh Xuan
OFFICEHCMC and Hanoi: Two directions
Asia Pacific, Office rental cycle, Grade A&B, Q4 2013
Shanghai New DelhiAdelaide Shenzhen
Melbourne
Kuala Lumpur
BeijingJakarta Bangkok
Perth
BangaloreAK
MS
JB
B
SN
P
B
G h
Hanoi
TokyoManila
Taipei
A kl d
Brisbane
SeoulHong Kong Canberra
PerthSydney
Wellington
GCW
ATM
TS
HS
B
H
M Mumbai
TENANTs Landlords
GuangzhouSingapore
Auckland
Ho Chi Minh City HSG A
HCMC
Landlords TENANTs
HANOI
TENANTs
Grade A and B vacancy rate: y-o-y Grade A and B asking rent: slightly –
but watch for Grade B supply
Grade A vacancy rate: Grade B vacancy rate: Grade A and B asking rent: y-o-y
18 CBRE | FEARLESS FORECAST 2014
but watch for Grade B supply Grade A and B asking rent: y o y
OFFICEPositive news for downtown landlords in HCMC
Grade A and B office space (*), D.1 HCMC2013 New Supply
600,000
A, s
m)
Q4/2012 Q4/2013Up 9.7%
Up 15.5%
2013 New Supply D.1, HCMC
-
150,000
300,000
450,000
(NL
A
Leased space Existing supply
Grade A and B net absorption, HCMC
Grade A Grade B
“ HCMC seeing increasing net absorption, on a Y-o-Y basis(*).
P l i f
60,000
90,000
(NL
A, s
m)
Source: CBRE
Pre-leasing is a key identifiable trend for the first time in four years.
”Source: CBRE
0
30,000
2011 2012 2013
(
19 CBRE | FEARLESS FORECAST 2014
(*) Survey on Grade A and B office buildings in District 1, HCMC
RETAILCompletion in 2013 & 2014 - Decentralisation owing to availability of land
HCMC HN
Aeon Mall Celadon City, Tan Phu Times Square , D1 Hanoi Square, formerly Hang Da GalleriaTrang Tien Plaza
Royal City, Thanh Xuan Times City, Hai Ba TrungParkson Cantavil Premier, D2 SC VivoCity, D7
Pico Plaza Tan Binh Thao Dien Pearl D2 Vi tt l D10 Lotte Shopping Center Ho Guom Plaza Lotte Mart (Mipec Tower)
20 CBRE | FEARLESS FORECAST 2014
Pico Plaza, Tan Binh Thao Dien Pearl, D2 Viettel, D10 Lotte Shopping Center Ho Guom Plaza Lotte Mart (Mipec Tower)
RETAILIn 2014, Hanoi supply is twice as much as HCMC’s
HCMC, Retail supply in 2014 (NLA, ‘000 sm) Retail supply by city (NLA, ‘000 sm)
32
41 16 6
2013 Supply
Aeon
1,000
1,200
448
Aeon
SCVivoCity
Thao Dien Pearl
Others
600
800
LA (
‘000
sm
)
Others
HANOI, Retail supply in 2014 (NLA, ‘000 sm) 200
400 NL
-HCMC Hanoi HCMC Hanoi HCMC Hanoi HCMC Hanoi
2011 2012 2013 2014
20
257
2013 Supply
Ho Guom Plaza
Times City (P2)
Lotte CentreExisting supply New supply570
23
100 35
24 20 Lotte Centre
Mo Market Shopping Centre
Lotte (Mipec Tower)
Others
21 CBRE | FEARLESS FORECAST 2014
Source: CBRE
23
RETAILF&B groups still remain the most active foreign retailers
• Middle class spending power limited to F&B;• High street corners/roundabouts are more and more
sought-after;• Lack of well-priced space in CBD shopping centre;Lack of well priced space in CBD shopping centre;• In Hanoi, developer tends to occupy more spaces in
shopping centre than HCMC’s. Shops closed at Vincom Center B and Union Square
VinKC VinKE
Tenant Mix, Times City (% of sm)
Tenant Mix, Royal City (% of sm)
Vinpearl Aquarium Vinpearl Ice-rink
McDonald’s sites on Pham Ngu Lao Str. (D1) and Dien Bien Phu Str. (D1)
Dunkin’ Donuts opened on Nguyen Duc Canh Str. (D7)
14%
8%
Aquarium Other retailers
11%1%
Others
6%
72%88%
22 CBRE | FEARLESS FORECAST 2014
Source: CBRE
Starbucks open day, February 1, 2013
REGIONAL MARKET COMPARISONRetail and Hotel marketAsian Pacific, Retail Space per Capita, Q3 2013
0 8
0.2
0.4
0.6
0.8
pace
per
cap
ital
(sm
)
0.0
Ban
gkok
Sin
gapo
re
ala
Lum
pur
Jaka
rta
Man
ila
Han
oi
HC
M
nom
Pen
h
Yan
gon
Ret
ail s
p
Asian Pacific, Hotel ADR* in Key Cities, Q3 2013
280
Kua Ph
120
160
200
240
S$/
room
/nig
ht
0
40
80
Singapore HCMC Kuala Lumpur Hanoi Jakarta Bangkok
US
*ADR A D il R t
23 CBRE | FEARLESS FORECAST 2014
*ADR: Average Daily Rate
Source: CBRE
HOTELHCMC & Hanoi
Top-tier hotel, RevPAR (US$/room/night)
$200
$250Danang 5 star*
Danang 4 star*
Nha Trang 5 star
$50
$100
$150Nha Trang 4 star
HCMC 5 star
HCMC 4 star
Novotel, HCMC
Source: CBRE
$0
$50
2011 2012 2013
HN 5 star
HN 4 star
Source: CBRE*Beachfront hotels only
24 CBRE | FEARLESS FORECAST 2014
JW Marriott Hotel, Hanoi
HOTELThriving coastal hospitality
NHA TRANG
Loads of cranes turning in fueled by Russian vodka & Ruble’s;
Scheduled flights from Moscow and Scheduled flights from Moscow and Domodedovo; and chartered flights from Novosibirsk and Vladivostok;
Backpackers being priced out of the market;p g p
DA NANG
Th th f i l fli ht (f fi iti i The growth of regional flights (from five cities in China, Russia, Korea and Japan);
Connectivity between hotels and the airport is the best in Vietnam;
=> The rebalancing of development in Danang away from the Vietnam’s East Sea
25 CBRE | FEARLESS FORECAST 2014
2013 TRANSACTIONSSlow second half after flurry of deals earlier in the year
Sentinel Place, HN CentrePoint, HCMC Gemadept Tower, HCMC
Life Resort, Quy Nhon
26 CBRE | FEARLESS FORECAST 2014
Union Square, HCMCLotte Legend Hotel, HCMCy
and Hoi An
INVESTMENTContinued pockets of interest from overseas investors
Significant and varied interest in Vietnam but investors (and agents) frustrated Significant and varied interest in Vietnam but investors (and agents) frustrated by limited deal opportunities;
Demand for deals continues to significantly outstrip supply – particularly for operating assets in D1, HCMC;
For the majority of ‘deals’ the big four questions still remain - Without a realistic and honest approach to these foreign investors will look elsewhere
VALUATION TRANSPARENCY STRUCTURING TRACK RECORD
realistic and honest approach to these, foreign investors will look elsewhere.
27 CBRE | FEARLESS FORECAST 2014
CBRE FEARLESS FORECASTCBRE FEARLESS FORECASTDream the Impossible Dream
2014 FEARLESS FORECAST
Capital Markets
1. Recycling capital will be the key in 2014. Opportunity cost will be considered and developers will not want to miss the investment options that will be presented in 2014, so will offer increasingly attractive terms and preferential pricing to move inventory.
2. The most significant transactions of 2014 will be for those involving land, but don’t hold your breath for a HCMC District 1 Golden Sitefor a HCMC District 1 Golden Site.
3. Although we may never know it, Chinese capital becomes the biggest backer of real estate deals.
4. Vietnam sees Real Estate firms delisted as investors looked to break up companies in order to unlock assetsunlock assets
City Planning
5. More cranes to be seen in Thu Thiem as development prospects in D1 HCMC remain difficult to access Infrastructure being a key driveraccess. Infrastructure being a key driver.
Office
6. With limited availability at premium Grade A properties in District 1, HCMC, and no identifiable supply on the horizon landlords take advantage of renewal positions to push rentals Greatersupply on the horizon, landlords take advantage of renewal positions to push rentals. Greater divergence with Hanoi market.
7. HCMC Grade B office market to remain flat as a steady flow of buildings populates the market with new supply.
29 CBRE | FEARLESS FORECAST 2014
pp y
2014 FEARLESS FORECASTResidential
8. The middle class rises. By the end of 2014 the volume of sales in the mid-end sector are equal if not greater than those in the affordable sector. g
9. Not only that, but CBRE will re-instate the word luxury back into its vocabulary.
Retail
10 Th t f St b k’ M D ld d Vi t ’ bli ti d WTO t it 100%10. The entrance of Starbuck’s, McDonalds and, Vietnam’s obligations under WTO to permit 100% foreign ownership in the restaurant sector in 2015, sees the widest variety of retailers visit Vietnam during 2014.
HospitalityHospitality
11. The coastal destinations continue to be the top performing hospitality sectors:
11a. Vodka sales to double in 2014. Deep-pocketed Russian will continue to shift strongly from Thailand to NhaTrang and Mui Ne. g
11b. Gambling revenues to surge, most notably in Da Nang’s only casino, as Northern spending power continues to flock to the city and an ever increasing flight schedule provides a wealth of guest.
12. Increasing stability in the hospitality sector, combined with availability of assets, sees more 201operating hotels transact in 2014 than any other property type.
Industrial
13. CNN and Bloomberg run first reports on smog in Vietnam as the industrial revolution gains further
30 CBRE | FEARLESS FORECAST 2014
momentum with TPP being signed. Land supply keeps prices stable.
2014 FEARLESS FORECASTAnd finally….
31 CBRE | FEARLESS FORECAST 2014
Source: The Saigon Times Daily, No. 4603 January 7, 2014
CBRE GLOBAL OFFICE LOCATIONS
© 2014 CBRE (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CBRE (Vietnam) Co., Ltd. We obtained some of the information above from sourceswe 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 representationabout 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 representcurrent or future performance of the market This information is designed exclusively for the use of this presentation and cannot be reproduced without prior written permission of
32 CBRE | FEARLESS FORECAST 2014
current or future performance of the market. This information is designed exclusively for the use of this presentation, and cannot be reproduced without prior written permission ofCBRE.