Hn & Hcm Market Presentation Q4 2009 Final En

January 2010

Ha Noi & HCMC Real Estate Market Q4 2009

•Presented by Savills Vietnam Co., Ltd.

DISCLAIMERThe property market research contained in this presentation is verified to the best of Savills Vietnam ability. Savills quarterly report reflects an overview of the current property market and is indicative research only. Savills Vietnam does not guarantee the accuracy of research and forecasts contained herein. Savills Vietnam does not accept any responsibility for losses arising from reliance on the research and forecasting contained within this presentation. Savills recommends that the reader obtain a detailed market study of the specific sector of interest should a deeper understanding of the market be required.Reproduction of this presentation, in any manner whatsoever, in whole or in part, without written prior consent from

Savills Vietnam is prohibited. Approval should be obtained from Savills Vietnam before any reference to this presentation can be made in any statement, published document, or circular.Where information is given without reference to another party in this presentation, it shall be taken that this

information has been obtained or gathered through Savills’ best efforts and to Savills’ best knowledge. Processed data references there from shall be taken as our opinion and shall not be freely quoted without acknowledgement.

PRESENTATION STRUCTURE

• I) Vietnam economy overview• II) Ha Noi market Q4 2009 • and III) HCMC market Q4 2009

1. Office for lease market 2. Retail market 3. Hotel market4. Apartment for sale market 5. Serviced apartment market

• IV) Conclusions and Forecast• V) Risk and Opportunity

Jan 2010

I. VIET NAM ECONOMIC OVERVIEW Q4 2009

Source: General Statistic Office, 2009

0

20

40

60

80

100

US$ Billion

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

GDP at current price 27.2 28.5 30.6 32.3 33.6 38.7 45.4 53.3 61.0 70.0 88.5 84.1

GDP grow th rate 5.80% 4.80% 6.00% 6.80% 6.90% 7.24% 7.70% 8.40% 8.17% 8.48% 6.23% 5.32%

98 99 00 01 02 03 04 05 06 07 08 09

National GDP growth rate and FDI

I-VIET NAM ECONOMIC OVERVIEW

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0Billion US$

Pledged FDI 3.2 4.5 6.8 10.2 20.3 64.0 21.5

Disbursed FDI 2.65 2.85 2.45 3.6 8.3 11.5 10.0

2003 2004 2005 2006 2007 2008 2009

Source: General Statistic Office, 2009

International tourists to Viet Nam (1996 – 2009)


0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

01/08 03/08 05/08 07/08 09/08 11/08 01/09 03/09 05/09 07/09 09/09 11/09

%

CPI

CPI - Food & Foodstuff

CPI - Construction materials

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

No. of tourists

Tourism Bussiness Visiting relatives Other

International visitors to Viet Nam, HCMC


0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

No. of foreign visitors (million)

To HCMC (mil)To VN (mil)

Source: GSO & HCMC Statistics Office, 2009

US$ Billion

0

1

2

3

4

5

6

7

8

9

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Remittance

Remittance from overseas Vietnamese

Source: Savills Research & Consultancy, 2009 Ha Noi market

II-1. HA NOI OFFICE Q4 2009Office take–up:

Significant increase in Q4 activityGrade A/ Grade C rent: about double

-10,000

0

10,000

20,000

30,000

40,000

Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

sq mGrade A Grade B

0%

20%

40%

60%

80%

100%

Grade A Grade B Grade C0

10

20

30

40

50US$/sq m/month

Occupancy rate Average rent

II-1. HA NOI OFFICE Q4 2009CEO Tower

Ha Noi market Source: Savills Research & Consultancy, 2009

Capital Tower

BIDV Tower

Supply

• 83 buildings: 14 Grade A, 33 Grade B and 36 Grade C

• 605,000 sq m, up 23% q-o-q and up 44% y-o- y

• Q4 2009: 9 new buildings, 18% of total supply • 2009: 18 new buildings, 181,000 sq m

Market performance

• Occupancy: 84%, -1.5% q-o-q• Rent rate: US$29/ sq m/ month, +5% q-o-q

Outlook

• Potential 1.5 M additional sq m by 2013• Mainly in suburban and secondary districts


II-1. HA NOI OFFICE Q4 2009

Future supply

0

100,000

200,000

300,000

400,000

500,000

600,000

2010E 2011E 2012E 2013E

sq mFuture supply


II-2. HA NOI RETAIL Q4 2009

Supply• Market remains extremely small vs. region• 372,000 sq m of all categories, up 4% q-o-q

Market performance• Occupancy: 90%, up 2% q-o-q• Prime Rents approx: US$150/ sq m/ month

Outlook• Till 2012: A potential doubling of new supply to

777,000 sq m• At least two major shopping malls



Supply by location and type

15%

48%33%

4%

Shopping centres/Department Stores and HypermarketsWholesales CentresSupermarketsRetail Podiums

56%

12%

32%

CBD Secondary Suburban



Rental rate of Shopping centres and Department stores

Rental rate of Retail podiums

150

4040

60

0

40

80

120

160

200

CBD Secondary

US$/ sq m/ month

615

70

8085

50

0

20

40

60

80

100

CBD Secondary Suburban

US$/ sq m/ month


Future supply up to 2012


0

100,000

200,000

300,000

400,000

500,000

600,000

2010E 2011E 2012E

sq mFuture supply


3-star28%

4-star19%

5-star53%

II-3. HA NOI HOTEL Q4 2009Supply

• 5-star: 10 hotels, 3,000 rooms.• 4-star: 6 hotels, 1,100 rooms.• 3-star: 22 hotels, 1,600 rooms.• No new supply in Q4 2009.

Market performance

• Rent and occupancy increased sharply• 5-star: US$124 (+8% q-o-q), 61% (+10% q-o-q)• 4-star: US$77 (+2% q-o-q), 67% (+13% q-o-q)

• Top rate: US$183 (Sofitel Metropole)

Outlook

• Nearly 30 future projects with 6,000 rooms• Mainly in the suburban Tu Liem District

Ha Noi market

Revenue per available room (RevPAR) = Average Daily Room Rate x Occupancy Rate

Source: Savills Research & Consultancy, 2009

0102030405060708090

100110

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

RevPAR (US$)

5-star 4-star 3-star

RevPAR across all grades: up 28% q-o-q

II-3. HA NOI HOTEL Q4 2009


Future supply

II-3. HA NOI HOTEL Q4 2009

0

500

1,000

1,500

2,000

2,500

3,000

2010E 2011E 2012E Potential

No. of rooms

Future supply

6%5%

13%

61%

10%

5%

Tu Liem Cau Giay Hoan KiemDong Da Thanh Xuan Hai Ba Trung


Canal Park

Hoa Binh Green

Supply• Primary market: 2,200 units, 14 active projects, + 2% q-o-q• New supply in Q4 2009: 6 projects, 1,100 units• Secondary market: very active particularly in Cau Giay, Tu Liem & Hoang Mai districts

Market performance• Avg. primary prices: +1.5% q-o-q

• Grade A: US$2,600 per sq m • Grade B: US$1,260 per sq m• Grade C: US$635 per sq m

• Secondary prices in most districts increased, by up to 15%

Outlook• Supply to primary market to increase significantly year on year• Mainly in the suburban districts

II-4. HA NOI APARTMENT FOR SALE Q4 2009


Primary market performance


0

200

400

600

800

1,000

1,200

1,400

Grade A Grade B Grade C

Units

0

500

1,000

1,500

2,000

2,500

3,000US$/ sq m

Primary supply No. of apartments sold in Q4 2009 Average primary asking price excl. VAT


Secondary market performance – asking price


-500

1,0001,500

2,0002,500

3,0003,500

4,0004,500

HoanKiem

Ba Dinh Tay Ho DongDa

Hai BaTrung

Tu Liem CauGiay

ThanhXuan

HoangMai

LongBien

US$/ sq m

Q1 2009 Q2 2009 Q3 2009 Q4 2009



Future supply up to 2012 by expected Completion year

0

2,000

4,000

6,000

8,000

10,000

12,000

2010E 2011E 2012E Potential

Unit

0

10

20

30

40

50

60Project

No. of units No. of projects


II-5. HA NOI SERVICED APARTMENT Q4 2009Supply

• 41 serviced apartment buildings; 220,000 sq m, 2,200 units

• No new projects• Smaller unit sizes dominate market share

Market performance• Rent rate: US$26/sq m/month, +3% q-o-q,

-6% y-o-y• Occupancy: 90%, +2% q-o-q, +1% y-o-y

Outlook

• 10 future projects, 2,400 units• Main future supply in west and north west of

Ha Noi

63%

4%10%

23%

Below 100 sq m From 100 - 150 sq mFrom 150 - 200 sq m Over 200 sq m


Market performance by occupancy & rent

II-5. HA NOI SERVICED APARTMENT Q4 2009

0%

20%

40%

60%

80%

100%

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

%

0

5

10

15

20

25

30US$/sq m/mth

Occupancy Average rent rate


II-5. HA NOI SERVICED APARTMENT Q4 2009

Future supply: huge stock by 2011 (more than 1,600 units)

0

400

800

1,200

1,600

2,000

2010E 2011E 2012E 2013E Potential

Units Future supply


II-5. HA NOI SERVICED APART. v.s HOTEL MARKET

Occupancy - Hotel sector is more volatile due to seasonality Rent – Same upward trend in Q4

0

20

40

60

80

100

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

Occupancy (%)

Hotel Serviced Apt.

0

5

10

15

20

25

30

35

40

45

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

US$/ sq m/ month

0

30

60

90

120

150US$/room/night

Serviced Apt. (RHS) Office (RHS) Hotel (LHS)

HCMC Real Estate Market Q4 2009

Photographed by Peter Adams

Supply

• 6 Grade A and 31 Grade B buildings: 475,000 sq m• Growing market: an increase 38% in 2009

Market performance

• Average asking rents dropped slightly.• Grade A: between US$55 – US$60• Grade B: around US$30

Outlook for 2010:• 240,000 sq m across all grades• New supply still concentrated in District 1,

accounting for over 60% of total new supply

III-1. HCMC OFFICE Q4 2009

Source: Savills Research & Consultancy, 2009 HCMC market

Saigon Centre

III-1. HCMC OFFICE Q4 2009

Supply, occupancy and rent (all grades)


Future supply

HCMC market

0

200,000

400,000

600,000

800,000

2010E 2011E Potential

sq m Future supply

0

200,000

400,000

600,000

800,000

1,000,000

Q49

6

Q49

7

Q49

8

Q49

9

Q40

0

Q40

1

Q40

2

Q40

3

Q40

4

Q40

5

Q40

6

Q40

7

Q40

8

Q30

9

Q40

9

sq m

10

15

20

25

30

35

40

45US$/ sq m/ month

Leased Area Vacancy Avg Rent

Supply• About 493,000 sq m for all categories• Remains extremely small vs. region

Market performance• Rents up slightly• Top rent: $220 per sq m for kiosks in Diamond Plaza

Outlook for 2010• 127,000 sq m gross area of new retail• Concentrated mainly in District 1, nearly 50% of total

new supply

III-2. HCMC RETAIL Q4 2009



US$/sq m/month

0

5,000

10,000

15,000

20,000

25,000

30,000

Par

kson

Flem

ingt

on

Par

kson

Hun

g V

uong

Par

kson

Sai

gont

ouris

t

Par

kson

CT

Pla

za

Dia

mon

dP

laza

Zen

Pla

za

sq m

0

50

100

150

200

250

Approx. Area Lower rent Upper rentsq m

-

500

1,000

1,500

2,000

2,500

TheManor

OperaView

NewWorldHotel

Rex HotelSheratonSaigon

CaravelleHotel

US$/sq m/month

0

20

40

60

80

100

120

140

160

Approx. Area Upper rent Lower rent

Performance of Department stores and retail podiums


Total value of retail sales in HCMC

Source: HCMC Statistics Office, 2009


Future supply

HCMC market

0

100,000

200,000

300,000

400,000

500,000


sq mFuture supply

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000VND Billion

Retail sales value GDP growth rate (%)

Supply

• 5-star: 13 hotels, 4,300 rooms• 4-star: 8 hotels, 1,300 rooms• 3-star: 32 hotels, 2,800 rooms• No new supply since Q3 2009

Market performance

• High season, room rates increased sharply• 5-star: US$126 (up 7% q-o-q)• 4-star: US$82 (up 14% q-o-q)

• Top rate: US$243 (Park Hyatt)

Outlook for 2010

• About 500 new rooms • Expecting strong rebound in international and

domestic visitors

III-3. HCMC HOTEL Q4 2009


Performance of 3 to 5 star hotels

III-3. HCMC HOTEL Q4 2009


Future supply of hotel rooms in HCMC (3 to 5-star)

HCMC market

0

400

800

1,200

1,600

2,000


No. of rooms

Future supply

0

20

40

60

80

100

120

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 20090

20

40

60

80

100

120RevPAR

Room rate RevPARRoom Rate ((US$/night)

Supply by Q4 2009• Primary market: 41 active projects, 9,600 units available for sale by developers• 145 projects sold to date• New supply: 11 projects, 5,500 units, mainly in suburban districts

Market performance• Avg. primary prices:

• Grade A: US$2,250 per sq m • Grade B: US$1,880 per sq m• Grade C: US$885 per sq m

• Secondary prices down by 4% mainly due to exchange rate adjustment

Outlook• 2010-2012: approximately 50,000 units of additional supply

III-4. HCMC APARTMENT FOR SALE Q4 2009


Primary market performance up to Q4 2009


Note: Exchange rate changed to 18,500 VND/ US$ in Q4 2009

0

2,000

4,000

6,000

8,000

10,000

12,000

Q1 2009 Q2 2009 Q3 2009 Q4 2009

units

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000US$/ units

Primary supply # of units sold Average Primary Price


0

500

1,000

1,500

2,000

2,500

3,000

Dis

t. 1

Bin

h Th

anh

Phu

Nhu

an

Dis

t. 5

Dis

t. 3

Dis

t. 7

Dis

t. 11

Dis

t. 2

Dis

t. 4

Nha

Be

Bin

h C

hanh

Dis

t. 6

Tan

Bin

h

Tan

Phu

Thu

Duc

Dis

t. 9

Dis

t. 12

Go

Vap

Dis

t. 8

Bin

h Ta

n

US$/ sq mQ1 2009 Q2 2009 Q3 2009 Q4 2009

Secondary market performance up to Q4 2009


Note: Exchange rate changed to 18,500 VND/ US$ in Q4 2009


End-user market

Future supply by expected Completion year


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2010E 2011E 2012E 2013-2016E

Units

05

1015

2025

3035

4045

Projects

# of units# of planned projects


Supply by Q4 2009

• 48 serviced apartment buildings; all grades (2,700 units)

• 2009: only one new Grade A serviced apartment – Kumho Asiana Plaza, 260 units

Market performance• Average rents went up slightly

• Grade A: US$29 (up 5% q-o-q)• Grade B: US$24 (up 1% q-o-q)

Outlook for 2010:

• 480 additional units, increasing by 17% y-o-y• New supply concentrate mainly in districts 3 & 7

III-5. HCMC SERVICED APARTMENT Q4 2009


Supply, occupancy and rent (all grades)

III-5. HCMC SERVICED APARTMENT Q4 2009

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

Units

0

5

10

15

20

25

30US$/ sq m/ month

Leased Vacancy Avg Rent


Vietnam• Mysterious residential demand – Don’t try to time the market• The second home market along central coast will be exciting in 2010 and 2011

• Retail development is exploding in Viet Nam• “Hanoi and HCMC urbanization problems” are being repeated in many other provincial cities (traffic, land prices [CBD vs. Suburban])

• Poor infrastructure in HN and HCMC: limiting the speed of urbanization and hampering the real estate market. Keeps land prices high

• Capital for property developments is an urgent issue for developers because land price too high so no $$ left for construction

• Developers more mature and starting to ask the right questions. Starting to think about “what is the highest and best use” for a certain land parcel rather than copying neighbour

IV. CONCLUSIONS AND FORECAST

•Apt. for sale:• In short term, design and price not meeting end user expectations• High pressure on the Grade A segment due to high prices• The market already adjusting to lower grade segment in the next 2 - 3 years •Office for lease:• Rent rate will continue fluctuating in 2010 with a slight downward trend in CBD• In some “planned projects”, ‘gov’t zoning’ not allowing for market dynamics, developers are struggling

•Retail market• Supermarkets will continue booming in the next 2 - 3 years• Disappearance of traditional markets in the CBD• Modern retail malls will start to dominate

IV. CONCLUSIONS AND FORECASTHA NOI MARKET

IV. CONCLUSIONS AND FORECASTHCMC MARKET•Apartment for sale• In 2010 and forward, clear trend of the market moving to the suburban districts, Grade C booming.

• Oversupply in short to medium term• Must find niche – Don’t follow the herd – unit size, price to end user•Office• 2010 Grade A rents bottoming out at US$50/ sq m per month• Short term new supply not true Grade A• Tenant’s market •Retail• Quality design = success• Shops will get bigger• Retail will emerge in the suburban districts•

•RISK• Inflation risk• Interest rate hikes• Over supply in some sectors

and areas• Under supply in others• Competition getting smarter• Exchange rate and trade

balance concerns

V. RISK AND OPPORTUNITY

•OPPORTUNITY• Cash is King• Foreign funds looking to Asia• Retailers interest very high• Infrastructure improving in the mid

term• Focus towards end users• Favorable demographics and

nature resources• Knowledge is POWER

CONTACTHa Noi Office13th Floor, Pacific Place83B Ly Thuong Kiet, HanoiTel: (04) 3946 1300Fax: (04) 3946 [email protected]

HCMC Office18th Floor, Frideco Tower81 - 85 Ham Nghi street, District 1, HCMCTel: (08) 3823 9205Fax: (08) 3823 [email protected]

Saigon South Office2nd Floor, The Laurence S.Ting Building801 Nguyen Van Linh ParkwayTan Phu Ward, District 7, HCMCTel: (08) 3412 0100Fax: (08) 3412 0199

www.savills.com.vn

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Hn & Hcm Market Presentation Q4 2009 Final En