Ho Chi Minh City Knowledge Report - July 2011

ECONOMIC OVERVIEW

HO CHI MINH CITY

KNOWLEDGE REPORT

July 2011 |

Overview The Governments battle against inflation is putting the greatest pressure on real estate compa-nies, curtailing new develop-ment, as credit has been signifi-cantly tightened. This has re-sulted in a catalyst effect em-phasizing M&A activity in the real estate sector. The industrial and tourism sectors have bene-fitted from the dong devaluation making exports cheaper and Vietnam, as an increasingly at-tractive tourist destination. GDP GDP in the 1st half of 2011 in-creased by 5.57% compared to the same period in 2010, During Q/1 it grew by 5.43% and in Q/2 5.67% respectively. Agriculture, forestry and fishery rose 2.08%, industry and construction by 6.49% and services by 6.12%,

FDI The attracted FDI for the 1st six month of 2011 reached 5.6 bil-lion USD, equaling 56.7% from the same period last year.

www.colliers.com/vietnam Pg 1

5.84%6.44%

7.18% 7.34%

3.14%

4.46%

6.04%6.90%

7.49%

5.72% 5.98% 5.89%

0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%

Q1 Q2 Q3 Q4

Vietnam GDP Growthrate (%) by Quarter2008-2010

2010 2009 2008

6.3 7.820.3

71.7

21.4 18.6 20.0

3.3 4.1 5.011.7 10.0 11.0 11.5

0.0

20.0

40.0

60.0

80.0

2005 2006 2007 2008 2009 2010 2011F

Vietnam FDI period 2001-2010 ($US Billion)(Source: General Office Statistic)

New Registered (US$ Billion) Disbursed (US$ Billion)

Of which, the newly registered capital of 455 licensed projects was USD 4.3 billion (down 49.9% by capital); the additional registered capital of 132 projects licensed from previous years was USD 1.2 billion. Realised FDI in the 1st six months was esti-mated at USD 5.3 billion, down 1.9% from last year. Manufacturing registered USD 3.3 billion, including USD 2.6 billion of newly registered capi-tal and USD 666.5 million of added capital; construction reached USD 474.8 million, in-cluding USD 333.2 million newly registered capital and USD 141.6 million added capital; the water supply, waste manage-ment and treatment gained USD 322.7 million. CPI

Junes CPI rose by 13.29% from the end of 2010 and by 20.82% if compared to same period in 2010. The average CPI for the first six month was 16.03%, al-though the increase in June was

ECONOMIC OVERVIEW Exports June’s export turnover was estimated at USD 7.8 billion, up 7.8% from May 2011 and 23.4% from the same period in 2010. The export turnovers for the 1st six months attained USD 42.3 bil-lion, up 30.3% from same period in 2010, of which the domestic economic sector gained USD 19.4 billion, up 29.4%; the FDI sector (including crude oil) USD 22.9 billion, up 31.1%. If gold re-exportation was excluded, the six months export turnover rose 33.2% compared to the same period in 2010. The increase in export turnovers was partly due to the increase in the vol-ume of certain goods and also in-crease of commodity prices, e.g. pep-per rose 72.2%; rubber 62%; coffee 57.3%; cashew nut 42.3%; crude oil 41%; petrol 38%; cassava and cas-sava products 33%; steel 19%. If in-flationary factors were excluded, the 1st six months export turnovers rose by 14.7%. The United States was still the largest market for Vietnamese ex-ports, comprising USD 7.6 billion, up 21.3% from last year followed by the EU with USD 7.4 billion, up 49.1%, ASEAN with USD 6.1 billion, up 16.6%, Japan with USD 4.6 billion, up 32.4% and China with USD 4.5 billion, up 56.6%. Trade Balance June’s trade deficit reached USD 400 million, equaling 5.1% of export turn-over, down from previous months, mainly due to re-exportation of gold. If gold was excluded, trade deficit was

A mere 1.09%, the lowest increase this year, since the Government intro-duced credit tightening measures to control inflationary pressures. Retail sales of consumer goods and services As estimated, total retailed sales of consumer goods and services in six months rose 22.6% from the same pe-riod in 2010, if inflationary factors were excluded, the growth was 5.7%. Of the total, trade increased by 23.2%; lodg-ing, eating and drinking by 19.6%; ser-vice by 22.3% and tourism by 19.1%. Imports June’s import turnover was estimated reaching USD 8.2 billion, down 5.2% from May 2011, however, up 16% from same period last year. Import turnover reached USD 49 billion, up 25.8% from last year, of which the domestic sector reached USD 27.6 billion, up 22.9%; and the FDI sector, USD 21.4 billion, up 29.7%. The price increase of some imported items increased, of which, cotton rose 106.8%, petrol 43.8%, textile fibre 38.5%, wheat 40.6%, gas 21.6% and plastics 18.8%. If the inflationary fac-tors were excluded, the six months import turnovers rose 15.1% The import structure also had a change from last year, of which, pro-portion of consumer goods rose from 7.2% to 8.2%; while proportion of means of production slowed down from 92.2% to 91.3%.


“Economy is the method by which we prepare today to afford the improvements of tomorrow”

Calvin Coolidge - US President, 1872-1933

“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.”

Sam Ewing - Writer

“Economics is a subject that does not greatly re-spect one's wishes”

Nikita Krushchev - First secretary of the Communist Party of the Soviet Union, 1894-1971

KNOWLEDGE REPORT | Q2 2011 | ECONOMICS | HCMC

ECONOMIC OVERVIEW products 80.4%; sugar 49.8%; constructional inflammable bricks, tiles and porcelains 45.6%; non-alcohol drinks 29.9%; inflammable porcelains (excluding those used in construction) 27.2%. Products with slowed down indexes were fibre and fabric 10.3%; steel 9.8%; animal feed 8.8%; beer 6.2%; pulp, paper and pa-per board 4.5% and pharmaceutical products 0.6%. Tourist Arrivals International visitors to Vietnam in the 1st six months were estimated at 2,965,800, up 18.1% against the same period last year. Of which, visitors coming for tourist purposes were 1,773,400, up 11.2%; for business pur-poses 493,300, down 1.7%; for visit-ing relatives 512,900, up 77.6%. Visi-tors to Vietnam from China increased by 51.5%; Republic of Korea 3.7%; United States 3.4%; Japan 11.7%; Cambodia 77.4%; Taiwan 8%; Aus-tralia 6.2%; Malaysia 16.7%; France 8.5%; and from Singapore 7.8%.

estimated at USD 1 billion. The trade deficit for the 1st six months was esti-mated at USD 6.65 billion, equaling 15.7% of export turnover. If gold was excluded, the figure was USD 7.5 bil-lion, equaling 18.1% of export turn-over. Industrial Production Index (IPI) June’s industrial production index (IPI), increased by 4.6% from May 2011 and 12.7% from the same period in 2010. The six months, IPI of the whole sector rose 9.7% (higher than the 8% in the first half of 2010), of which mining and quarrying grew by 2.8%; manufacturing 12.7% and power, gas and water 10.3%. Industrial products with higher IPI from the same period last year were sugar 43.5%; prefabricated metal products 38.1%; inflammable porce-lains (excluding those used in con-struction) 35.3%; non-alcohol drinks 35%; constructional inflammable bricks, tiles and porcelains 24.2%; raw flour 23.8%; wrinkling paper and wrapping 18.3%; fertilizer and nitric compound 17%; steel 16.4%; clothes (excluding leather clothes) 16.1%; beer 15.7%; butter and milk 15.1%; fibre and fabric 15% and cement 14.7%. The consumption indexes for processed and manufactured products in the five first months of this year increased by 17.5% from the same period in 2010. Products with higher indexes were prefabricated metal


“Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like’

Will Smith - American Au-thor, Actor, Singer and Pro-ducer -1968 to present

“The economy depends

about as much on econo-

mists as the weather does

on weather forecasters.”

Anonymous

“Ever wonder about those people who spend $2 apiece on those little bot-tles of Evian water? Try spelling Evian backward.

George Carlin - May 12, 1937 - June 22, 2008 - American stand-up come-dian, social critic, actor and author,

KNOWLEDGE REPORT | Q2 2011 | ECONOMICS | HCMC

P2 | COLLIERS INTERNATIONAL

KNOWLEDGE REPORT | Q2 2011 | INFRASTRUCTURE | HCMC

INFRASTRUCTURE DEVELOPMENTS

Developers to Pay for Infrastructure Companies involved in housing projects in HCMC’s District 2 look set to pay a new fee when building high-rises as district au-thorities are mulling over a plan to make a fund for infrastructure development. The move comes as the district has seen numerous townhouse and villa projects being changed to accommodate high-rise build-ings. This has resulted in pressure being put on the infrastructure system as the density of the population has increased. To deal with the problem, the People’s Committee of District 2 are considering a pilot scheme which requires property devel-opers to be financially responsi-ble for infrastructure develop-ment.

Saigon Bridge under repair and a adjacent new bridge to be built The Saigon bridge after 50 years of use is undergoing a significant overhaul after a hole, cracks, damaged concrete and rusted girder and bolts where found after an inspection, the bridge will be up-graded and the surface area will be re-placed and is expected to be completed in 6 months at a estimated cost of USD$3.2 million and undertaken by Freyssinet VN Co Ltd. The City’s People’s Committee have agreed to build a second bridge adjacent to the existing bridge, currently three local companies have tendered for the contract, although no final decision has been made and no contractor has been appointed.

Streets in district 1 & 3 to go under-ground The People’s Committee have approved in principle a plan to inter electricity and communication cables underground. Approximately 2,240 km of lines will disappear from the skyline in 337 street at a cost of VND10 trillion (US$476 million) in two phases. The first phase will involve streets in District 1 and 3, including Ton Duc Thang, Hai Ba Trung, Le Duan, Dong Khoi and around Ben Thanh market and September 23rd Park. To avoid inconvenience the work will be undertaken during the night and the HCMC Power Company will coordinate with telecom and cable TV companies to ensure streets are not dug up several times.


KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL | SKER


Ascendas Protrade Singapore Tech Park - Bing Duong Province

Ascendas, from Singapore, develop, manage and market IT & Science parks, industrial parks, hi-tech facilities, office and retail space. Their flag-ship developments include the Singapore Sci-ence Park, International Tech Park in Bangalore, India and Ascendas-Xinsu Suzhou in China have teamed up with the Protrade Corporation, a state owned company, whose core business includes F&B, healthcare, leisure and entertainment, real estate, wood processing, furniture and textile and garments to develop a new 500 ha IP in Binh Duong province.

Located approximately 35 km from Tan Son Nhat Airport and 40km from HCMC CBD will also benefit from an on site port and customs clear-ance facility and a on site power plant. The 1st phase comprising approximately 50 ha is expected to come on line during Q1/2012 and will comprise of a mixture of prepared land parcels, build to suit and ready built facilities. Rental rates will average approximately $40-$45 per sqm on the remaining 47 years of the lease term, however, the JV will also adopt a more flexible approach to those companies with ready built facilities on a 3-5 year lease with rates aver-aging approximately $4 per sqm. The company plan to provide dormitory housing for companies within the park which can accom-modate up to 5,000 workers and provide a one stop shop for incoming tenants for licensing and administrative issues.

DNN -Tan Phu Industrial Park - Long An Province

DNN is an industrial group whose core business is the manufacturing spare parts for auto and motor-cycle assembly and high precision moulds are in the process of developing the DNN - Tan Phu IP in Long An province. Located approximately 35km and 40km from Tan Son Nhat and HCMC CBD, respectively and con-veniently positioned for river access to the Ben Luc, Long An and Hiep Phuoc ports and the Ho Chi Minh and Trans Asia Highways, the national roads N1 and N2 to the west and access to national road 1A via road 825.

The IP will cover an area of 262 ha and will be de-veloped in two phases, the 1st phase will comprise 105 ha with land parcels ranging from 0.5 ha to 2 ha or divisions thereof. The IP wants to attract a variety of company’s in-volved in the design and manufacture of precision moulds, machines and equipment, motorcycle and car components, furniture, ceramics, paper, con-struction materials, food, garments, electronics manufacturing, agriculture and fishery products amongst others, like with many other IP’s, they are averse to pollutant industries. The company has specifically set aside a portion of the IP to focus on the Biotech sector. The rental rate has yet to be determined, however, anticipated to average approximately $45 per sqm and incentives will be offered on CI, VAT and Ex-port and Import tax in accordance with Government guidelines and terms and conditions of the IP.

New Industrial Parks in the SKER

KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL | SKER


INDUSTRIAL INVESTMENT TO IN-CREASE

Industrial parks and export processing zones in HCM City are expecting investment to quadruple in the first half of the year, according to the HCM City Export Processing and Industrial Zones Au-thority (HEPZA).

HEPZA’s forecast of US$1.352 billion while the comparable figure for last year was $319.5 mil-lion, comprising nine new foreign-invested pro-jects worth $1.023 billion and fresh capital infu-sion into 14 existing projects.

In the first five months of the year, the city's 14 IPs and EPZs attracted investment of $1.3 billion.

Approximately 70% of the 1,763 ha of land in IPs and EPZs is occupied with more than 256,000 Vietnamese and 2,180 foreign workers em-ployed.

FDI, which last year was worth a mere $94 mil-lion in the first half, is expected to surge to $1.18 billion in the same period this year.

Firms from Singapore, South Korea, Japan, USA, Netherlands and Malaysia are among those so far this year with investment in high technol-ogy, packaging, plastic, engineering and other areas.

In terms of cumulative investment, Singapore leads with $1.08 billion in IPs and EPZs, followed by Japan, $833 million, Taiwan, $468 million and South Korea, $179 million.

Foreign Direct Investment and domestic enterprises in industrial parks (IP’s) and export processing zones (EPZ) will need approximately 100,000 work-ers to meet the demand the demand of existing and new enterprises from now until 2015, according to the HCMC Export Processing and Industrial Zones Authority (HEPZA) with over 50% of recruitment coming from new projects and an estimated 60% of the total workforce will be female workers..

The sectors requiring additional staff will be in the pharmaceutical, electronics, machinery and infor-mation technology, however finding skilled workers remains a major problem and will account for ap-proximately 38% of the total demand.

It is considered that the number of new graduates are significant enough to meet the demand, al-though many employers are having to provide po-tential employees with short term training courses to ensure that they are capable, in many cases they need training to adapt to the working environment, understand foreign languages and gain practical knowledge.

Many foreign enterprises send more than 6,000 workers abroad to their parent company in order to reduce the number of foreign specialist, Japan leads the way followed by South Korea, Singapore, Taiwan and China.

Land & Warehouse Rental Rates in the SKER

WORKER REQUIRED - PLEASE APPLY

Location

Land Rental Price (US$/sqm/leasehold/35-50

years Excl. VAT and other fees

Warehouse Rental Price

(US$/sqm/month) Excl. VAT and other

fees HCMC Established EPZs&IPs: 150-300

New IPs: 60-150

2.5-4.5 Dong Nai 40-60 except AMATA 90-100

1.5-2 Binh Duong

Close to HCMC: 100-150 Elsewhere 40-60

1.5-3

Long An 30-60

1.5-2.5

Ba Ria-Vung Tau

35-70

1.5-2

Exchange Rate: VND 20,600/1USD Source: Colliers International

RESIDENTIAL SECTOR The residential market has been hit particularly hard with the Governments plan on curbing infla-tion, along with the devaluation of the dong and high interest rates. The Governments directive to the banks is to severely limit the amount of loans to real estate developers, which has led to devel-opments being stalled or having to find alterna-tive sources for capital investment.

M&A With the stock market still in the doldrums, issu-ing of shares to raise capital remains limited, however, there are indications of M&A activity with acquisitions by a subsidiary of Capitaland, Singapore for 70% and 65% stakes in Khang Dien Saigon Real Estate JSC and Quoc Cuong Saigon for apartment developments in D2 and Binh Chanh district, respectively.

Market view A recent survey by Colliers International of D7 and surrounding districts concluded that develop-ers with a track record still manage to find clien-tele, high to mid end developments under con-struction with no previous track record struggle to attract buyers, however, affordable developments priced below $1,000 per sqm are still able to at-tract buyers with 2 bedroom units the most popu-lar. However, in some of these developments the quality of finishing and layout design remain questionable and may well hinder the sales take up.

Flexible payments As we highlighted at the beginning of 2011, many developments, in an increasingly competitive market will have to adopt incentives and creative flexible payment plans. Novaland have intro-duced a scheme, whereas buyers will place a 20% deposit pertaining to the value of the apart-ment, pay an additional 60% on delivery, reside for a period of 2 years, thereafter pay the remain-ing 20% or return the apartment and retrieve their

deposit with interest. Another developer, Phat Dat Corporation, is offering buyers the opportunity to acquire an apartment with payments over 48 in-stalments. A deposit of 10% of the value is initially required, thereafter, the remaining payments are based on 1.3% per instalment.

There have been a number of launches an-nounced both for condominium and villa projects with reports of all units registered, this does not mean sold, until there is greater transparency in the market on actual sales, clever sound bites will not restore buyers confidence in a challenging market, incentives and payment plans may.

Ban on unfinished houses The Ministry of Construction are considering whether to bring in a law to clampdown on devel-opers selling unfinished houses. The current law states developers can issue a sales contract once the foundations are complete, however, the land plot may lay idle for several years thereafter, con-sidered to be a waste of necessary land re-sources.

It would appear that this change would be benefi-cial to all an sundry, however, a clear indication as to what comprises a completed house, as some houses are sold as shell units with the occupier completing the internal fit out would have to be clearly defined, also, inspecting each house would be timely and costly, perhaps, when the procedure of issuance of the red book is underway a con-struction completion certificate is provided signed by the ministry, the developer and the purchaser.

LACK OF HOUSING IN IP’s AND EPZ’s

Only five IPs and EPZs have housing for workers and they can accommodate only 6,000 people. By the end of this year nine more housing projects are expected to be completed with a capacity to house 12,000 workers. In the future it is likely that Investors in new industrial parks would be re-quired to set aside enough land for social infra-structure and housing.


KNOWLEDGE REPORT | Q2 2011 | RESIDENTIAL | HCMC

KNOWLEDGE REPORT | Q2 2011 | HOTELS | HCMC

HOTEL SECTOR Occupancy Rate and Average Room Rates for 3-4-5 star Hotels in HCMC Q2/2011 In Q2/2011, the overall occupancy rate of 3-5 star hotels is approximately 63.33% on average. Specifically, 5-star hotels have the highest occu-pancy with 67%, 4-star with 66% and 3-star with 57%. The average room rate in June 2011 for 5-star hotels is approximately $329 per person per night. The average for 4-star hotels is $151 and 3-star hotels is $74, respectively.

(Source: Colliers International)

In comparison to May 2011, there is a minimal

decrease in average rental rates of 5-star hotels,

approximately 3% and for 3-star hotels approxi-

mately 2%; however, the average rental rate of

4-star hotels has increased about 10%. The oc-

cupancy rate for of 3-5 star hotels also de-

creased from 66.65% in May 2011 to 63.33%; in

particular, 5-star hotels had the most significant

decrease, from 77% to 67%, bearing in mind we

are in the midst of the low season.

Marriott Hotels expanding across Vietnam

International hotel chain operator Marriot Interna-

tional, operators of the Renaissance Riverside Hotel

Saigon, are seeing the potential of Vietnam tourism

market with the growing numbers of tourist arrivals

and have embarked on an expansion plan across

Vietnam with a focus on beach locations and major

cities.

Currently projects under construction include the

JW Marriott Hotel in Hanoi, comprising 450 rooms

with completion in 2013, the Courtyard by Marriott in

Ham Tan, south of Phan Tiet, comprising 200

rooms with completion in 2014 and the Nha Trang

Marriott Hotel, comprising 250 rooms with comple-

tion in 2014.

Other projects in the design stage are the Marriott

Resort & Spa in Hoi An, comprising 250 rooms with

completion scheduled for 2015, the JW Marriott

Vinh Hoi Bay Resort & Spa , comprising 320 rooms,

the Vinh Hoi Bay - A Ritz-Carlton Reserve, 100 vil-

las, both in Quy Nhon and the JW Marriott Da Nang

Resort & Spa, comprising 271 rooms, with all three

projects scheduled for completion in 2016. Marriott

International are eager to spread their brands

across Vietnam and expect to announce at least an-

other two hotels by the end of the year.


5 Star 4 Star 3 StarOccupancy Rate 67% 66% 57%Average Room Rate $329 $151 $74

$0

$50

$100

$150

$200

$250

$300

$350

52%54%56%58%60%62%64%66%68%

Ro

om

Rat

e

Occ

up

ancy

Rat

e

Hotels

Hotel Market Performace, HCMC, Q2 2011

Occupancy RateAverage Room Rate

KNOWLEDGE REPORT | Q2 2011 | RETAIL | HCMC

RETAIL SECTOR

Current Supply

Currently, there are 10 department stores, 20

shopping centre’s, 11 retail podiums, 58 super-

markets and 3 wholesale markets in the city with

a total area of approximately 625,450 square me-

tres, an increase of 27% year on year, of which

58% percent of the increased growth rate came

from the CBD and 24% from suburban areas.



Average rental rate Q2/2011

Based on the chart below, the average rental rate of

prime street front retail is approximately $90 per

sqm per month, retail podiums $112.5, department

stores $102.5 and shopping centre’s $52.5, respec-

tively.


In comparison to Q1/2011, there is no change in

rents for prime street front retail and retail podiums;


however, there is an increase in average rental

rates for department stores, approximately 26% and

a decrease in average rental rates for shopping

centre’s, approximately 35%.

$65$80

$25 $15

$115

$145$180

$90

$0

$50

$100

$150

$200

$250

Prime Street Front Retail

Retail Podiums Department Stores

Shopping Centres

HCM Retail Rents by Type-Q2 2011(Source: Colliers International Vietnam)

Min of Asking Rents (US$/sqm, excluding VAT, SC)

Max of Asking Rents (US$/sqm, excluding VAT, SC)

KNOWLEDGE REPORT | Q2 2011 | OFFICE | HCMC

1 million sqm when many multiple projects go into

operation, such as M&C Tower, Vietcombank and

SJC Tower, if the completed as scheduled. Over-

all, the office market rental rates have continued

to decline, however, buildings of good quality, pro-

fessional management attract the best tenants in

this competitive market.


Rental Office Rate by Grade in Q2/2011

Based on the chart above, which indicates the

HCMC office rental rate of grade A, grade B and

grade C in Q2/2011. The rental range for grade A

offices is $34 USD to $41 USD per sqm, $14 USD

to $35 USD for grade B offices and for grade C

offices $10 USD to $22 USD.

Furthermore, this chart also indicates the total cur-

rent supply of grade A,B and C offices. It is calcu-

lated that the total current supply of grade A build-

ing is 141,246 sqm, 420,890 sqm for grade B

buildings and 416,101 for grade C. Current occu-

pancy rate in grade A is 88.24% and for grade B is

90.8% with grade C approximately 78%.

OFFICE SECTOR Overview

In Q2/2011, the average rental rate for office

leasing continued to decrease compared to

Q1/2011, due to the large supply of office space

available. According to Colliers research, there is

approximately 80,000 sqm Grade A space avail-

able for leasing. In 2010, the total supply of office

for lease was approximately 134,000 sqm, how-

ever, in Q2/2011, this number increased to

214,000 sqm. Average Occupancy and Rental Rates across all grades


Office leasing market is currently is a very com-

petitive, not only in the grade A sector but also in

grade B. It is expected that in 2011-2013, the

new supply will increase rapidly, within 4 years,

the supply will go up to 2.7 million sqm; from

which the total supply of Grade A is approxi-

mately 720,000 sqm. In 2013, there will be the

largest supply coming on line with a total of over


34

14 10

41

35

22

0 $10 $20 $30 $40 $50 $60 $70 $80 $

-50,000

100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000

Grade A Grade B Grade C

Sqm(NLA) End Price Start Price

HCMC Office Rental Price by Grade, as at Q2 2011 (US$)(Source: Colliers International Vietnam)

KNOWLEDGE REPORT | Q2 2011 | SERVICED APARTMENTS | HCMC


SERVICED APARTMENT SECTOR

Serviced Apartment Supply:

There are currently a total of 3,076 units of ser-

viced apartment in HCMC, of which, Grade A com-

prises 1,048 units, Grade B 1,147 units and Grade

C 881 units. The current supply comprises 9

Grade A apartments, 14 Grade B apartments and

34 Grade C apartments.


Occupancy and Rental Rate Q2/2011

According to the adjacent chart, which indicates

the occupancy and rental rates of serviced apart-

ment in Q2/2011. Grade A has the highest occu-

pancy rate of 93% as well as the average rental

rate for serviced apartment, approximately $38.79

per sqm, grade C has the lowest occupancy rate

with 73% and grade B with the rate of 85%.

In comparison with Q1/2011, there is a decrease in

occupancy rate for Grade A and Grade C; espe-

cially, Grade C occupancy rate has went down

from 88% in Q1/2011 to 73% at the beginning of

Q2/2011.


Market News

A local property developer, Saigon City Residence

Co, Ltd, plans to develop a chain of service apart-

ment projects, the first completed project, the Sai-

gon City Residence building at 8A/3D2 Thai Van

Lung Street in District 1. The project cost 72 billion

VND and has 10 floors and a basement compris-

ing 17 serviced apartment of one and two bed-

rooms. More than 80% of apartments of the build-

ing have been leased after only a week since its

launch with rental rates for the remaining 1 bed

units of 43 sqm and 47 sqm at $1,800 to $2,200

per month for this Grade C development.

Market Outlook

The current economic climate may have a signifi-

cant impact on the serviced apartment market as

many foreign operated enterprise (FOE), due to

inflation and uncertainty have either reduce the

number of expatriate employees or are not engag-

ing new replacements until the situation improves.

34%

37%

29%

Supply By Units Across All Grades Up to Q2 2011

Grade A Grade B Grade C

Grade A Grade B Grade COccupancy Rate 93.0% 85.0% 73%Average Rent $38.79 $25.58 $16.9

$0.00$5.00$10.00$15.00$20.00$25.00$30.00$35.00$40.00$45.00

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

100.0%

Serviced Apartment Occupancy & Rental Rates Q2/2011

Occupancy RateAverage Rent

No. of Units Rent/ unit/ month

KNOWLEDGE REPORT | Q2 2011 | CONSTRUCTION COSTS | VIETNAM


Construction cost comparison from Turner and Townsend from mid 2010 to Q2 2011 de-noted in US dollars. Highlights: • During Q/2, from April to

June the Dong has deval-ued further against the dol-lar to around 20,650 VND/USD,

• Rate of main material and

labour costs have not changed.

• High interest rates have

dampened demand for pro-jects.

• The nett effect is little

change in construction prices this quarter, but still 8% up on the year to end June 2011.

Turner & Townsend is a global professional services organisa-tion with 2,400 staff in 59 offices world-wide, advising business which invest in, own and operate assets. In Vietnam we have two offices, in Hanoi and Ho Chi Minh city and we are supported by a regional pan Asia network of nine offices and 250 staff, from whom we can draw on col-lective resources and expertise.

Residential Mid 2010 Q1 2011 Q2 2011 (USD)

Individual detached house medium standard 589 600 600

Individual detached house prestige 638 650 650

Townhouses medium standard 491 500 500

Apartments private medium density 638 650 650

Apartments high rise 736 750 750

Aged care/affordable units 491 500 500

Commercial

Office- business park 589 600 600

CBD office- up to 20 floor medium 736 750 750

CBD office- prestige 834 840 840

Warehouse

Warehouse/ factory units- basic 393 400 400

Large warehouse distribution center 393 400 400

High-tech factory/laboratory 687 700 700

Retail

Large shopping centre including mall 638 650 650

Neighbourhood including supermarket 491 500 500

Prestige car showroom 540 550 550

Hotels

Three star travelers 1,178 1,200 1,200

Five star luxury 1,570 1,580 1,580

Resort style 883 900 900

Hospitals

Day centre 589 620 620

Regional hospital 1,227 1,230 1,230

General hospital 1,227 1,230 1,230

Schools

Primary and secondary 491 500 500

University 589 600 600

Car Parks

Multi- storey above ground 589 600 600

Multi- storey below ground 638 700 700 Airport

Airport terminal 2,159 2,160 2,160

KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL LISTING | SKER


1. Linh Trung 1 EPZ, HCMC

Factory 1: 22,760 sqm, GFA 36,905 sqm Factory 2: 10,960 sqm, GFA 33,750 sqm

2. Tan Uyen District, Binh Duong

Land area: 34,438 sqm Factory: 4,800 sqm

Office: 150 sqm

3. Linh Trung III EPZ & IP, Tay Ninh

Land area: 10,836 sqm 3 factories with total GFA: 6,360 sqm Office & Show-room: 996.6 sqm

INDUSTRIAL PROPERTY FOR SALE 4. Dong Xuyen IP, Vung Tau

Land area:

23,325 sqm Shed: 2,199

sqm

Warehouse: 1,554 sqm

5. Viet Huong 2 IP, Binh Duong

Land area: 102,004 sqm

6. Nhon Trach I IP, Dong Nai

Land area: 19,977 sqm

Factory: 5,471 sqm

Office:1,008 sqm

For further Information on the above or other properties contact: Naim Khan - [email protected], or for factories, land or warehouses you have for sale or lease, contact: Ms. Thuy Phan - [email protected].

512 offices in 61 coun-tries on 6 continents United States : 125 Canada : 38 Latin America : 18 Asia Pacific : 182 EMEA : 117

• $1.6 billion in annual revenue • 978.6 million square feet under

management

This document/email has been prepared by Colliers International for advertising

KNOWLEDGE REPORT | Q2 2011 | HCMC

Vietnam HCMC Bitexco Building, 7th Fl 19-25 Nguyen Hue, District 1, HCMC, VN Tel: + 84 8 3821 8777 Fax: + 84 8 3827 5667 Email: [email protected] Hanoi Capital Tower Building, 10th Fl 109 Tran Hung Dao St, Hoan Kiem District, Hanoi, VN Tel: 84 4 3941 3277 Fax: 84 4 3941 3278 Email: [email protected]

NAIM KHAN-TURK Director - Research Bitexco Building, 7th Fl 19-25 Nguyen Hue, District 1, HCMC, VN TEL + 84 8 3821 8777 FAX + 84 8 3827 5667 [email protected]

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