Nov 2013 Colliers HCMC CBD Market Report

NOVEMBER 2013 | HCMC CENTRAL BUSINESS DISTRICT

CBD MARKET REpoRTHO CHI MINH CITY

www.colliers.com/vietnam

TABLE oF CoNTENTSHCMC CBD MARKET REpoRT | NoVEMBER 2013

Market Highlights

oFFICE MARKET

• Market overview

• Market performance

• outlook

• Table

RETAIL MARKET

• Market overview


• outlook

• Table

HoTEL MARKET

• Market overview


• outlook

• Table

SERVICED ApARTMENT


• outlook

• Table

CoNTACTS

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According to the report from Statistical office, foreign direct

investment (FDI) in Ho Chi Minh City (HCMC) in the first 10

months of this year increased by 24.8% compared to the same

period last year.

In the year to date, city authorities licensed 363 FDI projects

with a combined capital of 847.4 million USD, a rise of 12.4%

in the number of projects and 69.6% in capital. Furthermore,

they also allowed 108 existing projects to increase their capital

by 639.3 million USD.

So far, FDI can be considered a bright spot in the economic

picture of 2013. However, there is no room for complacency

as Vietnam faces fierce competition from several neighboring

countries; notably Myanmar, which is emerging as a new

attractive destination for investors. Meanwhile, Vietnam’s

competitive advantages, such as cheap labor and resources,

are wearing thin.

In this context, it is urgent for HCMC to develop new competitive

advantages; specifically, high quality human resources,

modern infrastructure and an effective legal system. These

advantages cannot be gained overnight, but require an effort,

money and a long-term process.

But if HCMC hesitates and fails to improve its investment

environment, it will miss opportunities to attract new FDI

flows. only when the investment climate becomes more

competitive can HCMC shift from attracting as much FDI as

possible to selecting high-tech, advanced and environmentally

friendly projects.

p.1 | Colliers International

HCMC CBD MARKET REpoRTNoVEMBER 2013

Economic Overview

Source: Statistical Office in HCMC, Colliers International

FDI IN HCMC BY SECToRS, NoVEMBER 2013

FDI IN HCMC BY MoNTH, NoVEMBER 2013



FDI BY CoUNTRY HCMC NoVEMBER 2013

HCMC CBD MARKET REpoRT

NOVEMBER 2013 | COMMERCIAL OFFICE MARKET


The commercial office market in HCMC Central Business District (CBD) over the past few months has seen a slight increase in rental asking rates and occupancy in both Grade A and Grade B’s buildings.

The average asking rent of Grade A properties increased 2% m-o-m to US$38.4/ sq m, while occupancy rates increased by 3.1% from 86.9% in previous month to 89.6% in october.

Grade B’s average asking rents also increased slightly to US$22.1/ sq m and average occupancy rates seen in Grade B are around 93.9%

MAJoR TRANSACTIoNS

BUILDING LEASE (L) / SALE (S) TENANT / pURCHASER AREA (sq m)

SG Airport plaza L pepsi Co 1,400Times Square Building L Sumitomo Bank Corp 1,800Empress Tower L Budweiser 600

OutlookWith limited commercial space available in the future and

a slight increase in demand growing from tenants due to

economic recovery and healthy FDI flows, it is expected that

landlords in the CBD will start to push back on rental offerings

and predict to increase rental prices offered and decrease

incentives.

New projects will enter the market in 2014 creating some

downward pressure on Grade B asking rental prices but it

is thought that premier Grade A developments will not be

significantly influenced by this.

Market Performance

MARKET pERFoRMANCE BY GRADE

Source: Colliers International

GRADE A pERFoRMANCE


VIETCoMBANK ToWER

Source: Public Domain

VIETCoMBANK ToWER

Source: Public Domain






No Name Address NLA (sq m)

Service Charges

(*)

occupancy rate

NFA asking rent (*)

1 Saigon Tower 29 Le Duan 13,950 6.0 99% 37.02 Diamond plaza 34 Le Duan 15,936 8.0 100% 40.03 Kumho Asiana plaza 39 Le Duan 26,000 8.0 98% 51.34 Saigon Centre 65 Le Loi 11,650 6.0 92% 40.05 Sunwah Tower 115 Nguyen Hue 20,800 6.0 98% 42.56 The Metropolitan 235 Dong Khoi 15,200 6.0 99% 41.37 Bitexco Financial Tower 45 Ngo Duc Ke 37,710 8.0 85% 32.08 president place 93 Nguyen Du 8,330 6.0 92% 33.09 Times Square 22-36 Nguyen Hue 9,000 7.0 60% 50.010 Lim Tower 9-11 Ton Duc Thang 29,265 6.0 75% 28.0

Grade A 187,841 6.9 89% 38.4

1 petro Tower 1-5 Le Duan 13,304 5.0 97% 31.02 Central plaza 17 Le Duan 6,094 5.0 100% 26.03 opera View 161-167 Dong Khoi 3,100 7.0 87% 26.04 Bao Viet Tower 233 Dong Khoi 10,650 6.0 100% 21.05 Saigon Riverside office 2A-4A Ton Duc Thang 10,000 5.0 98% 20.06 The Landmark 5B Ton Duc Thang 8,000 6.0 100% 16.07 Green power Tower 35 Ton Duc Thang 15,600 6.0 97% 22.08 Saigon Trade Center 37 Ton Duc Thang 31,416 6.0 98% 21.09 Gemadept Tower 5 Le Thanh Ton 14,000 6.5 98% 23.010 Vincom Center 68-70-72 Le Thanh Ton 56,600 5.0 75% 24.011 oSIC 8 Nguyen Hue 6,500 6.0 96% 20.012 Bitexco office Building 19-25 Nguyen Hue 6,000 5.5 100% 22.013 Harbour View Tower 35 Nguyen Hue 8,000 6.0 100% 18.014 MeLinh point Tower 02 Ngo Duc Ke 17,600 6.5 99% 24.015 Fideco Tower 81-85 Ham Nghi 15,000 6.0 100% 20.016 Havana Tower 132 Ham Nghi 7,326 6.0 100% 21.017 Somerset Chancellor Court 21-23 Nguyen Thi Minh Khai 3,200 5.0 97% 21.018 Yoco Building 41 Nguyen Thi Minh Khai 5,000 5.0 94% 16.019 Sailing Tower 51 Nguyen Thi Minh Khai 16,910 5.0 99% 25.020 Saigon Royal 91 pasteur 5,340 4.0 100% 19.021 TMS 172 Hai Ba Trung 4,000 4.0 97% 23.022 Indochina park Tower 4Bis Nguyen Dinh Chieu 2,145 4.0 80% 11.023 City Light 45 Vo Thi Sau 10,000 5.0 96% 10.024 A&B Tower 76 Le Lai 17,120 6.0 99% 28.025 Zen plaza 54-56 Nguyen Trai 11,037 6.0 97% 20.026 Maritime Bank Tower 192 Nguyen Cong Tru 19.596 5.0 98% 19.027 Royal Center 235 Nguyen Van Cu 14,320 5.0 100% 19.028 The Landcaster 22Bis Le Thanh Ton 7,000 5.0 100% 24.029 Empress Tower 138 Hai Ba Trung 19,538 5.0 85% 25.0

Grade B 364,396 5.5 93% 22.1

* US$/ sq m/ month

Office Market Overview


NOVEMBER 2013 | RETAIL MARKET



The socio-economic situation is considered to be fairly stable in

the CBD with marginal growth month on month in the Consumer

price Index (CpI) and Retail Sales Revenue.

While the Government continues to try to combat against

inflation and stabilize the macro-economy, Ho Chi Minh City’s

consumer price index (CpI) in october increased by 0.17%

against the previous month and increased by 4.89% year on year.

According to the municipal Statistic office, this increase

was attributable to price increases in seven out of

a total eleven categories monitored by the statistical

office to monitor public spending such as food and

beverage; oil and gas; housing costs etc. over this period.

Last month saw the highest price increase Month on Month of

0.41% in the food and beverage services category. This increase

was attributable to a 0.85% increase in the cost of supply in

meat and vegetables due to transportation difficulties due to

adverse weather conditions.

The prices of transportation, telecommunication, culture-

entertainment and other commodities & services also declines.

Ho Chi Minh City was estimated to have generated VND 52.26

trillion worth of retail sales and service revenues in october, up

12.5% from last year’s figure.

This year’s total figure to date is VND 493.23 trillion, up 12.2%

y-o-y.


Retail Market Overview

Lucky plaza on Nguyen Hue street in District 1, re-opened in

october after a re-fit and period of closure.

Retailers are still suffering the pinch between high rentals

from the landlords and limits in consumer spreading patterns.

However, in some cases in the CBD, namely the bigger Retail

centers, where tenants are not getting the footfall required and

rental payments have been delayed, the landlord takes notice

and offers reduction in rentals rather than declines in outlets.

This can be seen in the rents of retail podiums and shopping

centres generally in CBD which continue to decrease by –1.6%

and -4.5% respectively. m-o-m. occupancy rates are also in

decline by –1.5% and 8% m-o-m, standing at 85% and 82%

respectively.

Market Performance

CpI RETAIL & SERVICES REVENUE


RETAIL SALE REVENUE GRoWTH RATE


RETAIL SALES REVENUE BY SECToRS







Despite a slight decrease in rent in some of the CBD’s retail

podiums, the demand for prime retail space generally remains

high due to a continued push from big name brands looking for

key central locations. Companies such as Givral; Starbucks;

Burger King and other international brands still look to increase

market share over the next year.

Rents will continue to remain high in the CBD while companies

compete for key locations but in the wider market there is

a movement that will see increases in the provision of

external shopping outlet locations where rentals will be more

reasonable to attract the business outside of the CBD .i.e.

Cantavil; Celadon City; City Garden.

Consumer spending will increase over the next quarter with

people preparing for the up coming festive season.

Outlook

RETAIL MARKET oCToBER 2

SHoppING CENTRE


DEpARTMENT SToRE



RETAIL poDIUM


KUMHo MoNTHLY MARKET REpoRTNOVEMBER 2013 | RETAIL MARKET HCMC CBD MARKET REPORT


No Name of project /Building Address Location NLA

(sq m)Average Rental (US$/sq

m/month) occupancy Rate

1 Caravelle Hotel 19 Lam Son Square District 1 150 95 94%2 New World Hotel 79 Le Lai District 1 1,000 50 95%3 opera View Lam Son Square District 1 1,260 85 100%4 Rex Arcade 141 Nguyen Hue District 1 2,000 120 100%5 Sheraton Saigon 88 Dong Khoi District 1 750 125 100%6 Bitexco Financial Tower 45 Ngo Duc Ke District 1 8,000 42 95%7 Hotel Continental Saigon 132-134 Dong Khoi District 1 200 90 100%8 Times Square 22-36 Nguyen Hue District 1 9,000 90 70%9 president place 93 Nguyen Du District 1 800 30 100%

Retail podium 23,161 73.1 86%

1 parkson Saigon Tourist 35 Le Thanh Ton District 1 17,000 90 100%2 Zen plaza 54-56 Nguyen Trai District 1 6,817 52 100%3 Diamond plaza 34 Le Duan District 1 9,000 83 100%4 Kumho Asiana plaza 35 Le Duan District 1 6,830 35 100%

Department Store 39,647 72.4 100%

1 Saigon Center 65 Le Loi District 1 3,500 75 100%2 Saigon Square 1 77-89 Nam Ky Khoi Nghia District 1 1,300 167 100%3 Saigon Square 2 7-9 Ton Duc Thang District 1 1,400 75 75%4 Vincom Center B 72 Le Thanh Ton District 1 45,000 55 90%5 Vincom Center A Dong Khoi District 1 38,000 70 85%6 City plaza 230 Nguyen Trai District 1 5,250 25 100%7 Nowzone Nguyen Van Cu District 1 9,000 48 88%8 Tax Center 135 Nguyen Hue District 1 7,000 75 100%

9 Taka plaza 102 Nam Ky Khoi Nghia 17,600 1,000 90 100%

Shopping Centre 111,450 61.9 90%

No Name of Hotel Address Location Total Room occupancy ARR(*)

1 park Hyatt Saigon 02 Lam Son Square District 1 259 80% 3332 Sheraton 88 Dong Khoi District 1 480 81% 2053 Caravelle 19 Lam Son Square District 1 335 75% 1504 New World Saigon 76 Le Lai District 1 533 71% 1485 Renaissance Riverside 8-15 Ton Duc Thang District 1 350 70% 1406 Legend 2A-4A Ton Duc Thang District 1 283 68% 1427 Sofitel plaza Saigon 17 Le Duan District 1 290 75% 1448 Majestic Saigon 1 Dong Khoi District 1 175 72% 1489 Rex 141 Nguyen Hue District 1 289 80% 13610 InterContinental Asiana 39 Le Duan District 1 305 79% 20611 Nikko Saigon 235 Nguyen Van Cu District 1 334 64% 14012 pullman Hotel 146 Tran Hung Dao District 1 306 10% 128

5 Star 3,633 69% 167

1 Duxton 63 Nguyen Hue District 1 203 72% 1032 Grand 08 Dong Khoi District 1 107 65% 893 Kim Do Royal City 133 Nguyen Hue District 1 135 70% 484 Continental Saigon 132-134 Dong Khoi District 1 86 74% 855 palace Saigon 56-66 Nguyen Hue District 1 146 88% 546 oscar 68A Nguyen Hue District 1 108 62% 417 Liberty Central 179 Le Thanh Ton District 1 140 72% 1048 Golden Central Saigon 140 Ly Tu Trong District 1 132 70% 789 Norfolk Hotel 117-119 Le Thanh Ton District 1 104 71% 92

4 Star 1,161 70% 84.6

NOVEMBER 2013 | RETAIL MARKET HCMC CBD MARKET REPORT

KUMHo MoNTHLY MARKET REpoRT HCMC CBD MARKET REPORT



NOVEMBER 2013 | HOTEL MARKET

The total existing supply of luxury hotels in Central Business

District is 5,396 hotels rooms, among that, the total supply of

5-star hotels is 3,939 (increased by 8% y-o-y) and the total

room of 4-star hotel is 1,457 rooms (increased by 25% y-o-y).

Vietnam welcomed over 6.1 million overseas arrivals over the

past 10 months of 2013, up 10.4% against the same period

last year. According to the General Statistics office, arrivals

consisted 66.1% from Russia, followed by China 36.2%,

Thailand 21%, and Malaysia 12.7%. However, a decline is

observed in the number of international arrivals from the

US, Taiwan, and France during the same period. In october

alone, the country received around 630,000 foreign visitors,

representing a yearly increase of 15.1%.

Ho Chi Minh City itself welcomed over 419,650 international

tourists in october, 9% more than in october 2012.

The city’s total tourism revenue reached VND 6,651 billion

(US$332 million) in october, up 20% from 2012 figures.

Hotel Market Overview

Market Performanceon october 26, a visa exemption agreement for ordinary passport

holders signed between the Governments of Vietnam and Myanmar

had taken effect. According to the document, the two countries’

citizens who hold ordinary passports valid for at least six months

will not require visas for stays of up to 14 days in each other’s

territories. Vietnam’s ordinary passport holders can now enter the

other nine ASEAN member countries without a visa. It is hoped that

this policy will attract more foreign visitors to Vietnam.

october is normally the beginning of the high tourist season.

The performance of 4 and 5 star hotels in this month was better

than previous months and both occupancy rates and average

room rates increased as a result of the increase in arrivals.

The occupancy rate of 4 and 5 star hotels increased in by 3%

and 1.5% respectively. Both 4 and 5 star hotels’s average room

rate went up slightly, remaining at 69% and 71% respectively.

INTERNATIoNAL VISIToRS To HCMC


INTERNATIoNAL ARRIVALS


FUTURE SUppLY BY STATUS


HCMC CBD MARKET REPORT





The fact that multiple small investors have been racing to build low-end hotels in recent years in spite of low demand has resulted in oversupply for budget accommodation which has increased competitive rates in this market.

From now to April 2014, it will be a high season to travel for foreigners to HCMC, both HCMC authorities and the host of hotels need to prepare for this time to make the visitors have best memories and want to comeback again. It should be noted number of Asian visitors come to Vietnam increased month by month, so the staff who can speak Japanese, Korean, etc. should be hired and trained to have best services for the visitors.

Outlook

pERFoRMANCE oF 4 STARS HoTEL

pERFoRMANCE oF 4 & 5 STARS HoTEL

pERFoRMANCE oF 5 STARS HoTEL


Source: Colliers InternationalSource: Colliers International

NOVEMBER 2013 | SERVICED APARTMENT MARKET


Serviced Apartment OverviewGRADE A SERVICED ApARTMENTS


GRADE B SERVICED ApARTMENTS



HCMC CBD MARKET REpoRTHCMC CBD MARKET REpoRT


No project Name Address Location Total Room

Average occupancy ARR(*)

1 Sedona Suites 65 Le Loi District 1 89 85% 352 InterContinental Asiana Saigon 39 Le Duan District 1 260 96% 353 The Landcaster 22 Bis Le Thanh Ton District 1 55 67% 364 Nguyen Du park Villas 111 Nguyen Du District 1 41 95% 305 Somerset Chancellor Court 21-23 Nguyen Thi Minh Khai District 1 172 93% 436 Lafayette De Saigon 08 phung Khac Khoan District 1 18 50 367 The Landmark 5B Ton Duc Thang District 1 66 88% 30

Grade A 855 90% 36.0

1 Ben Thanh Luxury 172-174 Ky Con District 1 30 77% 202 Nikko Saigon 235 Nguyen Van Cu District 1 54 50% 253 Vincom Center 72 Le Thanh Ton District 1 60 60% 244 Saigon Sky Garden 20 Le Thanh Ton District 1 154 90% 295 Garden View Court 101 Nguyen Du District 1 76 76% 246 Somerset HCM 8A Nguyen Binh Khiem District 1 165 83% 267 Spring Court 1Bis phung Khac Khoan District 1 14 85% 198 Lafayette De Saigon 8 phung Khac Khoan District 1 18 84% 189 Saigon City Residence 8A/3D2 Thai Van Lung District 1 17 94% 2010 Diamond plaza 34 Le Duan District 1 42 93% 2611 Norfolk Mansion 17-21 Ly Tu Trong District 1 126 91% 28

Grade B 699 92% 28.9

(*) US$/sq m/month (**) Not including VAT and service charge


The lack of supply of serviced apartment’s in the CBD keeps

rental levels high. However limited customer’s budgets in recent

months show that people move away from high end apartments

and the costs associated with them. Landlords in CBD should

prepare if they want to maintain high rental levels they will

probably see a drop in occupancy.

Outlook

The average asking rent of Grade A and Grade B serviced

apartments increased slightly by 1.3% and 0.5% respectively.

During this time, the occupancy rate of Grade A dropped off

again, standing at 90%; and Grade B’s occupancy rate declined

in 0.4%, remaining at 80%.

Market Performance

pERFoRMANCE oF GRADE A & B



HCMC CBD MARKET REPORT | NOVEMBER 2013

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