2Q 2013 Colliers Vietnam Research & Forecast Report EN

Q2 2013 | VIETNAM OVERVIEW

research & forecast reportvietnam

“certain markets show signs of slight recovery in the south, but still limited market movement in the North of Vietnam”

www.colliers.com/vietnam

ecoNomy of VietNam• Vietnam’s GDp reached 5% in Q2 2013• inflation was under control • fDi exceeded Us$10 billion• trade deficit came back• Dong devaluation of 1%

ho chi miNh city aND haNoi’ s ecoNomic UpDateho chi miNh city iNfrastrUctUre UpDateho chi miNh city property market

office• market overview• rent slightly increased but much more incentives• occupancy increased at all gradesretail• more international players keep coming in• more vacancy at shopping malls residential• more launches to benefit the Government’s 30 trillion package • further drops in both primary and secondary markets • Developers are switching to affordable market

haNoi property marketoffice• six new buildings came online • Grade a: stable rent but more incentives• Grade B: strong drop in both rent and occupancyretail• stable market, waiting for huge new supplyresidential• 95% of new launches in affordable segment• price continued to decline

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Q2 2013

Office Retail Residential

Rent Occupancy Demand Rent Occupancy Demand Primary price

Secondary price

Sold rate Demand

HCMC stable weak healthyHANOI weak stable stable

VietNam property market at a GlaNce

VIETNAM | Q2 2013 | ECONOMIC UPDATE

Vietnam is now facing slow economic growth due to inflation limiting measures.VietNam’s GDp reacheD 5% iN Q2 2013Vietnam’s GDp in Q2 2013 grew 5%, slightly better than last quarter’s grow rate of 4.89%, with the major contribution from service sector (increasing 5.92% y-o-y and contributing 2.51% to the total growth). meanwhile, the industry sector’s growth slowed down to 1.99% in Q2 2013 from 2.14% in Q2 2012. this modest gain was due to the weak demand which recovered at a lower than expected. Despite a further interest rate cut, bad debt still hobbled over the economy. in addition, credit growth also picked up at a slower pace than expected while pri-vate investment, manufacturing continued being narrowed down. al-though GDp growth rate was not as high as expected, it was reasonable during this tough time.iNflatioN Was UNDer coNtrolVietnam’s economic policies have succeeded in recovering macroeco-nomic stability over the past year, which was reflected in the strong decline of inflation and the increasing trust in domestic currency. Vi-etnam’s cpi in June increased only 0.05 percent from the previous month, driving cpi in the first half of 2013 up 2.4% against last De-cember, the lowest increase rate since 2004. this indicated inflation may not be a big concern this year. however, it also implied that pur-chasing power is much lower than last year, as total retail sales only increased 4.9% in first six months, much lower than the 9.8% increase last year, warning a difficult year of both production and consumption. fDi eXceeDeD Us$10 BillioNVietnam attracted approximately Us$10.5 billion of newly registered and additional capital from foreign investors in the first half of this year, a 15.9% increase y-o-y. the figure included over Us$5.8 bil-lion of newly-registered capital from 554 fDi projects licensed in the period. specifically, the manufacturing sectors drew the most interest from foreign investors, with total capital of over Us$9.3 billion during the reviewed time, which accounted for 88.9 percent of total regis-tered investment capital. Besides, among 45 countries and territories that have invested in Vietnam, Japan ranked first with nearly Us$4 billion, followed by singapore with Us$3.4 billion and russia with over Us$1 billion.

traDe Deficit iNcreaseDin Q2 2013. export continued to enjoy steady growth with total earnings reached Us$32.3 billion, 9% higher than Q1 2013. meanwhile, import reached Us$34.2 billion, rose significantly 17% q-o-q. finally after one year, trade deficit increased with Us$1.9 billion in this quarter. however, it should be noted that fDi enterprises were dominating Vietnam’s export and import turnover. in the first six months of 2013, foreign investment sector contributed 66% of total export turnover, reaching Us$41.1 billion while it imported a total value of Us$35.7 billon, accounted for 56% of total import turnover. DoNG DeValUatioN of 1%the state Bank of Vietnam (sBV) also devalued the Dong in June for the first time since 2011 by 1% against the Dollar to 21,036 to more accurately represent the supply and demand of foreign currency and to stabilize the local foreign exchange market.


VIETNAM’S GDP REACHED 5% IN Q2 2013 Vietnam’s GDP in Q2 2013 grew 5%, slightly better than last quarter’s grow rate of 4.89%, with the major contribution from service sector (increasing 5.92% y-o-y and contributing 2.51% to the total growth). Meanwhile, the industry sector’s growth slowed down to 1.99% in Q2 2013 from 2.14% in Q2 2012. This modest gain was due to the weak demand which recovered at a lower than expected. Despite a further interest rate cut, bad debt still hobbled over the economy. In addition, credit growth also picked up at a slower pace than expected while private investment, manufacturing continued being narrowed down. Although GDP growth rate was not as high as expected, it was reasonable during this tough time.

INFLATION WAS UNDER CONTROL Vietnam’s economic policies have succeeded in recovering macroeconomic stability over the past one year, which was reflected in the strong decline of inflation and the increasing trust in domestic currency. Vietnam’s CPI in June increased only 0.05 percent from the previous month, driving CPI in the first half of 2013 up 2.4% against last December, the lowest increase rate since 2004. This indicated inflation may not be a big concern this year. However, it also implied that purchasing power is much lower than last year, as total retail sales only increased 4.9% in first six months, much lower than the 9.8% increase last year, warning a difficult year of both production and consumption.

FDI EXCEEDED US$10 BILLION Vietnam attracted approximately US$10.5 billion of newly registered and additional capital from foreign investors in the first half of this year, a 15.9% increase y-o-y. The figure included over US$5.8 billion of newly-registered capital from 554 FDI projects licensed in the period. Specifically, the manufacturing sectors drew the most interest from foreign investors, with total capital of over US$9.3 billion during the reviewed time, which accounted for 88.9 percent of total registered investment capital. Besides, among 45 countries and territories that have invested in Vietnam, Japan ranked first with nearly US$4 billion, followed by Singapore with US$3.4 billion and Russia with over US$1 billion.

TRADE DEFICIT CAME BACK In Q2 2013. export continued to enjoy steady growth with total earnings reached US$32.3 billion, 9% higher than Q1 2013. Meanwhile, import reached US$34.2 billion, rose significantly 17% q-o-q. Finally after one year, trade deficit came back with US$1.9 billion in this quarter. However, it should be noted that FDI enterprises were dominating Vietnam’s export and import turnover. In the first six months of 2013, foreign investment sector contributed 66% of total export turnover, reaching US$41.1 billion while it imported a total value of US$35.7 billon, accounted for 56% of total import turnover.

DONG DEVALUATION OF 1% The State Bank of Vietnam (SBV) also devalued the Dong in June for the first time since 2011 by 1% against the Dollar to 21,036 to more accurately represent the supply and demand of foreign currency and stabilize the local foreign exchange market.

VIETNAM’S GDP GROWTH RATE

VIETNAM’ S CPI MONTH-ON-MONTH

EXPORT & IMPORT TURNOVER

REGISTERED & DISBURSED FDI

2

After inflation was controlled, Vietnam is now facing slow economy growth

VIETNAM ECONOMIC GROWTH | Q2 2013

2%

3%

4%

5%

6%

7%

8%

Q1

2008

Q2

2008

Q3

2008

Q4

2008

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Source: GSO, Colliers International, Q2 2013

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec


2011 2012 2013

0

5

10

15

20

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

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Q1 2013

Q2 2013

US

$ bi

llion


Registered capital Disbursed capital

-20%

0%

20%

40%

-20

0

20

40

Q1 2010

Q2 2010

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Q2 2013

US

$ bi

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Export turnover Import turnover

Trade balance Growth rate of export turnover

Growth rate of import turnover











2



2%

3%

4%

5%

6%

7%

8%

Q1

2008

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2008

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2008

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2008

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2011

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2011

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2011

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2012

Q2

2012

Q3

2012

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2012

Q1

2013

Q2

2013


-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%



2011 2012 2013

0

5

10

15

20

Q1 2010

Q2 2010

Q3 2010

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Q2 2011

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US

$ bi

llion



-20%

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20

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Q1 2010

Q2 2010

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US

$ bi

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2%

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Q1

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2011

Q1

2012

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Q4

2012

Q1

2013

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2013


-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%



2011 2012 2013

0

5

10

15

20

Q1 2010

Q2 2010

Q3 2010

Q4 2010

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Q2 2011

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Q1 2010

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-1.0%

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2011 2012 2013

0

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Q1 2010

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Q1 2010

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p.1 | colliers international

HO CHI MINH & HANOI | Q2 2013 | ECONOMIC UPDATE


cpi showed growth in both hanoi & hcmcho chi miNh city ecoNomic UpDatehcmc’s GDp growth in Q2 2013 was recorded at 8.1%, showing an

improvement from the 7.6% growth in last quarter. During the first half of this year, the city’s GDp was estimated at VND340,654 trillion, growing 7.9% y-o-y and 0.2 pts lower than the growth in the same period last year.

cpi in June 2013 went up 0.12% m-o-m and 2.78% y-o-y. it should be noted that cpi has increased only 0.78% over the end of 2012, which is the lowest increase in the last twelve years. in addition, average cpi of the first half 2013 went up 2.86% y-o-y, incredibly lower than the increase of 11.12% in the same period last year.

in the first six months, total retail sales in hcmc reached VND288,912 billion, a 11.7% y-o-y increase. also in the meantime, hcmc recorded a total foreign exchange turnover of Us$22,639 million, increased 11.2% y-o-y, and still enjoyed a trade surplus of Us$1 billion. Both export and import showed notable increases of 6.2% and 15.5% y-o-y respectively.

in terms of attracting foreign investment, it is estimated that during Q2 2013, fDi in hcmc reached Us$130 million from 114 projects, which notably doubled the capital attracted last quarter. During the first six months of 2013, the city’s fDi reached only Us$189 million. compar-ing to the Us$541 million attracted last year, it is expected that the Government needs be more active in some legal procedures and other incentives to make hcmc more attractive to investors.

haNoi ecoNomic UpDatehanoi’s GDp growth in Q2 2013 reached at 7.67%, an further advance 0.07% in growth from last quarter. During the first half of this year, service show the greatest improvement of 8.5% follow by construction and industry at 7.46%.

cpi started to pick up again at 0.08% on June after 3 month of nega-

tive grow from march to may, y-o-y from June 2012 estimated at 5.43%. higher cpi would prove to be a challenge to economic growth in hanoi, especially the price of petroleum, which play a heavy role in cpi, is not under direct control of the government.

hanoi’s foreign investment is looking at $300.5 mil UsD new invest-ment capital spreading in 104 new and adjusted investment projects, a reduce of 15.5% in term of number and 21.2% in term of capital. this reflected the trend in world economy. major interest of foreign invest-ment in hanoi is retail.

in the tourism industry, total international visitors to hanoi reached nearly 930,000, which significantly increased 21.5% compared to the first six month last year.


RETAIL SALES GROWTH RATE

FOREIGN INVESTMENT CAPITAL

GDP GROWTH RATE

CPI MONTH-ON-MONTH

HO CHI MINH CITY ECONOMIC UPDATE HCMC’s GDP growth in Q2 2013 was recorded at 8.1%, showing an improvement from the 7.6% growth in last quarter. During the first half of this year, the city’s GDP was estimated at VND340,654 trillion, growing 7.9% y-o-y and 0.2 pts lower than the growth in the same period last year.

CPI in June 2013 went up 0.12% m-o-m and 2.78% y-o-y. It should be noted that CPI has increased only 0.78% over the end of 2012, which is the lowest increase in the last twelve years. In addition, average CPI of the first half 2013 went up 2.86% y-o-y, incredibly lower than the increase of 11.12% in the same period last year.

In the first six months, total retail sales in HCMC reached VND288,912 billion, a 11.7% y-o-y increase. Also in the meantime, HCMC recorded a total foreign exchange turnover of US$22,639 million, increased 11.2% y-o-y, and still enjoyed a trade surplus of US$1 billion. Both export and import showed notable increases of 6.2% and 15.5% y-o-y respectively.

In term of foreign investment attraction, it is estimated that during Q2 2013, FDI in HCMC reached US$130 million from 114 projects, which notably doubled the capital attracted last quarter. Totally the first six months of 2013 witnessed the city’s FDI reached only US$189 million. Comparing to the US$541 million attracted last year, it is expected that the Government needs be more active in some legal procedures and other incentives to bring HCMC become as attractive as before.

HANOI ECONOMIC UPDATE Hanoi’s GDP growth in Q2 2013 reached at 7.67%, an further advance 0.07% in growth from last quarter. During the first half of this year, service show the greatest improvement of 8.5% follow by construction and industry at 7.46%.

CPI started to pick up again at 0.08% on June after 3 month of negative grow from March to May, y-o-y from June 2012 estimated at 5.43%. Higher CPI would prove to be a challenge to economic growth in Hanoi, especially the price of petroleum, which play a heavy role in CPI, is not under direct control of the government.

Hanoi’s Foreign Investment is looking at $300.5 mil USD new investment capital spreading in 104 new and adjust investment projects, a reduce of 15.5% in term of number and 21.2% in term of capital. This reflected the trend in world economy. Major interest of Foreign investment in Hanoi is retail.

In the tourism industry, total international visitors to Hanoi reached nearly 930,000, which significantly increased 21.5% compared to the first six month last year.

3

HO CHI MINH CITY & HANOI ECONOMIC UPDATES | Q2 2013

CPIs in both two major cities started to rise back in June

6%

7%

8%

9%

10%

11%

12%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013


Ho Chi Minh City Ha Noi

-1.0%

0.0%

1.0%

2.0%

3.0%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

2012 2013

Source: Colliers International, Q2 2013

Ho Chi Minh Ha Noi

-

500

1,000

1,500

2,000

2,500

Q1 2011

Q2 2011

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Q2 2012

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US

$ m

illio

n

Source: GSO, Colliers International, Q2 2013Ho Chi Minh city Hanoi

5%

10%

15%

20%

25%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Source: GSO, Colliers International, Q2 2013Ho Chi Minh City Hanoi




GDP GROWTH RATE

CPI MONTH-ON-MONTH









3



6%

7%

8%

9%

10%

11%

12%

Q1 2011

Q2 2011

Q3 2011

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Q2 2012

Q3 2012

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Q1 2013

Q2 2013



-1.0%

0.0%

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2.0%

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2012 2013


Ho Chi Minh Ha Noi

-

500

1,000

1,500

2,000

2,500

Q1 2011

Q2 2011

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US

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Q1 2013

Q2 2013





GDP GROWTH RATE

CPI MONTH-ON-MONTH









3



6%

7%

8%

9%

10%

11%

12%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

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Q4 2012

Q1 2013

Q2 2013



-1.0%

0.0%

1.0%

2.0%

3.0%


2012 2013


Ho Chi Minh Ha Noi

-

500

1,000

1,500

2,000

2,500

Q1 2011

Q2 2011

Q3 2011

Q4 2011

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US

$ m

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25%

Q1 2011

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Q1 2013

Q2 2013





GDP GROWTH RATE

CPI MONTH-ON-MONTH









3



6%

7%

8%

9%

10%

11%

12%

Q1 2011

Q2 2011

Q3 2011

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Q1 2013

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-1.0%

0.0%

1.0%

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3.0%


2012 2013


Ho Chi Minh Ha Noi

-

500

1,000

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2,000

2,500

Q1 2011

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US

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Q2 2013


HO CHI MINH CITY | Q2 2013 | INFRASTRUCTURE

HO CHI MINH & HANOI | Q2 2013 | ECONOMIC UPDATE HO CHI MINH CITY | Q2 2013 | INFRASTRUCTURE

infrastructure developments behind schedule, but some bright points appearedho chi miNh cityon June 11, hcmc people’s committee signed a contract with hitachi regarding metro line No. 1 package 3, which covers electrical and mechanical works, rolling stock for the first phase of the city's metro network. the total value of the contract is around Us$381 million and includes the delivery of 17 three-car trains, signaling systems, tel-ecommunications, power supplies, platform screen doors, automatic fare collection, and depot facilities. Under a separate agreement, hi-tachi will also provide maintenance services for five years from the operation of the project, which is expected to begin in 2018. line 1’s construction began last year on the 17km elevated section, which is being built by a consortium of sumitomo and cienco.

hcmc is planning to upgrade four bridges, including Bong Bridge (spanning District 1 - Binh thanh District ), kieu Bridge (District 1 - phu Nhuan District ), le Van sy Bridge (District 3) and hau Giang Bridge (District 6), with a total cost of Us$37 million. most of the money will be funded by World Bank loans. the construction of four bridges will be in accordance with the committed term of the loan agreement and is expected to complete in June 2014.

the downtown area of hcmc will be expanded into five areas, with motorbikes and personal cars to be banned in the core area, according to the approved urban master plan by the city Department of planning and architecture. the area, which will have an expected population of 248,000 people, will have trams, shuttle buses and waterway traffic facilities along canals. the department is working out a schedule for implementing the plan, which was consulted by Japan’s Nikken sekkei ltd.

saigon Bridge No. 2, a major connection in the east of hcmc on ha-noi highway, is showing very good construction progress. Until June 2013, this Us$71 million project has finished 84% of total construction work and is expected to put into operation in early November 2013, which is 5 months ahead of schedule.


HO CHI MINH CITY

On June 11, HCMC People’s Committee signed a contract with

Hitachi regarding Metro Line No.1 Package 3, which covers

electrical and mechanical works, rolling stock for the first phase

of the city's metro network. The total value of the contract is

around US$381 million and includes the delivery of 17 three-car

trains, signaling systems, telecommunications, power supplies,

platform screen doors, automatic fare collection, and depot fa-

cilities. Under a separate agreement, Hitachi will also provide

maintenance services for five years from the operation of the

project, which is expected to begin in 2018. Line 1’s construction

began last year on the 17km elevated section, which is being

built by a consortium of Sumitomo and Cienco.

HCMC is planning to upgrade four bridges, including Bong

Bridge (spanning District 1 - Binh Thanh District), Kieu Bridge

(District 1 - Phu Nhuan District), Le Van Sy Bridge (District 3)

and Hau Giang Bridge (District 6), with a total cost of US$37

million. Most of the money will be funded by World Bank loans.

The construction of four bridges will be in accordance with the

committed term of the loan agreement and is expected to com-

plete in June 2014.

The downtown area of HCMC will be expanded into five areas,

with motorbikes and personal cars to be banned in the core

area, according to the approved urban master plan by the city

Department of Planning and Architecture. The area, which will

have an expected population of 248,000 people, will have trams,

shuttle buses and waterway traffic facilities along canals. The

department is working out a schedule for implementing the plan,

which was consulted by Japan’s Nikken Sekkei Ltd.

Saigon Bridge No. 2, a major connection in the East of HCMC

on Hanoi Highway, is showing very good construction progress.

Until June 2013, this US$71 million project has finished 84% of

total construction work and is expected to put into operation in

early November 2013, which is 5 months ahead of schedule.

4

METRO LINE 1 FOUND NEW PARTNER

FOUR BRIDGES TO BE UPGRADED

SAIGON BRIDGE NO. 2

NEW HCMC CENTER MASTER PLAN


Infrastructure developments behind schedule, some projects are progressing

HO CHI MINH CITY INFRASTRUCTURE | Q2 2013





HO CHI MINH CITY




















plete in June 2014.














4



SAIGON BRIDGE NO. 2









HO CHI MINH CITY




















plete in June 2014.














4



SAIGON BRIDGE NO. 2









HO CHI MINH CITY




















plete in June 2014.














4



SAIGON BRIDGE NO. 2









HANOI | Q2 2013 | OFFICE MARKETHO CHI MINH CITY | Q2 2013 | OFFICE MARKET


effective rental price lowered with incentives to increase occupancy.market oVerVieWBesides several new small Grade c buildings, there was no notable new supply in the office market in Q2 2013. the temporary pause in supply has helped push occupancy up from the last quarter but strong pressure is still pushing on rent as tenants are more selective and demanding.

landlords tended to hold and even increase asking rents at some high profile buildings; however actually the achievable rents and incentives are more open for negotiation by landlords. typically new tenants will be offered three months rent free and one month for fitting out. But in some particular cases, to attract multinational anchor tenants, land-lords are willing to offer much more. this has become a market prac-tice and tenants have much more power to bargain.

reNt moVemeNtQ2 2013 witnessed Grade a asking rent rose 1.6% to Us$38.8/ sq m/ month. Grade a market rents found its bottom in the second quarter last year and since increased if only slightly. however, it should be noted that rents only went up at the old and mature buildings. asking rents at new Grade a buildings kept softening and these landlords is likely to do whatever it takes to secure new tenants rather than leaving their buildings vacant.

Grade B and c rents still suffer with the downward pressure as price

is their only bargaining tool. While Grade B rents decreased 0.6% to Us$20.0/ sq m/ month, Grade c went down 2.2% to Us$15.4/ sq m/ month. some new Grade B buildings with attractive rents and decent quality, including ree tower, empress Building or a&B tower, man-aged quick uptake of space.

occUpaNcy rateoccupancy rates for the office market has grown in all three grades. Grade B showed the strongest improvement in occupancy with 1.7 points up from last quarter. Grade a and Grade c meanwhile showed modest increases, only 0.9 and 0.1 point respectively. overall, 87% of the whole office market in hcmc was already occupied.

it is felt that landlords have succeeded in using pricing tactic to build up occupancy. however one more important reason is that new supply has been coming on a slower pace than before, leaving more time for existing buildings to fill up.

oUtlookUp until 2014 it is expected that new supply will not be the major prob-lem as some projects being delayed and developers being aware of market absorption. the issue is on the demand side instead, including the economic situation and the power of tenants. tenants will be more aggressive in negotiating rents and incentives and it seemed that they are dominating the battle. achievable rents therefore are expected to keep softening but occupancy will increase.


MARKET OVERVIEW Besides several new small Grade C buildings, there was no notable new supply in the office market in Q2 2013. The temporary pause in supply has helped push occupancy up from the last quarter but strong pressure is still pushing on rent as tenants are more selective and demanding.

Landlords tended to hold and even increase asking rents at some high profile buildings; however actually the achievable rents and incentives are more open for negotiation case by case. Typically new tenants will be offered three months rent free and one month for fitting out. But in some particular cases, to attract multinational anchor tenants, landlords are willing to offer much more. This has become a market practice and tenants have much more power to bargain.

RENT MOVEMENT Q2 2013 witnessed Grade A asking rent rose 1.6% to US$38.8/ sq m/ month. It seemed that Grade A market found its bottom in the second quarter last year and still enjoyed the short-term up trend. However, it should be noted that rents only went up at the old and mature buildings. Asking rents at new Grade A buildings kept softening and these landlords is likely to do whatever it takes to secure new tenants rather than leaving their buildings vacant.

Grade B and C rents still suffered the down trend as price is their strongest advantage. While Grade B rents decreased 0.6% to US$20.0/ sq m/ month, Grade C went down 2.2% to US$15.4/ sq m/ month. Some new Grade B buildings with attractive rents and decent quality, including Ree Tower, Empress Building or A&B Tower, managed to fill up really quickly.

OCCUPANCY RATE Occupancy rate brought a brighter picture for the office market by growing in all three grades. Grade B showed the strongest improvement in occupancy with 1.7 points up from last quarter. Grade A and Grade C meanwhile showed modest increases, only 0.9 and 0.1 point respectively. Overall, 87% of the whole office market in HCMC was already occupied.

It is felt that landlords have succeeded in using pricing tactic to build up occupancy. However one more important reason is that new supply has been coming on a slower pace than before, leaving more time for existing buildings to fill up.

OUTLOOK Up until 2014 it is expected that new supply will not be the major problem as some projects being delayed and developers being aware of market absorption. The matter is on the demand side instead, including the economy condition and the belief of tenants. Realizing their power, tenants will be more aggressive in negotiating rents and incentives and it seemed that they are dominating the battle. Achievable rents therefore are expected to keep softening but occupancy will become healthier.

SUPPLY BY GRADE, Q2 2013

RENTAL RATE BY GRADES, Q2 2013

OCCUPANCY RATE BY GRADES, Q2 2013

ESTIMATED FUTURE SUPPLY

5

Price was sacrificed to fill spaces, along with more rent free and incentives

HO CHI MINH CITY OFFICE MARKET | Q2 2013

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Q1

2013

Q2

2013


Grade A Grade B Grade C

5

15

25

35

45

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011 2011 2011 2011 2012 2012 2012 2012 2013 2013

US

$/ s

q m

/ mon

th



70%

75%

80%

85%

90%

95%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011 2011 2011 2011 2012 2012 2012 2012 2013 2013

Source: Colliers International, Q2 2013Grade A Grade B Grade C

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2013 2014 2015 2016 Onward














5



-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Q1

2013

Q2

2013



5

15

25

35

45

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011 2011 2011 2011 2012 2012 2012 2012 2013 2013

US

$/ s

q m

/ mon

th



70%

75%

80%

85%

90%

95%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011 2011 2011 2011 2012 2012 2012 2012 2013 2013


0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2013 2014 2015 2016 Onward














5



-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Q1

2013

Q2

2013



5

15

25

35

45

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011 2011 2011 2011 2012 2012 2012 2012 2013 2013

US

$/ s

q m

/ mon

th



70%

75%

80%

85%

90%

95%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011 2011 2011 2011 2012 2012 2012 2012 2013 2013


0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2013 2014 2015 2016 Onward














5



-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Q1

2013

Q2

2013



5

15

25

35

45

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011 2011 2011 2011 2012 2012 2012 2012 2013 2013

US

$/ s

q m

/ mon

th



70%

75%

80%

85%

90%

95%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011 2011 2011 2011 2012 2012 2012 2012 2013 2013


0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2013 2014 2015 2016 Onward


HANOI | Q2 2013 | OFFICE MARKET

limited uptake of space due to less demand and oversupply

market oVerVieWDuring Q2 2013, six new office buildings came online in hanoi, bringing the total supply to approximately 1.5 million sq m Nfa. these include two Grade a buildings in hoan kiem and four grade B buildings in the West (new cBD), bringing the supply up over 100,000 sq m.

as more supply has been coming online, rents continue to be a concern

for owners and developers. tenants now have the motivation to move out

of old buildings in the cBD to higher quality and less expensive options

in outlying districts. those with 5 years contract from the thirst of office

space in 2008-2009 now coming for better choices. landlord are fighting

to keep their current tenants as well as attracting new one. many innova-

tive incentives have been offered around the places to keep a decent, fair

price among all tenants yet attractive enough for new or renew contracts.

property management probably would play more and more important role

on retain a better tenant list as service is directly affect the daily life and

representation of all offices.

GraDe a moVemeNt During Q2 2013 Grade a rents remained steady since the end of last year. rent was recorded at Us$38.70/ sq m/ month, which was almost unchanged q-o-q since the beginning of the year, however, there are incentives that ease up situation for companies during the hard time of the economy.

excluding the new buildings, Grade a have maintain occupancy rate since last year. average occupancy in the Grade a market was at around 72%. some Grade a buildings with more flexible negotiation on con-tract and better sales scheme continue to absorb new tenants as well as retain their own reaching their 90% occupancy rate. Grade a in the West side filling up almost 10,000 sq m with their space with aggres-sive strategy.

GraDe B moVemeNtGrade B segment continued on a downward slope, with average rents lowering from Us$20.70/ sq m/ month in Q1 2013 to Us$17/ sq m. the average occupancy saw an decrease of 7 percentage points, down to 73% in this quarter. this was due to new building coming to the market. Without them the occupancy rate would remain about same as last quarter. With landlords lowering their rents to fill up their space.

oUtlooka significant amount of supply of over 150,000 sq m will come online through the end of the year. as a “tradition” in hanoi, the new landlord is very confident about their buildings, with high price and no key ten-ants, new buildings in hanoi usually suffer low occupancy rate at the beginning as a result.

P2 | COLLIERS INTERNATIONAL www.colliers.com/vietnam

MARKET OVERVIEW

During Q2 2013, six new office buildings came online in Hanoi, bringing the total supply to approximately 1.5 million sq m NFA. These include two Grade A buildings in Hoan Kiem and four grade B buildings in the West (new CBD), bringing the supply up over 100,000 sq m.

As more supply has been coming online, rents continue to be a top concern. Tenants now have the motivation to move out of old buildings in the CBD to higher quality and less expensive options in outlying districts. Those with 5 years contract from the thirst of office space in 2008-2009 now coming for better choices. Landlord are fighting to keep their current tenants as well as attracting new one. Many innovative incentives have been offered around the places to keep a decent, fair price among all tenants yet attractive enough for new or renew contracts. Property management probably would play more and more important role on retain a better tenant list as service is directly affect the daily life and representation of all offices.

GRADE A MOVEMENT

During Q2 2013 Grade A rents remained steady since the end of last year. Rent was recorded at US$38.70/ sq m/ month, which was almost unchanged q-o-q since the beginning of the year, however, there are incentives that ease up situation for companies during the hard time of the economy.

Excluding the new buildings, Grade A have maintain occupancy rate since last year. Average occupancy in the Grade A market was at around 72%. Some Grade A buildings with more flexible negotiation on contract and better sales scheme continue to absorb new tenants as well as retain their own reaching their 90% occupancy rate. Grade A in the West side filling up almost 10,000 sq m with their space with aggressive strategy.

GRADE B MOVEMENT

Grade B segment continued on their slop downward, with average rents lowering from US$20.70/ sq m/ month in Q1 2013 to US$17/ sq m.

The average occupancy saw an decrease of 7 percentage points, down to 73% in this quarter. This was due to new building coming to the market. Without them the occupancy rate would remain about same as last quarter. With landlords lowering their rents to fill up their space.

OUTLOOK

A significant amount of supply of over 150,000 sq m will come online through the end of the year. As a “tradition” in Hanoi, the new landlord is very confident about their buildings, with high price and no key tenants, new buildings in Hanoi usually suffer low occupancy rate at the beginning.

GRADE A OFFICE PERFORMANCE


GRADE B OFFICE PERFORMANCE


6


The market is struggling to fill up vacant spaces

HANOI OFFICE MARKET | Q2 2013

0

80,000

160,000

240,000

320,000

400,000

480,000

Cau Giay

Ba Dinh

Hai Ba Trung

Tu Liem

Thanh Xuan

Dong Da

Hoan Kiem

Ha Dong

Others

sqm



MARKET OVERVIEW



GRADE A MOVEMENT



GRADE B MOVEMENT



OUTLOOK






6




0

80,000

160,000

240,000

320,000

400,000

480,000

Cau Giay

Ba Dinh

Hai Ba Trung

Tu Liem

Thanh Xuan

Dong Da

Hoan Kiem

Ha Dong

Others

sqm



MARKET OVERVIEW



GRADE A MOVEMENT



GRADE B MOVEMENT



OUTLOOK






6




0

80,000

160,000

240,000

320,000

400,000

480,000

Cau Giay

Ba Dinh

Hai Ba Trung

Tu Liem

Thanh Xuan

Dong Da

Hoan Kiem

Ha Dong

Others

sqm



MARKET OVERVIEW



GRADE A MOVEMENT



GRADE B MOVEMENT



OUTLOOK






6




0

80,000

160,000

240,000

320,000

400,000

480,000

Cau Giay

Ba Dinh

Hai Ba Trung

Tu Liem

Thanh Xuan

Dong Da

Hoan Kiem

Ha Dong

Others

sqm


HO CHI MINH CITY | Q2 2013 | OFFICE MARKET


HANOI | Q2 2013 | RETAIL MARKETHO CHI MINH CITY | Q2 2013 | RETAIL MARKET


Decrease in public spending, tenants downsizing , closing or re-negotiating leasesmarket oVerVieWthere was no new supply in the retail market in Q2 2013, even several developments looked almost ready to open. it is likely that they are waiting for a better time for grand opening as currently the economy is still moving quite slow. meanwhile the existing retail malls experi-enced a very difficult quarter with occupancy significantly decreased as tenants are moving out.

however it is good to note that hcmc remains an attractive destina-tion for foreign retailers. in may, NtUc fairprice, a large retailer from singapore, started their operation in hcmc by forming a joint ven-ture with domestic retailer saigon co.op to set up a new supermarket chain. the joint venture opened their first hypermarket called co-op Xtra in thu Duc District with much larger scale than the normal co.op supermarkets.

most lately, in the middle of July, the world’s most famous fast food chain, mcDonald’s, has officially announced their appearance in Viet-nam through a franchise to Good Day hospitality company. their first restaurant will be opened in early 2014 and will serve all mcDonald’s popular menu.

market performaNceaverage rents continued to decrease in Q2 2013 by 3% to Us$49.7/ sq m/ month. more important, occupancy showed a notable drop by 4 percent points from 89.6% in the last quarter.

only the department stores managed to maintain their rent at Us$60.8/ sq m/ month thanks to stable high occupancy at nearly 100%. podium sector meanwhile suffered slight decline with rent decreasing 3.1% to Us$54.1/ sq m/ month and occupancy down to 64.6%. Besides, shop-ping malls recorded rent softened by 4.5% to Us$46.6/ sq m/ month but occupancy still dropped dramatically 7 points to 84%. this was mostly due to lots of tenants at the two Vincom buildings have moved out because of bad business result.

this proved that as the society is tightening budget on retail goods and services, retail developments are facing lots of difficulties. therefore, several malls planned to close for renovation or even changed to an-other business, particularly the alta plaza in tan Binh District which was turned into a convention center and thien son plaza in District 7 was closed to restructure.

oUtlookapproximately 100,000 sm of retail space is waiting to come online until the end of the year and therefore a strong pressure is expected to put on the market performance. consequently hope is all on the demand side, as the Government is loosening the policies to encourage the society purchasing power. however these efforts are not likely to take effect in a short time; therefore retail rent is believed to continue its down trend. retail malls who locate outside the cBD will need to think of new way to attract foot traffic such as f&B area, cinema com-plex and popular anchor tenants.


MARKET OVERVIEW

There was no new supply in the retail market in Q2 2013, even several developments looked almost ready to open. It is likely that they are waiting for a better time for grand opening as currently the economy is still moving quite slow. Meanwhile the existing retail malls experienced a very difficult quarter with occupancy significantly decreased as tenants are moving out.

However it is good to note that HCMC remains an attractive destination for foreign retailers. In May, NTUC FairPrice, a large retailer from Singapore, started their operation in HCMC by forming a joint venture with domestic retailer Saigon Co.op to set up a new supermarket chain. The joint venture opened their first hypermarket called Co-op Xtra in Thu Duc District with much larger scale than the normal Co.op supermarkets.

Most lately, in the middle of July, the world most famous fast food chain, McDonald’s, has officially announced their appearance in Vietnam through a franchise to Good Day Hospitality Company. Their first restaurant will be opened in early 2014 and will serve all McDonald’s popular menu.

MARKET PERFORMANCE

Average rents continued to decrease in Q2 2013 by 3% to US$49.7/ sq m/ month. More important, occupancy showed a notable drop by 4 percent points from 89.6% in the last quarter.

Only the department stores managed to maintain their rent at US$60.8/ sq m/ month thanks to stable high occupancy at nearly 100%. Podium sector meanwhile suffered slight decline with rent decreasing 3.1% to US$54.1/ sq m/ month and occupancy down to 64.6%. Besides, shopping malls recorded rent softened by 4.5% to US$46.6/ sq m/ month but occupancy still dropped dramatically 7 points to 84%. This was mostly due to lots of tenants at the two Vincom buildings have moved out because of bad business result.

This proved that as the society is tightening budget on retail goods and services, retail developments are facing lots of difficulties. Therefore, several malls planned to close for renovation or even changed to another business, particularly the Alta Plaza in Tan Binh District which was turned into a convention center and Thien Son Plaza in District 7 was closed to restructure.

OUTLOOK

Approximately 100,000 sm of retail space is waiting to come online until the end of the year and therefore a strong pressure is expected to put on the market performance. Consequently hope is all on the demand side, as the Government is loosening the policies to encourage the society purchasing power. However these efforts are not likely to take effect in a short time; therefore retail rent is believed to continue its down trend. Retail malls who locate outside the CBD will need to think of new way to attract foot traffic such as F&B area, cinema complex and popular anchor tenants.

EXISTING SUPPLY, Q2 2013

AVERAGE MARKET PERFORMANCE

PERFORMANCE BY TYPES, Q2 2013


7

Tough economy, less spending, more tenants were closing their stores

HO CHI MINH CITY RETAIL MARKET | Q2 2013

-

100,000

200,000

300,000

400,000

500,000

600,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013


Podium Department store Shopping centre

40.0

45.0

50.0

55.0

60.0

75.0%

80.0%

85.0%

90.0%

95.0%

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US$ sq m/ month

Source: Colliers International, Q2 2013Average occupancy Average rent

30.0

40.0

50.0

60.0

70.0

80.0

90.0

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

110.0%



US$ sq m/ month

Average occupancy Average rent

0

100,000

200,000

300,000

400,000

500,000

600,000

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800,000

2013 2014 2015 2016 Onward



MARKET OVERVIEW




MARKET PERFORMANCE




OUTLOOK






7



-

100,000

200,000

300,000

400,000

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600,000

1996

1997

1998

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2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013



40.0

45.0

50.0

55.0

60.0

75.0%

80.0%

85.0%

90.0%

95.0%

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US$ sq m/ month


30.0

40.0

50.0

60.0

70.0

80.0

90.0

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

110.0%



US$ sq m/ month


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2013 2014 2015 2016 Onward



MARKET OVERVIEW




MARKET PERFORMANCE




OUTLOOK






7



-

100,000

200,000

300,000

400,000

500,000

600,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013



40.0

45.0

50.0

55.0

60.0

75.0%

80.0%

85.0%

90.0%

95.0%

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US$ sq m/ month


30.0

40.0

50.0

60.0

70.0

80.0

90.0

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

110.0%



US$ sq m/ month


0

100,000

200,000

300,000

400,000

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600,000

700,000

800,000

2013 2014 2015 2016 Onward



MARKET OVERVIEW




MARKET PERFORMANCE




OUTLOOK






7



-

100,000

200,000

300,000

400,000

500,000

600,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013



40.0

45.0

50.0

55.0

60.0

75.0%

80.0%

85.0%

90.0%

95.0%

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US$ sq m/ month


30.0

40.0

50.0

60.0

70.0

80.0

90.0

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

110.0%



US$ sq m/ month


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2013 2014 2015 2016 Onward


HANOI | Q2 2013 | RETAIL MARKET


the market is waiting for opportunities

market oVerVieWin Q2 2013, hanoi retail market welcomed a new supermarket in Dong Da and 4 new electronic marts in Dong Da, hai Ba trung, tu liem and ha Dong. on the other hand, 4 other projects were closed including the shopping center hang Da Galleria.

market operatioNthe average market rent was recorded at approximately Us$66/ sq m, a slight decrease of 0.7% q-o-q. the reopening of trang tien plaza, which was able to achieve higher asking rents, as high as Us$210, than the market average. meanwhile, existing developments both in-side and outside the cBD saw very little change in rental rates. as a developing market, hanoi retail sector only reached 9 stores per one million population, significantly lower than other countries such as thailand, philippine and indonesia. many international players on the market are looking at setting their foothold in hanoi as well as expanding their business.

a few projects with large floor plate are coming to the market and looking for key tenants to attract people to the project. however, as the market is not performing well, many tenants are hesitating whether to expand their business in a new building with vacant office spaces or unsold apartments. regardless of some incentives, including rent free, fitting out package, promotion price, early moving in, experienced ten-ants rather wait for the space to be well organized and operated for a more profitable estimation.

oUtlooka large supply of retail space is expected to come online throughout 2013. the most notable developments are royal city and times city, both being developed by VinGroup. these two projects will add ap-proximately 350,000 sq m of Gfa to the retail market, equal to nearly 49% of the current supply. the significant influx of supply will put pressure on rents and occupancy in the city despite the developers efforts to pre-lease space prior to launch. although retail, in general, remains a healthy market that has been experiencing fairly consistent growth, the market has already witnessed a number of developments closing for renovation or re-structuring tenant mixes to attract tenants amid current pressure, signaling that the market is already in a rela-tively weak position due to oversupply.

meanwhile on the demand side, it is believed that retailers are also facing lots of difficulties in their business when customers are tighten-ing their budget due to the slow economy.

With food hygiene are on the front page of news on a daily basic, many professional food chains, especially western ones, are expanding rap-idly, looking forward to cover up the whole hanoi geographically. pro-jects with retail space that can accept such kitchen inside can take advantage of the expansion plan for a good key tenant.


MARKET OVERVIEW

In Q2 2013, Hanoi retail market welcomed a new supermarket in Dong Da and 4 new electronic marts in Dong Da, Hai Ba Trung, Tu Liem and Ha Dong. On the other hand, 4 other projects were closed including the shopping center Hang Da Galleria.

MARKET OPERATION

The average market rent was recorded at approximately US$66/ sq m, a slight decrease of 0.7% q-o-q. The reopening of Trang Tien Plaza, which was able to achieve higher asking rents, as high as US$210, than the market average. Meanwhile, existing developments both inside and outside the CBD saw very little change in rental rates. As a developing market, Hanoi retail sector only reached 9 stores per one million population, significantly lower than other countries such as Thailand, Philippine and Indonesia. Many international players on the market are looking at setting their foothold in Hanoi as well as expanding their business.

A few projects with large floor plate are coming to the market and looking for key tenants to attract people to the project. However, as the market is not performing well, many tenants are hesitating whether to expand their business in a new building with vacant office spaces or unsold apartments. Regardless of some incentives, including rent free, fitting out package, promotion price, early moving in, experienced tenants rather wait for the space to be well organized and operated for a more profitable estimation.

OUTLOOK

A large supply of retail space is expected to come online throughout 2013. The most notable developments are Royal City and Times City, both being developed by VinGroup. These two projects will add approximately 350,000 sq m of GFA to the retail market, equal to nearly 49% of the current supply. The significant influx of supply will put pressure on rents and occupancy in the city despite the developers efforts to pre-lease space prior to launch. Although retail, in general, remains a healthy market that has been experiencing fairly consistent growth, the market has already witnessed a number of developments closing for renovation or re-structuring tenant mixes to attract tenants amid current pressure, signaling that the market is already in a relatively weak position due to oversupply.

Meanwhile on the demand side, it is believed that retailers are also facing lots of difficulties in their business when customers are tightening their budget due to the slow economy.

With food hygiene are on the front page of news on a daily basic, many professional food chains, especially western ones, are expanding rapidly, looking forward to cover up the whole Hanoi geographically. Projects with retail space that can accept such kitchen inside can take advantage of the expansion plan for a good key tenant.

AVERAGE OCCUPANCY AND RENTS


AVERAGE RENT BY TYPES

SUPPLY BY TYPE, Q2 2013

8

The market is waiting for opportunities

HANOI RETAIL MARKET | Q2 2013

0

50,000

100,000

150,000

200,000

250,000

300,000

Shopping centre

SupermarketHypermarket Wholesale supermarket

Department store

Retail podium


$60

$70

$80

$90

$100

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 Q1 2013 Q2 2013

US$/sqm/month


Average occupancy rate Average asking rent

0

20

40

60

80

100

120

Retail Podium Department Store Shopping Center

US$/sqm/month


Min average asking rent Max average asking rent

0

50,000

100,000

150,000

200,000

250,000

300,000

Thanh Xuan

Hai Ba Trung

Tu Liem Ha Dong

Cau Giay

Tay Ho Ba Dinh Long Bien

Others

sqm



MARKET OVERVIEW


MARKET OPERATION



OUTLOOK








8



0

50,000

100,000

150,000

200,000

250,000

300,000

Shopping centre


Department store

Retail podium


$60

$70

$80

$90

$100

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 Q1 2013 Q2 2013

US$/sqm/month



0

20

40

60

80

100

120


US$/sqm/month



0

50,000

100,000

150,000

200,000

250,000

300,000

Thanh Xuan

Hai Ba Trung

Tu Liem Ha Dong

Cau Giay


Others

sqm



MARKET OVERVIEW


MARKET OPERATION



OUTLOOK








8



0

50,000

100,000

150,000

200,000

250,000

300,000

Shopping centre


Department store

Retail podium


$60

$70

$80

$90

$100

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 Q1 2013 Q2 2013

US$/sqm/month



0

20

40

60

80

100

120


US$/sqm/month



0

50,000

100,000

150,000

200,000

250,000

300,000

Thanh Xuan

Hai Ba Trung

Tu Liem Ha Dong

Cau Giay


Others

sqm



MARKET OVERVIEW


MARKET OPERATION



OUTLOOK








8



0

50,000

100,000

150,000

200,000

250,000

300,000

Shopping centre


Department store

Retail podium


$60

$70

$80

$90

$100

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 Q1 2013 Q2 2013

US$/sqm/month



0

20

40

60

80

100

120


US$/sqm/month



0

50,000

100,000

150,000

200,000

250,000

300,000

Thanh Xuan

Hai Ba Trung

Tu Liem Ha Dong

Cau Giay


Others

sqm


HO CHI MINH CITY | Q2 2013 | RETAIL MARKET

HANOI | Q2 2013 | APARTMENT FOR SALE MARKETHO CHI MINH CITY | Q2 2013 | APARTMENT FOR SALE MARKET


the 30 trillion package warmed the market, but at this point, just spiritually market oVerVieWQ2 2013 was quite an active quarter of the residential market in term of project launching. this is partly thanks to the 30 trillion package that was officially implemented. in total, there were 1,231 new apartments launched in this quarter, of which 73%were from the affordable market and the rest came from the mid-end market, reflecting the fact that high-end segment is still struggling finding the real demand.

Both primary and secondary markets experienced stronger downward trends this quarter with prices decreasing 5.2% and 7.9% q-o-q respec-tively.

the primary marketaverage selling price in the primary market stood at Us$889/ sq m, most-ly due to the decrease in the affordable market. While mid-end market showed no change, high-end and affordable segments decreased 3.0% and 7.1% q-o-q respectively. the strongest decline in the affordable mar-ket is believed to benefit the favorable loan from the Government pack-age. accordingly, only projects with price lower than Us$715 psm can be considered qualified for a loan. Besides, thanks to the softened price, sold rate of the market reached 79%, up 3 pts q-o-q.

the secoNDary marketprice in the secondary market suffered a significant drop of 7.9% to Us$962/ sq m, much stronger than the decline in the primary market. this implied that individual investors are now facing even more financial pressures than the developers and they also have less patience as well as capital to wait for the market to recover.

it is interesting to note that while developers has been switching to afford-able market with price even lower than Us$500 psm, the majority of units in the secondary market are still ranging from Us$1,000 - Us$1,500 psm. this is because these investors already purchased properties at notably high price during the booming time of the market; therefore, now they cannot lower too much than the initial price. meanwhile developers recog-nized that the real demand is in the affordable segment and therefore they flexibly redesigned and adjusted new projects accordingly.

market oUtlookthe 30 trillion package was finally implemented. it showed the intention of the Government to rescue the property market by funding the end buy-ers. however it’s effectiveness is still doubted as so far there have been only few approved cases mostly due to unclear instruction on who will be qualified to receive the loan.

therefore, counting on this package to improve the market is almost im-possible even it did bring some good momentums to the society. appar-ently buyers’ belief is the most important factor, and until this gains back, we will continue to see the market struggling to find buyers and rents will keep decreasing.


MARKET OVERVIEW Q2 2013 was quite an active quarter of the residential market in term of project launching. This is partly thanks to the 30 trillion package that was officially implemented. In total, there were 1,231 new apartments launched in this quarter, of which 73%were from the affordable market and the rest came from the mid-end market, reflecting the fact that high-end segment is still struggling finding the real demand.

Both primary and secondary markets experienced stronger downward trends this quarter with prices decreasing 5.2% and 7.9% q-o-q respectively.

THE PRIMARY MARKET Average selling price in the primary market stood at US$889/ sq m, mostly due to the decrease in the affordable market. While mid-end market showed no change, high-end and affordable segments decreased 3.0% and 7.1% q-o-q respectively. The strongest decline in the affordable market is believed to benefit the favorable loan from the Government package. Accordingly, only projects with price lower than US$715 psm can be considered qualified for a loan. Besides, thanks to the softened price, sold rate of the market reached 79%, up 3 pts q-o-q.

THE SECONDARY MARKET Price in the secondary market suffered a significant drop of 7.9% to US$962/ sq m, much stronger than the decline in the primary market. This implied that individual investors are now facing even more financial pressures than the developers and they also have less patience as well as capital to wait for the market to recover.

It is interesting to note that while developers has been switching to affordable market with price even lower than US$500 psm, the majority of units in the secondary market are still ranging from US$1,000 - US$1,500 psm. This is because these investors already purchased properties at notably high price during the booming time of the market; therefore, now they cannot lower too much than the initial price. Meanwhile developers recognized that the real demand is in the affordable segment and therefore they flexibly redesigned and adjusted new projects accordingly.

MARKET OUTLOOK The 30 trillion package was finally implemented. It showed the intention of the Government to rescue the property market by funding the end buyers. However it’s effectiveness is still doubted as so far there have been only few approved cases mostly due to unclear instruction on who will be qualified to receive the loan.

Therefore, counting on this package to improve the market is almost impossible even it did bring some good momentums to the society. Apparently buyers’ belief is the most important factor, and until this gains back, we will continue to see the market struggling to find buyers and rents will keep decreasing.

PRIMARY MARKET, Q2 2013

OVERALL MARKET OPERATION, Q2 2013

PRICE RANGE, Q2 2013


9

The 30 trillion package warmed the market, but at this point, just spiritually

HO CHI MINH CITY APARTMENTS FOR SALE MARKET | Q2 2013

800

900

1,000

1,100

1,200

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US

$/ s

q m


Primary Secondary

- 7,000 14,000 21,000 28,000 35,000

< US$500 psm

US$500 - US$750 psm

US$750 - US$1,000 psm

US$1,000 - US$1,500 psm

US$1,500 - US$2,000 psm

US$2,000 - US$3,000 psm

> US$3,000 psm


Units

Primary Secondary

500

1,000

1,500

2,000

2,500

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US

$/ s

q m

Source: Colliers International, Q2 2013High end Mid end Affordable

6%

12%

24%58%


Under Construction

Delay

Vacant land

Planning













9



800

900

1,000

1,100

1,200

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US

$/ s

q m


Primary Secondary

- 7,000 14,000 21,000 28,000 35,000

< US$500 psm

US$500 - US$750 psm

US$750 - US$1,000 psm

US$1,000 - US$1,500 psm

US$1,500 - US$2,000 psm

US$2,000 - US$3,000 psm

> US$3,000 psm


Units

Primary Secondary

500

1,000

1,500

2,000

2,500

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US

$/ s

q m


6%

12%

24%58%


Under Construction

Delay

Vacant land

Planning













9



800

900

1,000

1,100

1,200

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US

$/ s

q m


Primary Secondary

- 7,000 14,000 21,000 28,000 35,000

< US$500 psm

US$500 - US$750 psm

US$750 - US$1,000 psm

US$1,000 - US$1,500 psm

US$1,500 - US$2,000 psm

US$2,000 - US$3,000 psm

> US$3,000 psm


Units

Primary Secondary

500

1,000

1,500

2,000

2,500

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US

$/ s

q m


6%

12%

24%58%


Under Construction

Delay

Vacant land

Planning













9



800

900

1,000

1,100

1,200

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US

$/ s

q m


Primary Secondary

- 7,000 14,000 21,000 28,000 35,000

< US$500 psm

US$500 - US$750 psm

US$750 - US$1,000 psm

US$1,000 - US$1,500 psm

US$1,500 - US$2,000 psm

US$2,000 - US$3,000 psm

> US$3,000 psm


Units

Primary Secondary

500

1,000

1,500

2,000

2,500

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

US

$/ s

q m


6%

12%

24%58%


Under Construction

Delay

Vacant land

Planning

HANOI | Q2 2013 | APARTMENT FOR SALE MARKET


to improve market looking in the future

market oVerVieWall the market in Q2 2013 is looking forward for the VND30,000 billion stimulation pack that the government plan on assisting people of low income to access affordable housing. the market, 95% of new launch-es in the first haft 2013 strive to aim on the low income segment of Us$650 to Us$1000 per sq m, with 80% of them are below the Us$1,000 mark. 2 year ago, only 20% of the new launches are below Us$1,000, this shows great interest of the investor in this market as well as reflecting the demand of the public.

the primary marketin Q2 2013, Grade c residential for sale plays the major role in the

primary market as they take 74% of sale on the quarter. only 1% ac-counted for grade a. price adjustment in the market heavily influent primary market even to a decrease of 30% price on certain re-launch-es projects. projects that can keep up with their schedule proved to have significant advantage over other delayed and late ones. the developers also has advantage on adjusting their project to fit with certain particular need of the market. some started to look after the green building and eco-friendly or changed their floor plan for a super size penthouse. such flexibilities gives developer niche to win valuable buyers in such difficult market.

the secoNDary marketsecondary market continue to suffer low liquidity as the fight between investor and developer continue. asking price in tu liem decreased as much as 7% while long Bien, cau Giay and Ba Dinh were also down by 5%. as the primary market reaching their lowest point of price, close to the cost value, secondary market suffer greater on cut lost, foreclosure pressure from the banks. New government assistance policies also favor more significant entities such as bank and primary developer would further deepening the cut on secondary investor who looking for short term capital gain.

oUtlookQ2 2013 provided some light at the end of the turner for the residen-tial market. With the price at lower level and closer to bottom than ever before, home buyers and long term investors are looking for their catches with cautious confidence. Government policies often take a few quarters lag would be the tails wind for projects with suitable price range and fast approaches to the new policies of the market.


MARKET OVERVIEW All the market in Q2 2013 is looking forward for the VND30,000 billion stimulation pack that the government plan on assisting people of low income to afford a house. The market, 95% of new launches in the first haft 2013 strive to aim on the low income segment of US$650 to US$1000 per sq m, with 80% of them are below the US$1,000 mark. 2 year ago, only 20% of the new launches are below US$1,000, this shows great interest of the investor in this market as well as reflecting the demand of the public.

THE PRIMARY MARKET In Q2 2013, Grade C residential for sale plays the major role in the primary market as they take 74% of sale on the quarter. Only 1% accounted for grade A. Price adjustment in the market heavily influent primary market even to a decrease of 30% price on certain re-launches projects. Projects that can keep up with their schedule proved to have significant advantage over other delayed and late ones. The developers also has advantage on adjusting their project to fit with certain particular need of the market. Some started to look after the green building and eco-friendly or changed their floor plan for a super size penthouse. Such flexibilities gives developer niche to win valuable buyers in such difficult market.

THE SECONDARY MARKET Secondary market continue to suffer low liquidity as the fight between investor and developer continue. Asking price in Tu Liem decreased as much as 7% while Long Bien, Cau Giay and Ba Dinh were also down by 5%. As the primary market reaching their lowest point of price, close to the cost value, secondary market suffer greater on cut lost, foreclosure pressure from the banks. New government assistance policies also favor more significant entities such as bank and primary developer would further deepening the cut on secondary investor who looking for short term capital gain.

OUTLOOK Q2 2013 provided some light at the end of the turner for the residential market. With the price at lower level and closer to bottom than ever before, home buyers and long term investors are looking for their catches with cautious confidence. Government policies often take a few quarters lag would be the tails wind for projects with suitable price range and fast approaches to the new policies of the market.

AVERAGE NEWLY-LAUNCHED PRICE

AVERAGE SECONDARY PRICE

NEWLY-LAUNCHED UNITS, Q2 2013

10



Looking forward to the sunshine after night

HANOI APARTMENTS FOR SALE MARKET | Q2 2013

0

2,000

4,000

6,000

8,000

10,000

12,000

Tu Liem Ha Dong Hoang Mai

Dong Da Tay Ho Hoai Duc Cau Giay

Long Bien

Others

units










10





0

2,000

4,000

6,000

8,000

10,000

12,000



Long Bien

Others

units










10





0

2,000

4,000

6,000

8,000

10,000

12,000



Long Bien

Others

units










10





0

2,000

4,000

6,000

8,000

10,000

12,000



Long Bien

Others

units


HO CHI MINH CITY | Q2 2013 | APARTMENT FOR SALE MARKET

RESEARCH & FORCAST REPORT | Q2 2013 | VIETNAM

With more than 100 professionals in 2 offices in Vietnam, the team is market driven and has proven and successful track record with both international and local experience.

From Hanoi to Ho Chi Minh City, we provide a full range of real estate services

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The foundation of our services is the strength and depth of our experience.

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