GBA Meeting 16-01-2012 - CBRE Presentation

7/30/2019 GBA Meeting 16-01-2012 - CBRE Presentation

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Fearless Forecast Do not let a good crisis go to wasteJanuary 2012

Presented by:

Marc TownsendManaging DirectorCB Richard Ellis (Vietnam) Co., Ltd.


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CBRE Vietnam

CBRE VietnamCBRE Vietnam | Page 2 Fearless Forecast 2012

HCMC 2011 Changes

Times Square Saigon M&C Tower Eden A

Taken on January 12, 2012



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CBRE Vietnam


HCMC 2011 Changes

Vietcombank Tower VietinBank BIDV Tower




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CBRE Vietnam


HCMC 2011 Changes

Saigon Centre

(phase 2)

Ben Thanh Towers




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CBRE Vietnam

CBRE VietnamCBRE Vietnam | Page 5 Fearless Forcast 2012

2011 MOST Fearless Forecasts

Office Tenants Multiple choices and softening rents

Hospitality

Ritz Carlton, St. Regis, Mandarin Oriental, Shangri-La and FourSeasons to enter market within the next 5 years

Retail

Refurbished retail areas appear (Saigon Square #3) Shipyards moving towards development

Growth of mini-malls due to lack of land (< 3,000 sm) Larger retail areas coming up outside of traditional areas District 5 (Tan DaShopping Center), and Binh Duong(BecamexNew City)


6/32CBRE VietnamCBRE VietnamCBRE Vietnam | Page 6 Fearless Forcast 2012

2011 MOST Fearless Forecasts

Investors

Property investment remains dangerous for your health Change in asset class as gold dips and people moved in other directions

Developers Marketing spend TRIPLES as developers search for new ways to sell / lease

their units

Increased use of technology in property building management systems, CRMsystems

Local companies seek capital through IPOs and more sophisticated financialstructures

Some residential developers will convert units for sale to unitsfor lease due tounsold units in completed buildings, or instituting rental pools(guarantees) Demand for data centresgrows due to the continuing movement online, as our

businesses become more immediate with wi-fi, smart phones and iPads.Developers prepared to deliver with the requirements needed to support these

trends will profit.


7/32CBRE VietnamCBRE VietnamCBRE Vietnam | Page 7 Fearless Forecast 2012

Source: Historical data by GSO, 1GSO , 2SBV, 3 IMF, 4SJC, 5World Bank, 6Ministry of Investment, 7Oxford Economics

2011 Vietnam Economic Overview2008 2009 2010 2011 e 2012 f

GDP

Growth Rate (y-o-y)

6.2% 5.3% 6.8% 5.91 6.3 3

Lending Rate 12%12.75%

Down from 21%in Q3

16%-17.0%(Late 2010)

22% - 25%2 N/A

Inflation(Average, y-o-y)

22.9% 6.9%1 9.2%(Dec10: 11.8%)

18.58%1 12.1% 3

Exports US$62.7 bil US$57.1 bil US$71.6 bil US$96.3 bil US$105.4 5

Imports US$80.7 bil US$69.9 bil US$84.0 bil US$105.8 bil US$113.3 5

Gold Price(per Tael)

VND17.8 mil

(Dec. 31, 2008, up7.2% y-o-y)

VND26.7 mil

(Dec. 31, 2009,up 50% y-o-y)

VND36.1 mil

(Dec. 31, 2010, up35.2% y-o-y)

VND41.8mil4

(Dec. 30,2011. up15.8% y-o-y) N/A

US$/VND(Commercial banks)

17,400(Dec. 31, 2008)

18,497(Dec. 31, 2009)

19,500(Dec. 31, 2010)

Devalued by 5.4%vs. Dec. 2009

21,036(Dec.31, 2011)

Devalued by 7.9%vs Dec. 2010)

21,7357

US$/VND(Unofficial market) 17,510(Dec. 31, 2008) 19,470(Dec. 31, 2009) 21,010(Dec. 31, 2010) 21,275(Dec. 31, 2011) N/A

Committed FDI US$71.7 bil US$22.6 bil 1US$18.6 bil

(US$6.8 bil realestate)

US$14.7 bil 1

(US$845.6 mil realestate)

US$15 - 16 bi l 6

Implemented FDI US$11.7 bil US$10 bil US$11 bil US$11 bil1

N/A



2011 Regional Economic Comparison

Source: Oxford Economics, Vietnamese General Statistics Office, World Bank, Goldprice.org, goldpricethai.com, pecunix.com

Hong Kong Thailand Singapore China Malaysia Vietnam Indonesia

GDPGrowth Rate

4.9% 1.6% 5.0% 9.0% 4.9% 5.9% 6.3%

Consumer PriceIndex

5.3% 3.9% 5.0% 5.6% 3.2% 18.6% 5.4%

Gold Price

( per gram inUS$ equivalent)

US$51.80 US$50.50 US$52.18 US$51.88 US$52.17

US$53.00

2.2% higherthan regionalaverage

US$52.72

Trade Balance -$55.4 bn $27 bn $48.3 bn $111.9 bn $47.1 bn -$9.5 bn $38.2 bn

FDI (net inflowin current US$,

2010)$68.9 bn $6.3 bn $38.6 bn $185.1 bn $9.5 bn

$8.0 bn(Source: World

Bank)

$13.3 bn



A look ahead to 2012

2012 GDP(% y-o-y) CPI(% y-o-y)Vietnam 5.8 11.5

Hong Kong 3.5 3.6

Thailand 4.5 2.9

Singapore 3.3 2.8

China 8.1 3.5

Malaysia 4.9 2.8

Indonesia 6.2 5.0

Source: Oxford Economics. Note: GDP growth for Vietnam in 2012, The World Bank, IMF and ADB range between 6.1% 6.5%.

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2000Q1

2001Q1

2002Q1

2003Q1

2004Q1

2005Q1

2006Q1

2007Q1

2008Q1

2009Q1

2010Q1

2011Q1

2012Q1

2013Q1

World Western Europe Asia-Pacif ic United States

With demand from the eurozone and USexpected to remain weak for some time,emerging East Asia should continue to worktoward increasing intraregional trade andfinancial integration, and expanding links

with other emerging economies.- ADB, Asia Economic Monitor, December 2011 -



Implemented FDI

2011 Economic Overview FDI

36.8%

27.3%

9.3%

1.7%

24.9%

COMMITTED FDI, 2010Real estate

Processing Manufacturing Industry

Construction

Hotels and restaurants

Others

5.8%

48.5%

8.5%

2.9%

34.3%

COMMITTED FDI, 2011Real estate

Processing Manufacturing Industry

Construction

Hotels and restaurants

Others

Source: Ministry of Planning & Investment


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2011 International Arrivals

2011: 6 million international arrivals to Vietnam (19.1% y-o-y) and

3.5 million to HCMC (13% y-o-y)

Source: General Statistics Offices; bistrochic.net

Tourism arrivals by country 2011China 1,416,804

South Korea 536,408

Japan 481,519US 439,872

Cambodia 423,440

Taiwan 361,051

Australia 289,762

Malaysia 233,132France 211,444

Thailand 181,820

Others 1,438,779

0

1

2

3

4

5

6

7

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Millions

Vietnam HCMC



Car Sales

Nguyen Van Linh theautomobile hub, furthergrowth expected;

Kia New Morning

VND357,000,000(US$17,000);

Entry Level MercedesVND1,500,000,000

(US$70,000); Car Sales by Manufacturer in Vietnam

79%82%

7%2%

34% 34%

22%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mekong (Fiat,

Ssangyong, PMC)

VMC (BMW,

Mazda, Kia)

GM Daewoo VinaS ta r

(Mitsubishi)

Mercedes-Benz

Vietnam

Visuco (Suzuki) Toyota

$.0

$20000.0

$40000.0

$60000.0

$80000.0

$100000.0

$120000.0

2007 2008 2009 2010 11M/2011

CarSales

(unit)

CAR SALES IN VIETNAM



2011 Government Decrees

New in 2011:

Pricing in Dong Decree 95/2011/ND-CP states that VND must be used for quotation or advertising of goodsand services, etc.

Relating to Apartment Service Fees Decision No. 4520/Q-UBND provides that the statutory Apartment Service Fee Rates shall beapplied only when the parties has not yet agreed on the Apartment Service Fee in advance Non-Agricultural Use Tax

Decree No. 53/2011/ND-CP Pilot program for NALU Tax, Prior to enforcement of Decree No. 53 on January 01, 2012, TheMinistry of Finance is unrolling a pilot program to collect non-agricultural land-use tax in certain local

areas of HNi, Cn Thcities and the BcNinh province. The pilot stage will focus on identifying taxation areas as wellas connecting and exploiting thedatabases of local agencies on tax and natural resources.

Requirement for Environmental Impact Statement Decree No. 29/2011/ ND-CP dated April 18, 2011 is the first guidance on the assessment onenvironmental impact Proscribes many requirements and procedures to that are required for specific development projects



The Original Golden Sites

Of the 20 Golden sites: 2 completed 2 under development 16 sites awaiting action



Infrastructure 2011 Milestones

Roadways T3 Thu ThiemTunnel The ten year NhieuLoc -Thi NgheCanal Road

widening project is completed

On August 24, the first Bus Rapid Transport (BRT)route in the city opened from Ben Thanh Market, toMien Tay Bus Station.

Metro lines The expected cost of Metro Line 1 has almost doubled,

with progress in compensation. Tramway Line No. 1 is being restructured into a Bus

Rapid Transit (BRT) system at reduced cost.

Air

DaNangs new airport terminal opens! Prime Minister Dung officially approved Long Thanh

International Airports master plan.

The airport has an area of 5,000 hectares withinvestment capital of US$6.7 billion for the first phase.

VietjetAir, a new private airline, started operation. (1Airbus, 2 on order).

Nhieu Loc - Thi NgheCanal RoadSource: www.info.vn

Da Nang New TerminalSource: Tuoi Tre



2012 Infrastructure

Roads: Construction of the four main roads in the ThuThiemnew urban area will start in July, 2012 Completion is expected 2015.

Bridge: Saigon Bridge No. 2, with four lanes, will start

constructed in April, 2012, and will take 22months to be completed.

Bus system: In 2012, the city will focus on improving the bus

system and services, implementing solutions to

improve the backbone of the citystransportation.

East West Highway



Al l Future Projects HCMC Hanoi Da Nang Can Tho

Nha Trang

(Khanh Hoa)

Vung

Tau

Hai

Phong

Office 267 245 43 22 16 35 13

Retail 86 33 18 7 4 11 5

Hospitalityand SA

44 53 28 12 37 19 6

Residential 311 268 134 10 22 32 9

Projects UnderConstruction

HCMC Hanoi Da Nang Can ThoNha Trang

(Khanh Hoa)VungTau

HaiPhong

Office 166 88 15 15 6 19 7

Retail 42 24 6 6 3 1 3

Hospitalityand SA

25 32 17 5 10 8 2

Resi 142 104 19 3 5 14 5

According to BCI Asia

Source: www.bciasia.com; CBRE Vietnam
http://www.bciasia.com/http://www.bciasia.com/



Office - Rents

$20

$30

$40

$50

$60

2009 2010 2011

$10

$15

$20

$25

$30

2009 2010 2011

$10

$15

$20

$25

$30

2009 2010 2011

Grade A Rents (US$ psm)

Grade B Rents (US$ psm)

Grade C Rents (US$ psm)

Rents 3 y ear 1 y ear 1 quarte rGrade A -55.0% -8.3% -5.8%Grade B -44.0% -7.5% -1.5%Grade C -41.5% -8.5% -3.0%

Off



Office - Vacancy

0%

10%

20%

30%

40%

2009 2010 2011

0%

5%

10%

15%

20%

2009 2010 2011

0%

5%

10%

15%

20%

2009 2010 2011

Grade C Vacancy

Grade B Vacancy

Grade A Vacancyacancy 3 y ear 1 year 1 quarte rGrade A 23.4 pt -14.6 pt -6.1 ptGrade B 14.4 pt 3.3 pt -0.7 ptGrade C -2.6 pt -1.9 pt -0.1 pt

3 Y R id ti l P i M t


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CBRE VietnamCBRE VietnamCBRE Vietnam | Page 21 Fearless Forecast 2012

$900

$930

$960

$990

$1,020

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010 2011

$650

$670

$690

$710

$730

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010 2011

Secondary Asking Price (US$/sm)

$0

$2,000

$4,000

$6,000

2007 2008 2009 2010 2011

Luxury High-endMid-end Affordable

3 Year Residential Price Movement

$4,000

$4,100

$4,200

$4,300

$4,400

$4,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010 2011

Luxury Condominium (US$ psm)

$1,800

$1,830

$1,860

$1,890

$1,920

$1,950

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010 2011

High-end Condominium (US$ psm)

Mid-end Condominium (US$ psm) Affordable Condominium (US$ psm)

T k H


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CBRE VietnamCBRE VietnamCBRE Vietnam | Page 22 Fearless Forcast 2012

Take-up vs. Hangover

Unsold Units Accumulated (Units)

0

2,000

4,000

6,000

8,000

10,00012,000

14,000

16,000

18,000

20,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010 2011

TotalUnsold

Units

UnsoldUnitsbySegment

Luxury High-end Mid-end Affordable Total

0%

10%

20%

30%

40%

50%

60%

70%

80%90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010 2011

Luxury High-end Mid-end Affordable

Take-Up Rate (%)

Some are waking up with their head

in their hands

Th R id ti l Ni ht


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CBRE VietnamCBRE VietnamCBRE Vietnam | Page 23 Fearless Forecast 2012

The Residential Nightmare

Q15,078 launches2,229 sales

Q24,926 launches1,390 sales

864 launches1,867 sales

Q31,096 launches

846 sales

Q4

Resolution 11Resolution 11Dong Devaluation

(9.3%)Dong Devaluation

(9.3%)

US$6,000/unitin Binh Duong

US$6,000/unitin Binh Duong

2012Death,

Discount orOpportunity

?

Doc. 8844 /NHNN-CSTT: Remove 4real estate groups out of the non-productive outtsatndingloan category

Doc. 8844 /NHNN-CSTT: Remove 4real estate groups out of the non-productive outtsatndingloan category

Goldora Villasold to ICC

Goldora Villasold to ICC

Discount HeadlinesDiscount Headlines

Property sector, the most attractiveinvestment channel, but morecautious to invest in 1-3 years

(survey by Grant Thornton Vietnam)

Property sector, the most attractiveinvestment channel, but morecautious to invest in 1-3 years

(survey by Grant Thornton Vietnam)

More incentives to

stimulate salesMore incentives to

stimulate sales

More strictly control ondolarisation price list in

VND

More strictly control ondolarisation price list in

VND

The AscottsignedDiamond Island (D.2)The AscottsignedDiamond Island (D.2)

Intl banks stoppedmortgage lending

Intl banks stoppedmortgage lending

R t il


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Retail

The past 18 months has seen shopping centre

rentals create a buzz; 2012, we expect department store rentals to come

back to the forefront: Lack of quality space in the CBD; Still a softening on rents

2012, shopping centre rentals in the CBD to remainsoft; Saigon Centre phase 2, theCBD retail hub on the

horizon;

First new supply in CBD with department store;

Department Store vs. Shopping Centre

1st quality shopping centre outside the CBD

Crescent Mall; However, rentals still softening as retailers have

multiple options and established SHOPHOUSElocation remain popular;

Non-CBD Asking Rents (US$/sm/month)

Source: CBRE Vietnam

$0

$20

$40

$60

$80

$100

2008 2009 2010 2011

Department Store Shopping Centre

CBD Asking Rents (US$/sm/month)

Source: CBRE Vietnam

$0

$20

$40

$60$80

$100

$120

$140

2008 2009 2010 2011

Department Sto re Shopping Centre

H t l 2012


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Hotels 2012

Occupancy and RevPAR bothshowing signs of growth in 2011.

Coastal markets such as Phu Quoc,Nha Trang and DaNang showed a higher

RevPARgrowth rate than HCMC:20

25

30

35

40

45

50

55

60

2009 2010 2011F

RevPAR (US$/room/night)

HCMC Da Nang Phu Quoc Nha Trang

Phu Quoc continues to lead the coastalmarket with 20% y-o-yincrease inRevPAR, expected to be an attractivedestination for investors in 2012.

The operation of new DaNang InternationalAirport terminal in December,2011facilitates more direct internationalflights to Da Nang from locations suchas Seoul and Kuala Lumpur.

D N H t l /R t /2nd H 2012


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Da Nang Hotels/Resorts/2nd Home 2012

2011 y-o-y increase in visitors was 34%, of which international visitors

increased 44% y-o-y

The Hyatt Regency came online in Q4 with 200 five-star rooms, 2012expects InterContinental, Le Meridien, Melia and Pullman to enter DN

In 2012, the DN hospitality market will target Russian tourists with directRussia Da Nang flights in consideration

Da Nang market continues to perform with 60% of the 40 villas launchedat The Point sold within three months

No construction expected in 2012 without pre-sales

Projects away from the coast see action too WTC leasing (anchorsalready signed) and Azura to complete Q2

S i d A t t 2011


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Serviced Apartments 2011

Demand derived from 3 sources:

Professional expatriates main source Both from Asia and the West Hanoi: employees in the Embassies Returning Overseas Vietnamese Wealthy Vietnamese a new and growing trend Vietnam will be the 11th most common

destination of companies sending staff oninternational assignments up to 2013. Therefore,this is likely to ensure that the demand for

accommodation from companies sending staff intoVietnam is likely to remain strong in the next threeyears.

--- Trends in Managing Mobility

Survey 2010, ECA International

H1/2011 work permits issuedto foreigners in HCMC: Achieved 85.1% of entire 2009 Down 16.5% against H1/2010

$0 -$1200 $1200 - $2500 $2500 - $3500 $3500+

Q4/2010 10.0% 40.0% 40.0% 10.0%

Q1/2011 17.9% 41.5% 29.2% 11.3%

Q2/2011 20.5% 48.2% 24.1% 7.2%

Q3/2011 11.7% 52.1% 26.6% 9.6%

Source: CBRE Residential Leasing

Proportion of Housing Budget (US$/month)

Proportion of Requested Area (sm)

Source: CBRE Residential Leasing

0%

20%

40%

60%

80%

100%

Q1/2011 Q2/2011 Q3/2011 Q4/2011

0 - 60 60 - 100 100 - 160 160+

TOP DEMAND!

ILS 2012 Forecast


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Logistics component becomes a must inindustrial park zoning.

Logistics to grow as Asian regional tradebuoys economy through Eurozonecrisisand slower US growth.

Japanese investment KEY. Both fromJapan directly, and from Japanesecompanies relocating out of Thailand.

Potential growth areas: Food & Beverage for South Vietnam Electronics for North Vietnam.

Ready Built Factory rental rates comedown as more supply than ever before.

With the increasing profile of industrial inVietnam, more investors seek wholesale

purchases of operating IPs.

ILS 2012 Forecast

Th Ri f I t t Th I tit ti l D l


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The Rise of Investment - The Institutional DealAnd a notable variance in yield

At least three

moreinstitutionaldeals to come

in 2012

At least threemore

institutionaldeals to come

in 2012

Pacific Place, Hanoi

Q4 2010 Reported 12%CentrePoint, HCMC

Q2 2011 Reported 10.6 11.3%

Saigon Tower, HCMC

Q4 2011 Reported 8.5%

CBREs 10 Most Fearless Forecasts


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CBRE s 10 Most Fearless Forecasts

1. Nguyen Traistill the retail king!2. Square office buildings back in fashion! The best tenant deals will have happened

in the first half of 2012.

3. Any residential project that hasnt broken ground will gravitate to the affordable(new middle class, less than 21,000,000VND psm) segment.

4. Luxury residential in the CBD WILL sell.5. Golf Boom or Bust?!?6. Revenue from cleared sites skyrockets as they are converted intodrive-in movie

theatres and Circle K.7. Burger King opens at DaNang airport and Sushi Bar opens in Phu Quoc as

overseas visitors increase a further 20%.

8. In the short-term the new Pudongis not Thu Thiem, it is District 4.9. Gold price declines with new supply from Vietnams two gold medals at the

London Olympics 2012.

10.Registered FDI into real estate triples in 2012 as Vietnam sees 20 new foreigninvestors.

11. Jack Dorsey to spend Christmas 2012 in Vietnam, @Townsend_Marc to have

50,000 followers

On December 31, 2012

2012: Gold Supply in Vietnam Increases


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CBRE VietnamCBRE VietnamCBRE Vietnam | Page 31 Fearless Forcast 2012Source: vov.vn; giadinh.net.vn; tuoitre.vn ; 1star1objet.fr

2012: Gold Supply in Vietnam Increases

The magic from Trinh Ducs performance in the

Rugby World Cup is overshadowed by: Quy Phuc is expected to win the gold in 100 m

freestyle Anh Tuan is expected to win the gold in


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The most insightful real estate publication in Vietnam!

Plan your future with two quarter and eight quarter forward looking analysis.

CBRE Vietnam - HCMC & Hanoi Quarterly Reports

2012 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CB Richard Ellis (Vietnam) Co., Ltd. We obtained some of the

information above from sources we believe to be reliable. However, we have not verified the accuracy of the information which we obtained from other sources and make noguarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us forexample only, and they may not represent current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot bereproduced without prior written permission of CB Richard Ellis.

THANK YOU

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