Vietnam MB Q2 2015 English

Cushman & Wakefield Vietnam

Unit 602, Asia Tower

6 Nha Tho Str., Hoan Kiem Dist

Hanoi

www.cushmanwakefield.com/knowledge

For more information, contact:

Jonathan Tizzard, Director

+(84) 93 986 4192

[email protected]

The market terms and definitions in this report are based on NAIOP standards. No warranty or

representation, express or implied, is made to the accuracy or completeness of the information

contained herein, and same is submitted subject to errors, omissions, change of price, rental or other

conditions, withdrawal without notice, and to any special listing conditions imposed by our principals.

© 2014 Cushman & Wakefield, Inc. All rights reserved.

ECONOMY

1H 2015 witnessed an increase in GDP of

6.28% compared to the same period last

year, which is the highest level since 2008

(with 2013 at 4.9% and 2014 at 5.18% by way

of comparison). Inflation remains under

control, with the Consumer Price Index (CPI) increasing just 0.86%

year-on-year. Inward FDI to Vietnam in the 1H of 2015, including

both newly registered and additional FDI capital, reached US$5.49

billion, down 19.8% year-on-year. However, disbursed FDI

increased by 9.6% year-on-year to US$6.3 billion. Among the

provinces, Dong Nai attracted the largest share totaling US$900.8

million (23.5%), followed by HCMC with US$765.8 million (19.9%)

and Tay Ninh with US$282.7 million (7.4%). A total of 46 nations

and territories registered new FDI in the first six months, with

Korea, Turkey, Virgin Islands (UK), Hongkong and Japan accounting

for 75% of the total in the 1H of 2015. Sector-wise, the

manufacturing and processing industry accounted for 76.2% of total

registered capital, followed by real estate (8.5%)

OFFICE MARKET OVERVIEW

There were no new office buildings entering the market

for either Grade in the second quarter of 2015. Currently,

there are 21 Grade A and 64 Grade B office buildings (*), providing

nearly 375,000 square meters (sq.m.) and 747,000 sq.m. to the

market respectively.

The average asking rents for both Grades remained stable

compared to the previous quarter. However, whilst Grade A

rents were stable on a year-on-year basis, standing at VND654,000

per square meter per month (/sq.m./mo), equivalent to

US$30/sq.m./mo., Grade B’s rent decreased by 4.7% year-on-year

to VND392,400/sq.m./mo., equivalent to US$18/sq.m./mo.

The occupancy rate of both Grades improved significantly

this quarter on both a quarter-on-quarter and year-on-

year basis. Grade A’s increased by 3 percentage points on both a

quarter-on-quarter and year-on-year basis, reaching 81%;

occupancy rate of Grade B stood at 84%, an increase by 2

percentage points quarter-on-quarter and 12 percentage points

year-on-year. The significant increase in Grade B’s occupancy year-

on-year were mainly from Hapulico Complex and Viet A Tower.

(*)Service charge included, VAT excluded

OUTLOOK

No new Grade A offices are due to come online in 2015, but a lot

of Grade B supply is expected to enter the market in 2015. The

office market will continue to face an oversupply over the year due

to a significant number of office projects currently in the fitting-out

stage, especially in the western part of the city (such as Diamond

Flower Tower, 789 Building and Discovery Complex). Therefore,

rental declines are expected to continue and will be of considerable

concern for landlords. Tenants, however, can look forward to

more flexible leasing terms in addition to falling rents.

There is expected to be around 715,000 sq.m. of office space

across all Grades coming onto the market in the next two years,

thus more opportunities for tenants when choosing office space

with a reasonable rental rate.

STATS ON THE GO

Q2 2015 Q-O-Q CHANGE Y-O-Y CHANGE

12 MONTH FORECAST

Grade A Overall Vacancy 18.7% -2.9% -3.1%

Grade A Overall Rents US$30 -0.5% 0.5%

Grade A Absorption (sq.m.) 10,831 -0.1% 202%

ECONOMIC INDICATORS

VIETNAM 2013 2014 2015F

GDP Growth 5.42% 5.98% 6.20%

CPI Growth 6.6% 4.09% 5.0%

Unemployment 2.2% 2.08% 2.06%

SOURCE: GSO

DIRECT RENTAL VS. VACANCY RATES

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

5

10

15

20

25

30

35

40

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

2011 2012 2013 2014 2015

US

$/s

q.m

/mo

.

Grade A overall rent Vacancy

Q2 2015 HANOI, VIETNAM

OFFICE SNAPSHOT MARKETBEAT

A Cushman & Wakefield Research Publication


Unit 602, Asia Tower

6 Nha Tho Str., Hoan Kiem Dist

Hanoi

www.cushmanwakefield.com/knowledge



+(84) 93 986 4192

[email protected]






HANOI, VIETNAM

SUBMARKET INVENTORY (SQ.M)

OVERALL VACANCY RATE

UNDER CONSTRUCTION (SQ.M)

YTD CONSTRUCTION COMPLETIONS (SQ.M)

OVERALL NET ABSORPTION (SQ.M)

AVERAGE GROSS RENT

(US$/SQ.M/MTH)

US$

SF/YR

EURO SF/YR

Q1 2015 Q2 2015 Q2 2015 Q2 2015

CBD Grade-A 168,580 14% 0 0 -2,337 35.8 33.6 37.4 33.3

CBD Grade-B 65,600 15.4% 16,000 0 1223 24.7 26.7 29.8 26.5

CBD

TOTALS

234,200 14.3% 16,000 0 -1,114 31.8 31.7 35.3 31.4

Non- CBD Grade-A

206,200 22.6% 160,000 0 13,168 28.2 27.2 30.3 26.9

Non-CBD

Grade-B

681,300 16.6% 319,500 5,500 12,853 17.5 17.2 19.1 17

NON-CBD

TOTALS

887,500 18% 479,500 5,500 26,021 18.4 19.5 21.7 19.3

* RENEWAL NOT INCLUDED IN LEASING ACTIVITY STATISTICS

MARKET HIGHLIGHTS

SIGNIFICANT Q1 2015 LEASE TRANSACTIONS

BUILDING NAME SUBMARKET TENANT BUILDING CLASS SQUARE METER

Hong Ha Center Hoan Kiem BSH A 800

Lotte Center Hanoi Dong Da Worldquantz A 600

Hanoi Toserco Cau Giay ILA B 600

PV Oil Cau Giay Vietcombank B 2100

SIGNIFICANT PROJECTS UNDER CONSTRUCTION

PROJECT NAME SUBMARKET AREA (SQM) COMPLETION DATE STATUS

Handico Tower Tu Liem 27,000 2015 Fitting Out

HUD Tower

MD Complex Tower

Cau Giay

Tu Liem

42,000

24,700

2015

2015

Fitting Out

Under construction

789 Tower Cau GIay 60,400 2015 Under construction

Thang Long Garden Hai Ba Trung 16,150 2015 Under construction

Diamond Flower Tower

Mo Market Trade Center

Cau Giay

Hai Ba Trung

20,000

35,200

2015

2016

Under construction

Fitting Out

Discovery Complex Cau Giay 45,000 2016 Under construction

Cushman & Wakefield Viet Nam

Level 14, Vincom Center Building

72 Le Thanh Ton, District 1, HCMC

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ECONOMY


6.28% compared to the same period last year,

which is the highest level since 2008 (with 2013

at 4.9% and 2014 at 5.18% by way of

comparison). Inflation remains under control,

with the Consumer Price Index (CPI) increasing just 0.86% year-on-

year. Inward FDI to Vietnam in the 1H of 2015, including both newly

registered and additional FDI capital, reached US$5.49 billion, down

19.8% year-on-year. However, disbursed FDI increased by 9.6% year-

on-year to US$6.3 billion. Among the provinces, Dong Nai attracted

the largest share totaling US$900.8 million (23.5%), followed by

HCMC with US$765.8 million (19.9%) and Tay Ninh with US$282.7

million (7.4%). A total of 46 nations and territories registered new

FDI in the first six months, with Korea, Turkey, Virgin Islands (UK),

Hongkong and Japan accounting for 75% of the total in the 1H of

2015. Sector-wise, the manufacturing and processing industry

accounted for 76.2% of total registered capital, followed by real estate

(8.5%)

MARKET OVERVIEW

There was no new supply in Q2 2015. The retail component of

Keangnam Landmark 74 is currently under reconstruction and likely

to stay inactive at least until the end of 2015. The total retail supply as

of Q2 2015 was recorded at 722,609 square meters (sq.m) from 20

shopping centres, 2 department store, and 23 retail podiums.

The average asking rents for ground floor shopping centres and

department stores fell by 1% quarter-on-quarter, to circa US$36.90

per square meter per month (/sq.m./mo), whilst retail podiums

showed an increase of 3% quarter-on-quarter, to US$46.60/sq.m/mo.

Overall rents remained stable at US$37.70/sq.m/mo., However, this is

projected to trend downwards in the long run due to supply

overhang as well as incoming supply, especially from retail podiums in

condominium complexes; vacancies are expected to rise in tandem.

The occupancy rates of shopping centres and department stores

remained stable quarter-on-quarter, standing at 81%, whilst retail

podium rose by nearly 3 ppts to reach 88.7%.

(*)ALL RENTS ARE ASKING RENTS, SERVICE CHARGE INCLUDED AND VAT EXCLUDED

OUTLOOK

Both the total supply of shopping centre and retail podium will

increase in coming time, and it is noted that a significant retail

podiums will cluster in the suburban districts (Cau Giay, Tu Liem and

Thanh Xuan districts)

Under the Trans-Pacific Partnership (TPP), a majority of the import

duties on goods will be removed. Once the agreement is signed,

together with further liberalization of the retail sector under the

provisions of the WTO starting in January 2015 where many taxed

goods’ tariffs will be lifted, Vietnam’s retail market should become a

more attractive destination for international retailers.

ECONOMIC INDICATORS

NATIONAL 2013 2014 Q2 2015

GDP Growth 5.42% 5.98% 6.28%

CPI Growth 6.6% 4.09% 0.86%

Retail Turnover 12.6% 11.1% 9.80%

SOURCE: GSO, World Bank

PRIME RETAIL RENTS – Q2 2015

MAINSTREETS MIL VND SQM/MTH

EURO SF/MTH US$ SF/MTH Q-O-Q CHANGE

Y-O-Y CHANGE

Ba Trieu 0.8 – 1.6 3.2 – 6.3 3.5 – 6.9 0% -

Pho Hue 0.8 - 1.6 3.2 - 6.3 3.5 - 6.9 0% -

Thai Ha 0.5 - 1.2 2.0 - 4.7 2.2 - 5.2 0% -

Lang Ha 0.6 – 1.2 2.3 - 4.7 2.6 - 5.2 0% -

MALLS MIL VND SQM/MTH

EURO SF/YR US$ SF/YR Q-O-Q CHANGE

Y-O-Y CHANGE

Vincom Center

Towers A&B

2.2 99 111 0% -4.8%

Trang Tien

Plaza

3.3 148 167 0% -21%

Parkson Viet

Tower

1.6 74 84 0% -11.8%

Vincom Mega

Mall – Royal

City

0.8

35 39

0%

-6.7%

Vincom Mega

Mall – Times

City

0.7

30 33

0%

-14.3%


PROPERTY LOCATION SQUARE METERS COMPLETION DATE

Thang Long Mall Tu Liem 11,246 2015

Aeon Mall Long Bien 108,000 2016

Mipec Long Bien Long Bien 17,550 2016

Vincom NCT Dong Da 65,400 Q1 2016

HANOI, VIETNAM

RETAIL SNAPSHOT MARKETBEAT

A Cushman & Wakefield Research Publication Q2 2015

mailto:[email protected]







+(84) 93 986 4192

[email protected]






ECONOMIC OVERVIEW




(with 2013 at 4.9% and 2014 at 5.18% by way

of comparison). Inflation remains under














MARKET OVERVIEW

The total supply of industrial parks (IPs) in the Hanoi market in Q2

2015 remained stable with total leasable area of ten IPs standing at

1,423 hectares. The land available for lease recorded a decrease of

3% percentage points compared to the same period last year, but

remained stable quarter-on-quarter, standing at 30% of total supply.

Five out of ten operating IPs are fully occupied in Q2 2015. The

remaining IPs having land for lease are Hoa Lac Hi-tech Park, Phu

Nghia IP, Noi Bai IP (Phase II), Quang Minh I and HANSSIP I, of

which Hoa Lac Hi-tech Park still has the highest vacancy rate (70%)

with approximately 346 hectares available for lease.

The average quoting rent of Hanoi IPs in Q2 2015 remained stable

quarter on quarter, but decreased slightly by 1% year-on-year,

standing at around VND2,289,000 per square meter per term(*)

(equivalent to over US$105/sq m/term). Management fees in these

IPs range from US$0.40 to US$1/sq m/month. The average asking

rent of IPs in Hanoi continued to be the highest compared to all

the cities/provinces in the northern region of Vietnam.

There are currently 21 countries and territories investing in Hanoi

IPs with projects mainly focused in the field of supporting

industries, mechanical engineering and electronics. Japan, China,

Hong Kong are still the leading investors.

OUTLOOK

An additional supply of about 6,100 hectares from 14 identified IP

projects is expected to enter the market through 2020, which is

equivalent to 400% of current supply. By 2030 with vision to 2050

Hanoi will have 33 IPs with an area of 8,000 hectares. With labor

costs increasing in China, foreign investments in IPs is expected to

grow continually in the medium to long-term as manufacturing

companies shift their operations to other countries, including

Vietnam and in particular, Hanoi.

MARKET STATISTICS

SUBMARKET TOTAL AREA (HA) LEASABLE AREA (HA) NO. OF IPS

Gia Lam 97 78 1

Long Bien 40 32 1

Soc Son 163 114 2

Me Linh 344 240 1

Tu Liem 30 24 1

Chuong My 170 111 1

Dong Anh 274 206 1

Thach That & Quoc Oai 705 619 2=

SIGNIFICANT FUTURE PROJECTS

IP NAME DISTRICT AREA (HA) STATUS

Phung Hiep Chuong My 200 Site clearance

North Thuong Tin Thuong Tin 430 Site clearance

Quang Minh II Me Linh 266 Site clearance

Soc Son Clean IP

Thanh My- Xuan Son

Soc Son

Son Tay

340

100

Site clearance

Planning

PERFORMANCE BY DISTRICT

* ALL RENTS ARE ASKING RENTS, VAT EXCLUDED


INDUSTRIAL SNAPSHOT MARKETBEAT


0%

20%

40%

60%

80%

100%

0

50

100

150

200

US$

/sq.m

/peri

od

Rent Occupancy








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RESIDENTIAL FOR SALE MARKETBEAT


ECONOMIC OVERVIEW




(with 2013 at 4.9% and 2014 at 5.18% by

way of comparison). Inflation remains under














RESIDENTIAL FOR SALE MARKET OVERVIEW

Q2 2015 witnessed moderate launch activities across all

grades with one grade A and four grade B and C projects yielding

nearly 1,200 units in total. In addition, several active grade B and C

projects also launched a total of 3,681 new units (in which 2,487

from grade B and 1,194 from grade C). The total primary supply in

this quarter was more than 15,000 units.

Grade C accounted for the greatest market share (56% of total

primary supply), followed by Grade B (42%) and Grade A (2%).

Q2 2015 also recorded better sale performances across all

grades. This can be attributed to the improvement in customers’

rapidly improving confidence in the market in addition to the

punctual construction progress, promotions, flexible payment

terms from developers and a rent guarantee program applied at

mid and high-end projects.

Good sales at Vinhomes Nguyen Chi Thanh project and relatively

optimistic sales of newly launched grade A project D’le Pont D’or

contributed to the high absorption rate of 58.5% of grade A

projects during the quarter. Both grade B and C sectors also

showed positive absorption rates of 47.2% and 42.1% respectively.

However, grade A average asking prices fell significantly by 17.4% as

a result of a new project that was launched at below average price

levels (VND44.6 million/sq.m) and the limited remaining supply of

active grade A priced at an average of VND 51.8 million/sq.m

(equivalent to US$ 2,378/sq.m). The asking price for grade B stood

at VND33.6 million/sq.m (equivalent to US$1,543/sq.m), with

Grade C remaining affordable at VND16.8million/sq.m (equivalent

to US$770/sq.m)

(*): ALL PRICES ARE VAT EXCLUDED

OUTLOOK

Low-end apartments will continue to be the most sought-after and

most liquid going forward. However, the demand for mid and high-

end apartment is expected to grow as more investors are entering

the market. With the new Housing Law and downward interest

rates encouraging buyers, the apartment market will continue to

improve in 2H 2015. While looser foreign ownership restrictions,

which will take effect from July 2015, might not have an immediate

impact, the effect is overall positive as foreign interest in Vietnam

should help improve market liquidity. In addition, the amended law

on real estate, to take effect from July 1 and which guarantees off

plan residential sales by banks, an immediate increase in prices is

expected to be passed on by the developer to consumers.

ECONOMIC INDICATORS

VIETNAM 2013 2014 1H 2015F

GDP Growth 5.42% 5.98% 6.28%

CPI Growth 6.6% 4.09% 0.86%

Source: GSO

ASKING PRICES OF ALL SEGMENTS Q2 2015

PRIMARY MARKET PERFORMANCE Q2 2015

0

20

40

60

80

Grade A Grade B Grade C

mil V

ND

Lowest asking price Highest asking price

0

2,000

4,000

6,000

8,000

10,000


un

its

Primary supply No. of units sold








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MARKET HIGHLIGHTS

Significant Residential Projects Launched in Q2 2015 LOCATION EXPECTED COMPLETION UNITS LAUNCHED SALE PRICE

(VND/SQ.M.)

D’Le Pont D’or

Park Hill (Times city phase 2) 2, 5

Trang An Complex

Eco Green City

The Crown

Season avenue

219 Trung Kinh

Hateco Hoang Mai

Goldsilk Complex

Thang Long Victory (T2)

Parkview Residence (H, J, K)

New Horizon City

A1CT2 Linh Dam

The Sparks Le Van Luong HH2

Dong Da

Hai Ba Trung

Cau Giay

Ha Dong

Ha Dong

Ha Dong

Cau Giay

Hoang Mai

Ha Dong

Tu Liem

Ha Dong

Hoang Mai

Hoang Mai

Ha Dong

2017

2016

2017

2017

2015

2017

2017

2017

2017

2017

2016

2017

2016

2017

178

561

175

300

400

88

55

145

80

100

250

152

140

360

44,600,000

35,500,000

29,000,000

22,700,000

28,700,000

29,400,000

29,600,000

15,000,000

21,300,000

12,400,000

16,400,000

19,500,000

19,700,000

16,000000

Significant Projects Under Construction LOCATION DEVELOPER EST. NUMBER OF UNITS EXPECTED COMPLETION

Mipec Riverside

Hoa Binh Green City (Tower B)

Green Star (B4, B5)

Sun square

Discovery Complex

Vinhomes 56 Nguyen Chi Thanh

Long Bien

Hai Ba Trung

Pham Van Dong

Tu Liem

Cau Giay

Dong Da

Mipec

Hoa Binh Corp.

Geleximco

Thang Long

Kinh DoTCI Group

Viettronics -

Vingroup

435

560

520

392

500

378

Q3 2015

Q3 2015

Q4 2015

Q1 2016

Q1 2016

Q1 2016








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ECONOMIC OVERVIEW




(with 2013 at 4.9% and 2014 at 5.18% by

way of comparison). Inflation remains under control, with the

Consumer Price Index (CPI) increasing just 0.86% year-on-year.

Inward FDI to Vietnam in the 1H of 2015, including both newly

registered and additional FDI capital, reached US$5.49 billion,

down 19.8% year-on-year. However, disbursed FDI increased by

9.6% year-on-year to US$6.3 billion. Among the provinces, Dong

Nai attracted the largest share totaling US$900.8 million (23.5%),

followed by HCMC with US$765.8 million (19.9%) and Tay Ninh

with US$282.7 million (7.4%). A total of 46 nations and territories

registered new FDI in the first six months, with Korea, Turkey,

Virgin Islands (UK), Hongkong and Japan accounting for 75% of the

total in the 1H of 2015. Sector-wise, the manufacturing and

processing industry accounted for 76.2% of total registered

capital, followed by real estate (8.5%)

SERVICED APARTMENT MARKET OVERVIEW

Supply remained unchanged in Q2 2015 for both grades. Overall,

there are 12 grade-A projects and 21 grade-B projects, supplying

1,950 and 1,500 units to the market, respectively.

In Q2 2015, the average asking rent of grade A rose more than

6% q-o-q but declined 2% y-o-y, to VND722,473 per square meter

per month (/sq.m/mo.) or US$33.14/sq.m/mo. This fluctuation is

attributed to the increase in rents of Fraser Suites Hanoi and

Somerset Grand Hanoi over the period. Grade B asking rents

remained stable quarter-on-quarter but recorded a slight fall on a

year-on-year basis by nearly 5%. The average asking rent of grade

B was VND462,972 (/sq.m/mo.) or US$21.24(/sq.m/mo.)

In terms of occupancies, both grades witnessed an improvement

in occupancy rates when compared to the previous quarter.

Specifically, grade A projects increased by 2ppts q-o-q to 83%, but

down 2 ppts y-o-y. Grade B showed an upward trend of nearly 5

ppts q-o-q and 9 ppts y-o-y, to 94%, mainly due to the DMC Lake

view and Coco village projects becoming more affordable due to

the decline in rental rates.

OUTLOOK

Additional supply from new projects, especially from the

conversion of condominium-for-sale into serviced apartments is

expected to place downward pressure for the HN serviced

apartment market.

There will be no new projects launching in the next two quarters

of 2015, however, approximately 100 new units from existing

projects will be added to the current stock, and circa 250 units

from two projects are set to launch in 2016. As such, compared

to the current level of supply, the total supply across both grades

will grow by 4% and 11% by the end of 2015 and 2016,

respectively.

* ALL RENTS ARE ASKING RENTS, SERVICE CHARGE INCLUDED AND VAT EXCLUDED

RENTAL VALUES AS OF Q2 2015

SUBMARKET AVERAGE RENT VND/SQ.M./MTH

% CHANGE SHORT TERM OUTLOOK Q-O-Q Y-O-Y

GRADE A

CBD 753,453 10% 5.5%

Non – CBD 718,285 5.6% -2%

GRADE B

CBD 516,227 -0.2% -8.5%

Non - CBD 442,348 -4.2% -9.5%

Grade A & B Overall Rental Vs. Occupancy Rate Q2 2015

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

VN

D/s

q.m

/mo.

Grade A - Rent Grade B - Rent

Grade A - Occupancy Grade B - Occupancy


SERVICED APARTMENT

SNAPSHOT

MARKETBEAT








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STATS ON THE GO

CURRENT SUPPLY BY GRADE IN Q2 2015

GRADE NO. OF BUILDINGS NO. OF UNITS

A 12 1,948

B 21 1,507

SIGNIFICANT PROJECTS UNDER CONSTRUCTION/PLANNING

BUILDING LOCATION DEVELOPER EST. NUMBER OF UNITS EXPECTED COMPLETION

Hoang Thanh Tower Hoan Kiem Tran Hung Dao Jsc 50 2015

West Point Tay Ho Golden Villa Ltd. 200 2016

27 Thai Thinh Street Dong Da Handico 52 50 2016

Somerset West Central

Le Roi du Soleil

Cau Giay

Tay Ho

Handico - Thuy Duong Jsc

Tan Hoang Minh Corp.

50

N/A

2016

Onwards







+(84) 93 986 4192

[email protected]

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation,

express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted

subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special

listing conditions imposed by our principals. © 2014 Cushman & Wakefield, Inc. All rights reserved.

ECONOMY



which is the highest level since 2008 (with

2013 at 4.9% and 2014 at 5.18% by way of





19.8% year-on-year. However, disbursed FDI increased by 9.6%

year-on-year to US$6.3 billion. Among the provinces, Dong Nai

attracted the largest share totaling US$900.8 million (23.5%),






processing industry accounted for 76.2% of total registered capital,

followed by real estate (8.5%)

OFFICE MARKET OVERVIEW

VTP, a Grade B office building in District 1 was removed

this quarter due to the conversion to internal use, thus

decreasing the total stock of Grade B spaces marginally by 6,500

square meters (sq.m.) to reach 660,700 sq.m. from 46 buildings.

This marked a 1% decrease quarter-on-quarter but an increase of

1% year-on-year. Grade A stock remains unchanged pending the

delivery of Vietcombank Tower in the third quarter. Currently,

there are nine Grade A office buildings, providing 156,700 sq.m. of

space to the market.

Occupancy of both Grades continued to increase this

quarter, with the occupancy rate of Grade A increasing by 1% on

both a quarterly and yearly basis to 92%, whilst Grade B’s average

occupancy has trended upward during the last eight quarters,

increasing by some 2% year-on-year to 94%. The Grade B buildings

in the CBD achieved a high average occupancy of 94%.

Approximately 35% of Grade B buildings in this area had seen

occupancy increase. On the other hand, the average occupancy in

the non-CBD remained slightly higher than those in the CBD over

the last four quarters at 95%, showing that tenants remained

attracted due to the area's affordability.

In terms of rents, the average rents(*) of both Grades

remained stable on both a quarterly and yearly basis at around

VND1,000,000 per square meter per month (/sq.m./mo), equivalent

to US$46.60/sq.m./mo for Grade A; and VND595,000/sq.m./mo

(US$27.30/sq.m./mo) for Grade B.

* ALL RENTS ARE ASKING RENTS, SERVICE CHARGE INCLUDED AND VAT EXCLUDED The

total net absorption of both Grades stood at 1,230 sq.m. in the

second quarter (-91% quarter-on-quarter and -93% year-on-year).

Grade A’s net absorption reached 1,360 sq.m. while Grade B

reported a negative absorption of 126 sq.m (-100.8% year-on-year),

mainly from buildings in the non-CBD area.

OUTLOOK

In the second half of 2015, the HCMC market is expected to

welcome more than 100,000 sq.m. of office space from one Grade

A and three Grade B projects, providing more options for

occupiers. New leases inked could have more flexible leasing terms

and more incentives as landlords compete for tenants.

Competitive deals remain available for the best and largest tenants

as new supply gets delivered with Vietcombank, Lim Tower 2, and

Pearl Plaza, being the most prominent. A lack of quality Grade A

leasable space may mean rents will stabilize in the fourth quarter of

2015.

STATS ON THE GO

2Q15 Q-O-Q CHANGE

Y-O-Y CHANGE

12 MONTH OUTLOOK

Overall Vacancy 7.8% 0.87% 0.9%

Grade A Overall Rents $46.6 -0.34% -0.31%

Absorption (sq.m.) 1,359 -162% 302%

ECONOMIC INDICATORS

VIETNAM 2013 2014 2015F

GDP Growth 5.42% 5.98% 6.20%

CPI Growth 6.6% 4.09% 5.0%

Unemployment 2.2% 2.08% 2.06%

SOURCE: GSO

GRADE A OVERALL RENTAL VS. VACANCY RATES

0%

5%

10%

15%

20%

25%

30%

35%

0

10

20

30

40

50

60

70

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QQ41Q2Q3Q4Q1Q2Q3Q4Q1Q2Q

2010 2011 2012 2013 2014 2015

US$

/sq.m

/mth

Grade A overall rent Vacancy

Q2 2015 HO CHI MINH CITY, VIETNAM

OFFICE SNAPSHOT MARKETBEAT









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HO CHI MINH CITY, VIETNAM

SUBMARKET INVENTORY OVERALL VACANCY RATE

UNDER CONSTRUCTION

YTD

CONSTRUCTION COMPLETIONS

OVERALL DIRECT NET ABSORPTION

GRADE A & B AVERAGE GROSS (SERVICE CHARGED INCL., VAT EXCLUDED)

(US/SQM/MTH)

US$ SF/YR

EURO SF/YR

CBD A - Grade 156,700 7.8% 208000 0 1,359 $46.6 $52.0 €45.8

CBD B - Grade 424,990 6.1% 99,320 0 2,644 $31.3 $34.9 €30.8

Non - CBD

B - Grade 235,700 5.4% 200,300 0 -2,770 $20.1 $22.4 €19.8

TOTALS 817,400 6.2% 507,620 0 1,232 $31 $34.5 €30.4

* RENTAL RATES REFLECT ASKING $PSQM/MONTH

MARKET HIGHLIGHTS

Significant Q2 2015 Lease Transactions SUBMARKET TENANT BUILDING CLASS SQUARE METER

Bitexco Financial Tower CBD Hogan Lovell A 500

Vietcombank Tower CBD Russin & Vecchi A 330

Kumho Asiana Plaza CBD Masan A 2,750

Maritime Bank Tower CBD Ben Lines B 580

Vincom Center CBD Gia Hoa Advertising B 300

Vincom Center CBD Landon & Seah B 200

Vincom Center CBD OCB B 1,057

Significant Projects Under Construction SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE METER

Vietcombank Tower CBD Vietcombank Q3 2015 55,000

Pearl Plaza Non-CBD N/A Q3 2015 30,000

Saigon Centre 2 CBD N/A Q2 2016 40,000

SC Vivo City (Phase 1) Non-CBD N/A Q2 2016 30,000

Viettel Tower Non-CBD N/A On Hold 66,000








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ECONOMY



which is the highest level since 2008 (with 2013

at 4.9% and 2014 at 5.18% by way of





19.8% year-on-year. However, disbursed FDI increased by 9.6% year-

on-year to US$6.3 billion. Among the provinces, Dong Nai attracted

the largest share totaling US$900.8 million (23.5%), followed by

HCMC with US$765.8 million (19.9%) and Tay Ninh with US$282.7

million (7.4%). A total of 46 nations and territories registered new

FDI in the first six months, with Korea, Turkey, Virgin Islands (UK),

Hongkong and Japan accounting for 75% of the total in the 1H of

2015. Sector-wise, the manufacturing and processing industry

accounted for 76.2% of total registered capital, followed by real estate

(8.5%)

RETAIL MARKET OVERVIEW

New stock was added in Q2 2015, as one shopping centre and

one bazaar, namely SC Vivo City (District 7) and Taka Plaza 2

(District 3) entered the market, adding 42,600 sq.m. of retail space to

the market. However, one bazaar (1,400 sq.m, District 1) ceased

operations due to weak performance, while one shopping centre

(District 1) and another bazaar (District 5) were closed temporarily

for renovations. The total stock in Q2 2015 grew by 5% quarter-on-

quarter (q-on-q) and 10% year-on-year (y-on-y). Currently, there are

eight retail podiums, eight department stores, 20 shopping centres,

seven bazaars, 70 supermarkets and three wholesale centres in the

city with a total area of approximately 937,100 sq.m.

District 1 remains the most concentrated retail market in the city,

currently accounting for 19% of the total supply, followed by district 7

with 15%.

The retail market continued to see gradual improvement

with average occupancy in all areas rising on a yearly basis, up by 4

percentage points (ppts), to 92%. The two new completions in this

quarter enjoyed relatively high occupancy rates of over 80%. Retail

properties in the CBD area generally perform better than those in

the other areas, reaching 91% (up 2 ppts y-on-y). However, both the

secondary and suburban areas have recently enjoyed new investment

trends with some giant foreign retailers establishing large shopping

centres and offering aggressive rents as compared to those in the

CBD. Hence, occupancy rates in secondary and suburban areas have

improved, increasing by 5ppts and 4ppts on a yearly basis, to 87% and

98%, respectively.

Average rents continued to trend downwards, down 1% q-on-q

and 5% y-on-y to VND1,300,000 per square meter per month

(/sq.m/mo.). The main reasons for the decrease are the lower rents in

new projects and the closing of three retail properties, where rents

are higher.

Rents in all areas remained stable q-on-q, but the secondary and

suburban areas experienced a slight decrease y-on-y, down 2% and

7%, to VND1,119,000/sq.m./mo (US$51.4/sq.m./mo.) and

VND729,000/sq.m./mo (US$33.4/sq.m./mo), respectively. Rents in the

CBD area remained the highest, at VND2,320,000/sq.m./mo or

US$106/sq.m/mo. on average. This is twice the level of the secondary

areas and three times higher than those in the suburban areas.

(*)ALL RENTS ARE ASKING RENTS, SERVICE CHARGE INCLUDED AND VAT EXCLUDED

OUTLOOK

Over a million square meters of new supply will enter the market

through 2020, which represents a 200% increase in retail supply from

current levels. Demand for retail space in the CBD is expected to

remain high in the short to medium term. However, due to limited

land, the majority of large scale future stock will be located in non-

CBD areas, mostly in the south and east, where most of the city’s

infrastructure and residential developments have been established.

Under the Trans-Pacific Partnership (TPP), a majority of the import

duties on goods will be removed. Once the agreement is signed,

together with the further liberalization of the retail sector under the

provisions of the WTO starting in January 2015, where many taxed

goods’ tariffs will be lifted, Vietnam’s retail market is expected to be

more attractive to international retailers.

ECONOMIC INDICATORS

NATIONAL 2013 2014 Q2 2015

GDP Growth 5.42% 5.98% 6.28%

CPI Growth 6.6% 4.09% 0.86%

Retail Turnover 12.6% 11.1% 9.80%

SOURCE: GSO, World Bank

PRIME RETAIL RENTS – Q2 2015

MAINSTREETS MIL VND SQM/MTH EURO SF/MTH US$ SF/MTH Q-O-Q CHANGE Y-O-Y CHANGE

Dong Khoi 2.2 8.3 9.4 0.0% -

Nguyen Hue 2 7.6 8.5 0.0% -

Le Loi 1.6 6.1 6.8 0.0% -

MALLS MIL VND SQM/MTH EURO SF/YR

US$ SF/YR

Q-O-Q CHANGE Y-O-Y CHANGE

Union Square

Parkson Saigon

Tourist

3.6

2.0

163

91

184

102

0.0%

0.0%

0.0%

-9.5%

Diamond Plaza

Rex Arcade

2.8

2.2

127

100

143

113

0.0%

0.0%

0.0%

0.0%


PROPERTY LOCATION SQUARE METERS COMPLETION DATE

SSG Tower Secondary 21,000 2015

Vincom Mega Mall Thao Dien Secondary 120,000 2015

Saigon Centre 2 CBD 55,000 2016

HO CHI MINH CITY, VIETNAM

RETAIL SNAPSHOT MARKETBEAT

A Cushman & Wakefield Research Publication Q2 2015








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INDUSTRIAL SNAPSHOT MARKETBEAT


ECONOMY




(with 2013 at 4.9% and 2014 at 5.18% by

way of comparison). Inflation remains under control, with the

Consumer Price Index (CPI) increasing just 0.86% year-on-year.

Inward FDI to Vietnam in the 1H of 2015, including both newly












INDUSTRIAL MARKET OVERVIEW

No new supply was delivered in this quarter. Currently, there

are 18 operating IPs providing a total area of approximately 3,625

hectares. The leasable area is estimated to be about 62% of the

total industrial land scale, or more than 2,260 hectares. The

remaining LUR years range from 26–43 years, with the average

being 35.

The IP market in HCMC during Q2 2015 was stable when

compared to the previous quarter, with both occupancy

and rents unchanged. However, on a yearly basis, the average

occupancy increase by more than 5 percentage points year-on-year,

to reach 73%. The majority of IPs in HCMC reported occupancy

rates of above 90% as they are established and have been operating

for many years. Three IPs in the Nha Be, Cu Chi and Binh Chanh

Districts, which have just started operations recently, reported

occupancy rates under 50%.

Average asking rents in this quarter stood at approximately

VND2,750,000 per square meter per term (/sq.m./term), equivalent

to US$126.20/sq.m./term*. The rental rate in HCMC is about two

times higher than Long An, Binh Duong, and Dong Nai.

Currently, developers are turning from long-term land leases to

factory construction for short-term occupation with areas of about

2,000–3,000 sq.m., and rents ranging from VND53,800–

VND75,400/sq.m./mo, equivalent to US$2.50– US$3.50/sq.m./mo.

* ALL RENTS ARE ASKING RENTS AND VAT EXCLUDED

OUTLOOK

The total increase in industrial land in HCMC up to 2020 is

projected at approximately 3,000 hectares, up some 85% from the

current stock. In terms of the number of IPs, it is expected that 12

new IPs will be added to the 18 that are currently in operation by

2020.

The majority of future projects are in the clearance and

compensation stage and awaiting government approval.

MARKET STATISTICS

SUBMARKET TOTAL AREA (HA) LEASABLE AREA (HA) NUMBER OF IPS

District 2 112 79 1

District 7 300 195 1

District 12 29 22 1

Binh Tan District 584 321 2

Tan Phu District 134 92 2

Thu Duc District 151 110 3

Nha Be District 908 506 2

Binh Chanh District 260 190 2

Cu Chi District 1,137 719 4

SIGNIFICANT FUTURE PROJECTS

IPS AREA (HA) STATUS

Le Minh Xuan 2 338 Under construction

Vinh Loc 3 200 Under construction

Vinh Loc 1- Phase 2 56 Under construction

PERFORMANCE BY DISTRICT

0%

20%

40%

60%

80%

100%

0

50,000

100,000

150,000

200,000

250,000

VN

D/s

q.m

/year

Rent Occupancy








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ECONOMY

1H 2015 witnessed an increase in GDP of 6.28%

compared to the same period last year, which is

the highest level since 2008 (with 2013 at 4.9% and

2014 at 5.18% by way of comparison). Inflation

remains under control, with the Consumer Price

Index (CPI) increasing just 0.86% year-on-year. Inward FDI to Vietnam in

the 1H of 2015, including both newly registered and additional FDI

capital, reached US$5.49 billion, down 19.8% year-on-year. However,

disbursed FDI increased by 9.6% year-on-year to US$6.3 billion. Among

the provinces, Dong Nai attracted the largest share totaling US$900.8

million (23.5%), followed by HCMC with US$765.8 million (19.9%) and

Tay Ninh with US$282.7 million (7.4%). A total of 46 nations and

territories registered new FDI in the first six months, with Korea,

Turkey, Virgin Islands (UK), Hongkong and Japan accounting for 75% of

the total in the 1H of 2015. Sector-wise, the manufacturing and



RESIDENTIAL MARKET OVERVIEW

Q2 2015 witnessed the launch of a large amount of new supply

across all grades, with 516 grade A units, 840 grade B units and 3,253

grade C units from 12 new projects; and a further 2,152 grade A units,

616 grade B units and 995 grade C units from 14 active projects were

also launched. As of Q2 2015, there were nearly 25,300 available units for

sale across all grades in the primary market, up significantly 121% year-

on-year in terms of primary supply. Grade C remained the core product,

accounting for more than 50% of the total stock. More than 50% of total

primary stock is located in Districts 2, 7, and Binh Thanh District.

The residential market, which had been depressed for several

years, is experiencing strong signs of recovery, with transaction

volumes across all grades in Q2 registering a moderate increase of 1%

quarter-on-quarter but up 236% year-on-year. As usual, Grade C

remained the most active sector, accounting for slightly over 40% of total

transaction volumes, followed by Grade B with 37%. Districts 2, 7, Binh

Thanh and Tan Phu achieved the highest sales volume among all districts,

accounting for 66% of total units sold in the quarter.

There was an upward trend in average prices(*) across all grades.

Grade C enjoyed the highest increase on both a quarterly and yearly

basis, by 8.5% quarter-on-quarter and 12% year-on-year, reaching VND

17,878,000 per square meter (/sq.m), equivalent to US$820/sq.m.; whilst

Grade B’s remained unchanged by quarter but increased 6.5% y-on-y,

reaching around VND29,926,000/ sq.m or US$1,373/sq.m. Grade A

average prices increased by 1.3% q-on-q but were down 4% y-on-y, stood

at VND46,100,000 per square meter (sq.m) or US$2,115/sq.m. The

increase in average prices was due to the higher prices now being offered

by new projects that launched recently, combined with some projects

with lower than average prices becoming 100% sold out. (*): ALL PRICES ARE

VAT EXCLUDED

OUTLOOK

Affordable apartments with small sizes should continue to be the most

sought-after. Notably, there is no future supply located in the city center

due to limited supply of development sites; permission to build residential

is also difficult to obtain. Therefore, future supply will be in non-CDB

areas but which offer easy access to the city center such as District 7,

District 2, District 4 and Binh Thanh District. Particularly, projects

located along the first metro line will attract more buyers and investors.

Some suburban Districts, such as Districts 8, 9,12 and Binh Tan with an

abundant stock of affordable apartments, sufficient land fund for project

developments and improving infrastructure are also attracting developers

and low income earners. The New Housing Law, which will be effected in

July 2015, which allows foreigners to own commercial properties in VN

will help to strengthen demand, especially for mid to high-end projects. In

addition, the new guarantees required by developers from banks for new

developments will add more confidence to the market. However, the

cost of these guarantees is expected to be passed on to the consumer.

The residential market in Ho Chi Minh City continues to improve and we

expect this to continue throughout 2015 and beyond.

ECONOMIC INDICATORS VIETNAM 2013 2014 1H 2015F

GDP Growth 5.42% 5.98% 6.28%

CPI Growth 6.6% 4.09% 0.86%

Source: GSO

ASKING PRICES OF ALL SEGMENTS Q2 2015

PRIMARY MARKET PERFORMANCE Q2 2015

0

20

40

60

80

100


mil VND/sq.m.

Lower asking price Upper asking price

1,500

4,000

6,500

9,000

11,500

14,000


Accumulated Primary supply Unit sold

Units








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MARKET HIGHLIGHTS

Significant Residential Projects Launched in Q2 2015 LOCATION EXPECTED COMPLETION UNITS LAUNCHED SALE PRICE

(VND/SQ.M.)

Sarimi District 2 2016 368 50,500,000

Citi Home District 2 2016 176 14,200,000

Gateway Thao Dien District 2 2017 148 41,200,000

The Sun Avenue District 2 2017 84 32,800,000

Vista Verde District 2 2017 800 28,800,000

Vinhomes Central Park Binh Thanh 2017 2,152 43,120,000

Saigonres Plaza Binh Thanh 2017 202 23,000,000

Scenic Valley District 7 2017 352 31,300,000

An Gia Riverside District 7 2017 246 25,340,000

Sunrise City View District 7 2018 392 29,100,000,

Him Lam Cho Lon District 6 2015 150 21,000,000

Him Lam Cho Lon Phase 2 District 6 2016 264 21,400,000

Flora Anh Dao District 9 2016 212 18,600,000

City Gate Tower District 8 2016 267 16,800,000

An Gia Star Binh Tan 2016 96 15,800,000

Oriental Plaza Tan Phu 2016 1,136 21,500,000

Melody Residences Tan Phu 2017 550 21,700,000

8X Rainbow Tan Phu 2017 408 15,670,000

Linh Trung Apartment Thu Duc 2016 259 14,560,000

Dream Home 2 Go Vap 2017 424 17,500,000

Significant Projects Under Construction LOCATION DEVELOPER EST. NUMBER OF UNITS EXPECTED COMPLETION

Sunrise City North District 7 Novaland Group 631 2016

Sarimi District 2 Dai Quang Minh Corp 368 2016

Vinhome Central Park Binh Thanh VinGroup 10,000 2017

Scenic Valley District 7 Phu My Hung 1,200 2017

Gateway Thao Dien District 2 Son Kim Land 441 2017








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SERVICED APARTMENT MARKETBEAT


ECONOMY



which is the highest level since 2008 (with

2013 at 4.9% and 2014 at 5.18% by way of















SERVICED APARTMENT MARKET OVERVIEW

No new supply was completed this quarter. Currently, the

total supply of Grade A and Grade B stock is approximately 2,930

apartments from 30 buildings. There are 670 Grade A units and

nearly 2,260 Grade B units. District 1 makes up 44% of the total

supply. There are a few international operators in HCMC, such as

Ascott, Norfolk, Nikko, InterContinental, Capri and Sedona.

Tenants, especially single tenants, prefer to lease in the CBD, while

families are attracted to District 2 and 7 due to the presence of

international schools, a wide range of amenities and modern

infrastructure systems.

Q1 2015 continued to see gradual improvement with

average occupancy across both grades rising on a yearly

basis, by 6 percentage-points year-on-year (y-on-y) for Grade A and

9 percentage-points y-on-y for Grade B, to 95% and 90%

respectively. C&W believes that this increase was due to the rise in

short term tenants who opt for a home-stay experience in serviced

apartments with larger spaces and competitive rents when compared

to hotels.

In terms of rents, the average level of both grades remained

stable quarter-on-quarter. However, average rents for Grade B

units increase by some 4% y-on-y to VND468,400 per square meter

per month (/sq.m./mo), equivalent to US$21.5/sq.m./mo*. This was

mainly due to the increase in rents of the Somerset chain after

renovation; rents of Grade A remained stable on a yearly basis, at

VND643,000/sq.m./mo., equivalent to US$29.5/ sq.m./mo*.

Serviced apartments in District 1 have traditionally performed well;

and this continued into Q2 2015 with a high occupancy rate of 96%,

up 10 ppts y-on-y, and approximately 8 - 10 percentage points higher

than the non-CBD areas, despite average rent being 37% higher, at

VND599,000/sq.m./mo, equivalent to US$27.5/sq.m./mo*. Average

rents in the non-CBD areas was at VND 438,400/sq.m./mo,

equivalent to US$20/sq.m./mo*.

OUTLOOK

Four serviced apartment projects with over 900 units are expected

to enter the market by 2016, of which 30% will be in District 1. Due

to lackluster economic performance, many multi-national companies

have cut staff accommodation allowances. Hence, modestly-sized

apartments are expected to be more popular in the short to

medium-term due to the more affordable quantum.

Hotels continue to be a competitor to serviced apartments for

short-term stays while serviced apartments compete with buy-to-let

apartments and villas for long-term stays. The CBD continues to be

preferred by developers and has the highest number of future

projects. However, the scale of projects in the CBD is smaller when

compared to other districts due to limited land.

RENTAL VALUES AS OF 2Q 2015

LOCATION AVERAGE RENT SQ.M./MTH

%CHANGE SHORT TERM OUTLOOK MTH AGO YEAR AGO

GRADE A

CBD 660,000 0.6% 0.5%

Non - CBD 461,000 0.0% 0.6%

GRADE B

CBD 543,000 -0.2% 8.6%

Non - CBD 437,600 0.6% 1.1%

* ALL RENTS ARE ASKING RENTS, WITH SERVICE CHARGE INCLUDED AND VAT EXCLUDED

GRADE A & B OVERALL RENTAL VS. OCCUPANCY

RATE Q2 2015

0

20

40

60

80

100

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015

%VND/sq.m/mo.

Grade A- Avrg. Asking Rent Grade B- Avrg. Asking Rent

Grade A- Avrg. Occupancy Grade B- Avrg. Occupancy








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STATES ON THE GO

Significant Projects Under Construction LOCATION DEVELOPER EST. NUMBER OF UNITS

EXPECTED COMPLETION

Times Square 22-36 Nguyen Hue, District 1 Quang Truong Thoi Dai JSC 78 2015

SC Vivo City Nguyen Van Linh Boulevard, District 7 VCCD-Saigon Co.op-Mapletree

480 2016

Ascott Waterfront Saigon 1 Ton Duc Thang, District 1 M.I.K Corporation 222 2016

Saigon Centre Phase 2 65 Le Loi, District 1 Keppel Land 89 2016


Documents

Vietnam MB Q2 2015 English