Vietnam’s GDP growth rate in Q4 2015continuously exceeded expectations
Vietnam (VN)’s GDP in Q4 2015 expanded 7.01%YoY, contributing to the 6.68% YoY growth rate ofthe country in 2015, which is the highest growthrate in the past 5 years. Stronger performance wasrecorded in all major sectors in Q4 2015, continuethe economic recovery. Growth in the industrial andconstruction sectors outweighed other sectors with9.49% YoY. Export volume in Q4 2015 was $41.7billion, increasing by 3.20% YoY.
Bank lending interest rates have remainedstable since November 2014
The average bank lending interest rates in Q4 2015remained stable at 11% per annual. The rates areexpected to fall slightly towards the first half of2016, further boosting individual investments. Inaddition, in order to encourage long term loans forbuying cars or houses, many banks such asVietcombank, Techcombank and ACB offeringincentive lending rates of 6%-8% for the first yearor even 0% with specific conditions.
Ho Chi Minh City (HCMC) continued to be thedynamic center of VN with an outstanding GDPgrowth at 12.10% YoY in Q4 2015, contributing tothe 9.85% growth rate of the city in 2015 andmuch higher than VN’s GDP growth rate .
EZLAND PRESENTATION Vietnam Economy Overview
Reference exchange rate was slightlyincreased in Q4 2015Latest in December 2015, the government adjustedthe reference exchange rate of USD/VND to beslightly increased from VND 21,800 to VND 21,890buying rate and from VND 22,475 to VND 22,575selling rate. The interbank exchange rate ofUSD/VND has been maintained at VND 21,890since the last adjustment in August 2015,increasing by 3% YoY.
9%
11%
13%
Lending Interest Rates of Some Banks
Average interest rates p.a in Q4 2015
4.00 4.66 5.35 5.44 4.76 5.00 5.54 6.04
5.09 5.25 6.19
6.966.12 6.47 6.87 7.01
7.40 8.70
9.60 10.40
7.60 8.10
10.20 10.70
7.70 8.70
10.30 11.20
8.00 9.10
10.20
12.10
02468
101214
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013 2014 2015
GDP Growth Rate
VN Growth rate (YoY) HCMC Growth rate (YoY)
%
20,828
20,828
20,828
20,828
20,828
21,036
21,036
21,036
21,036
21,246
21,246
21,458
21,673
21,890 21,890
20,000
20,500
21,000
21,500
22,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013 2014 2015
USD/VNDInterbank Exchange Rate
Interbank exchange rate
EZLAND PRESENTATION Vietnam Economy Overview (cont.)
M&A hit $4.3 billion in 2015, increasing 40% YoYImplemented FDI in VN was increasedsignificantly in Q4 2015
After reaching a peak in Q3 2015 with $11.7 billion,the total new and additional registered FDI in VN inQ4 2015 was cooled down with $5.60 billion,decreasing by 38% YoY. Meanwhile, implementedFDI hit $4.8 billion during this quarter, increasingby 37% YoY. Overall, the country attracted $22.8billion of total new and additional registered FDI(13% YoY) and got $14.5 billion implemented FDI(17% YoY). Such improvement resulted from thestable macroeconomic backdrop with relatively lowinflation and low interest rates, turning VN into afavorable destination among South East Asiacountries for foreign investors.
The total new and additional registered FDI ofHCMC was also decreased in Q4 2015 with $0.63billion (-54% YoY) as the result of the stronginvestment wave in the previous quarter. In 2015,the city attracted $3.64 billion (13% YoY).
2.6 3.7 3.1 3.5
6.0 4.4 4.5
6.5
3.3 3.5 4.3
9.0
1.8
3.7
11.7
5.60
2.5 2.8 2.9 2.4 2.7 3.0 3.0 2.8 2.9 2.9 3.2 3.5 3.1 3.3 3.4 4.8
-100%
0%
100%
0
5
10
15
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013 2014 2015
Registered and Implemented FDIin Vietnam
VN New and additional Registered FDI ($ billion)VN Implemented FDIChange of VN implemented FDI (YoY)
$ billion%
Asset Seller BuyerValue
(mil USD) % Trans. Industry
MD Bank MD Bank Maritime Bank N/A N/A Banking
PG Bank PG Bank VietinBank N/A N/A Banking
MHB MHB BIDV 150 100% BankingSounthern
Bank Southern Bank Sacombank N/A N/A BankingHanoi
Landmark Tower Keangnam
Qatar Investment
Authority 800 100% Banking
4 Investment Projects
Indochina Land Holdiings 2
Gaw Capital Partners 106 N/A Real Estate
Celadon City Sacomreal Gamuda Land 64 100% Real Estate
An GiaAn Gia
Investment Creed Group 200 20% Real Estate
Casino Hoi An Vina Capital Chow Tai Fook N/A N/A Hositality
Masan Consumer Holdings &
Masan Brewery Masan Singha 1,100
25% Masan Consumer
Holdings33.3% Masan
Brewery FMCG
The total value of M&A transaction reached $4.3billion in 2015 (40% YoY). Consumer goods, realestate, retails and banking are the most activesectors to the M&A activity in this year.
Key Information for Vietnam’s 3 Main Cities in 2015
Ha Noi• Population : 7.38 million people• Average annual income/person: $3,422• GDP Growth: 9.24% (YoY)• CPI: 0.7% (YoY)• Industrial zones: 13 zones• International airport capacity: 12 million people/year• Registered FDI: $1.4 billion• Total transaction value in stock market (HNX): $6.0
billion.Da Nang• Population : 1.03 million people• Average annual income/person: $2,036• GDP Growth: 8.71% (YoY)• CPI: 0.52% (YoY)• Industrial zones: 6 zones• International airport capacity: 10 million people/year• Registered FDI: $3.30 billion.Ho Chi Minh (Fund Target City)• Population : 8.22 million people• Average annual income/person: $5,500• GDP Growth: 9.85% (YoY)• CPI: 0.23% (YoY)• Industrial zones: 18 zones• International airport capacity: 25 million people/year• Registered FDI: $3.64 billion• Total transaction value in stock market (HOSE): $21.6
billion.
HCMC is the right location in Vietnam to start the AH
EZLAND PRESENTATION Vietnam Economy Overview (cont.)
Vietnam to be an attractive destination for retailers
Leading the Asia-Pacific region in the growth of retails sales volume in 2015 (forecasted by OxfordEconomics), Vietnam promises a healthy demand resulting from optimistic economic conditions and agrowing young and educated population, which are the ideal settings for affordable housing investors.HCMC returns to the top cities for investment and development, as a survey by PwC shows.
Source: Emerging Trends in Real Estate Asia Pacific 2015 Survey, CBRE
Source: Oxford Economics (17 Nov 2014)
AFFORDABLE HOUSING FUND
The amended housing law and real estate business law take effect from July 1st 2015.
Foreigners are allowed to buy projectedhouses and condominium
Effective from July 1st 2015, foreigners are allowedto buy or lease real estate products in VN as longas total number of units owned by foreigners donot exceed 30% of total apartments or 250 villasor townhouses in a project. In addition, foreignowners have the same rights (including sublease,mortgage, trade and inherit) as Vietnameseowners towards their own properties. Taking moreadvantage to the housing law is Viet Kieu(Overseas Vietnamese), who will have full rights toproperty ownership in Vietnam.
Raise the Legal Capital of Real EstateEnterprise to approximately $1 million
Minimum legal capital for each real estateenterprise is increased from $0.28 million toapproximately $1 million, which will immediatelyhelp remove unqualified companies out of the realestate market.
Real estate Presale and Project Guarantee
To improve guarantee for customers buyingprojects, developers are required to obtain a bankguarantee for the under-construction projects. Incase of default, the bank must be responsible forrefunding to buyers. In addition, customers willonly need to pay maximum 70% value of theproperty before handover date and not exceed95% value of the property before receivingOwnership Certificate if not agreed by buyers.
The amended laws helps VN’s real estatemarket to become more competitive in theSouth East Asia region.
(Source: Savills, Q4 2014)
EZLAND PRESENTATION Housing Law and Real Estate Business Law Amendments
• Central Business District (CBD) & Surrounding Areas: District 1, District 3, District 4, District 5, District 10, BinhThanh, Phu Nhuan;
• Outer Areas: Tan Binh, District 11, District 12, Go Vap, District 2, District 9, Thu Duc, District 6, District 7, District 8,Binh Chanh, Binh Tan, Nha Be, Tan Phu.
Note: The order of districts in the following charts corresponds to the relative geographical location ofdistricts
Binh Chanh
Nha Be
Dong Nai Province
Binh Duong Province
We focus on the districts and areas visible above
Page 7 of 19
EZLAND PRESENTATION HCMC Overview
Long Thanh – Dau Giay Expressway, the most modernexpressway in Vietnam, was completed and opened on 8th
February 2015• Long Thanh Dau Giay Expressway connects District 2 and District 9 ofHCMC with Dong Nai and Vung Tau;
• It helps to reduce travel time from HCMC to Vung Tau from 2.5 to 1.5hours.
Long Thanh International Airport – The new airport will beoperated by 2025• Approved by deputies on June 24th 2015;• Long Thanh Airport will be located at a 35 minutes driving time fromCBD via the new HCMC-Long Thanh-Dau Giay expressway;
• It will help transporting the increasing flow of international touristsexpected to rise from 15% to 20% annually and the increasing numberof locals travelling abroad;
• 3 phases: 1st phase to be completed in 2025 will handle 25mpassengers per annum. After completion, the airport will will serveover 100m passengers annually.
Part of Inner Ring Road 2 (2.7 km) was started construction inDec 2015• 2.7 km of Inner Ring Road 2 (blue line) links Pham Van Dong Streetand 1A High Way in Thu Duc District;
• The 1st phase was started construction in Dec 2015 with totalinvestment of VND 1,135 billion and it is expected to be completed in2017 with 6 car lanes and 3 bridges. The 2nd phase will then buildingthe main road with 8 car lanes;
• Other part of Inner Ring Road 2 from My Thuy Roundabout (District 2)to Rach Chiec Bridge 2 (District 9) has already use since August 2013;
• Rach Chiec Bridge 2 was opened on 29th Dec 2015, fully connectsDistricts 2 with District 9, reducing travel distance from Ha NoiHighway to Cat Lai port from 14km to only 8km.
Thu Thiem Bridge 2 was started construction in Feb 2015• Thu Thiem Bridge 2 will connect District 1 and District 2, easing thetraffic pressure in this central;
• It is expected to be completed by April 2018.
Vietnam-Taiwan joint venture to build $115 million interchangeNguyen Huu Tho – Nguyen Van Linh• The project will be developed under the Build-Transfer (BT) mechanismand 240 hectares of land in Nha Be will be transferred in exchangeafter the project is completed;
• Stage 1 will be a central circular island and two tunnels along manybranches of Nguyen Van Linh worth $37 million;
• Stage 2 will be two overpasses and two other tunnel worth $78 million;• The construction of the Nguyen Huu Tho – Nguyen Van Linhinterchange will be combined with the Nguyen Huu Tho Street’sexpansion.
EZLAND PRESENTATION Update HCMC Infrastructure
Long Thanh – Dau Giay Expressway
Thu Thiem Bridge 2
Inner Ring Road 2 map (The red solidline)
Page 8 of 19
Long Thanh International Airport
Source: Tuoi tre; Vnexpress 2015
Interchange Nguyen Huu Tho – NguyenVan Linh
Metro lines• Metro line No. 1 will connect Ben Thanh (District 1) and Suoi Tien park(District 9) with total length of 19.7km (in which 2.6 km undergroundand 17.1 km elevated) and 14 stations. It is expected to be completedby 2019 and put into operation in 2020.
• Metro line No.2 will include 11 stations stretching between BenThanh and Tham Luong in District 12 with total length of 11.3 km (inwhich 9.6 km will be underground).This was started construction atTham Luong Depot (District 12) in December 2014 and is expected tocomplete in Q3 2016.
• Stage 1 of metro line No. 5 will connect Bay Hien intersection (TanBinh) to Sai Gon Bridge (Binh Thanh) and stage 2 will connect BayHien intersection to Binh Chanh.
HCMC plans to build 6 Bus Rapid Transit (BRT) routes and thefirst route will be operated by 2018• HCMC will build 6 BRT routes with a total budget of $155 million,mainly provided by the World Bank.
• HCMC has studied the feasibility of building the first BRT route (on VoVan Kiet Avenue) and plans to complete by 2018.
HCMC is seeing major infrastructure projects being realized, inparticular to the East, an area we are focusing on.
EZLAND PRESENTATION Update HCMC Infrastructure
Page 9 of 19
Bus Rapid Transit
Metro Line No.1
Progress of Metro line No.1 The six metro lines planned for HCMC
Tan Son Nhat Airport
HCMC announces to expand Tan Son Nhat Airport•Tan Son Nhat Airport will be expanded by 8 hectares in 2019 with a total budget of $283 million.
•The airport terminals will be upgraded to increase the passenger capacity to 25 million passenger a year by 2020.
•The aircraft parking capacity will also increase to 82, twice the current number.
Source: Tuoi tre; Vnexpress; CBRE 2015
The supply of mid-end and affordable segment
increased notably in 2010 – 2015 period. As the
period saw housing prices were kept under
control and speculators were moving out from
the market, developers has began to focus on
middle income customers who are the actual
buyers.
In Q4 2015, there were 14,038 units launched
from 29 new and existing projects to the
apartment market in HCMC (56% YoY).
From 2010 to 2015, there were 79,976 units
launched in the market from 153 projects, of
which affordable units took the majority with
52%.
There were 40,008 units launched in 2015 from
77 projects (129% YoY). Of which, District 2,
District 7 and Binh Thanh District continue to
lead the market with 16,722 units from 27
projects, representing 42.8% of total apartment
supply.
3,369 7,333 9,201
2,579
17,486
40,008
0
10,000
20,000
30,000
40,000
50,000
2010 2011 2012 2013 2014 2015
Current Supply by Year
below affordable affordable mid-end high-end Total
EZLAND PRESENTATION HCMC Market Update
Page 10 of 19
Market supply (all segments)
The HCMC average primary price across all
segments was $1,285/sqm in 2015, increasing by
4.4% YoY and 2.5% QoQ.
Price improvements were recorded for all
segments in 2015 as a result of the strong sales
momentum, especially high end segment, which
increased by 8.3% YoY, resulting that the real
estate market is more attractive to buyers (CBRE,
Q4 2015).
Primary asking price (all segments)
Primary asking price/sqm (*)
Market performance (all segments)Sold units by quarter (*)
2015 recorded a notably high sales volume with
36,160 units sold, up by 98% YoY.
In Q4 2015, there were 10,340 unit were
absorbed, marking the new record in historical
quarterly absorption, up by 38% YoY (CBRE, Q4
2015), thanks to:
• Positive signals of Vietnamese economy such
as low CPI and high GDP growth rate.
• Smaller unit sizes and attractive sales
strategies from developers such as flexible
payment terms, price discount, promotion, etc.
Units
(*) CBRE Research Definitions (Affordable units with sales price lower than $800/sqm; Mid-end units with sales price from $800-1500/ sqm; High-end units with sales price from $1500-$2000/sqm, Luxury units with sales price larger than $2000/sqm)
below affordable
6%
affordable52%
mid-end25%
high-end17%
Existing Supply 2010 - 2015
below affordable
affordable
mid-end
high-end
500
700
900
1,100
Affordable Average Asking Price/sqm Q4 2015 by District
Since 2013, it has been showing a rebound
responding to recovering economic conditions,
developers’ better ability to deliver suitable
products and enhanced buyers’ confidence.
With 5,759 units from 11 projects, the affordable
segment continued to rank first in total supply,
accounting for 41% of new launches in Q4 2015.
Of the new affordable unit launches, 2 of those
are the second phases of projects in Nha Be
ncluding Dragon Hill Residence and Suite 2 and
Hung Phat Silver Star. Others are new projects in
which the most outstanding ones were developed
by reputation developers such as Gia Hoa (The Art
– District 9), Novaland (Rich Star – Tan Phu),
Hung Thinh (Lavita Garden – Thu Duc).
As the target customers of affordable segment are
middle income with limited budgets, most new
affordable projects are located in outer districts
for relatively low land prices compared to the
CBD. Top three largest affordable supply districts
from the period 2010-2015 are Tan Phu (5,005
units), Thu Duc (4,733 units) and Binh Tan (4,376
units).
Looking forward, better connectivity to the outer
districts thanks to the development of
infrastructure such as Metro Line No.1 creates
more opportunity to the rise of the HCMC’s
affordable apartments’ supply. Generally, the
market is expected to welcome around 11,239
affordable units in 2016.
Market supply (affordable segment)
EZLAND PRESENTATION HCMC Affordable Market Update
Prices of affordable units were mainly depend on
their location, so projects locating near the CBD
such as District 2, District 6, District 7, Tan Binh
have higher prices than outer districts such as
District 8, District 12, Thu Duc, Binh Tan and
District 9.
Page 11 of 19
Accumulatively since 2000, there were 46,166
affordable units have been absorbed, contributing
to 81% of total affordable supply (CBRE, Q4
2015).
In 2015, 8,564 affordable units were absorbed,
increasing by 27% YoY. The top three best seller
included Sunview Town (Thu Duc), Topaz City
(District 8) and Tecco Green Nest (District 12).
Market performance (affordable segment)
Units No. of projects
Primary asking price (affordable segment)
US$/sqm
Price improvement was recorded in Q4 2015 with
the increase of 10% QoQ. Despite of the increase
in price, the demand was kept stable reflecting
the attractiveness of the affordable segment to
buyers since most buyers in this segment are
end-users with limited budgets so price is the
most sensitive factor to this group.
0
1
2
3
0
500
1000
1500
District8
District9
District12
BinhThanh
Tan Phu Thu Duc Nha Be
New Affordable Supply Q4 2015
Units launched No. of Projects
(*) CBRE Research Definitions (Affordable units with sales price lower than $800/sqm; Mid-end units with sales price from $800-1500/ sqm; High-end units with sales price from $1500-$2000/sqm, Luxury units with sales price larger than $2000/sqm)
Affordable Sales Performance (*)
EZLAND PRESENTATION HCMC Affordable Market Update
Page 12 of 19
Market Demand
Growing population is one of the main drivers for housing demand
According to HCMC’s Statistics Office, HCMC is the most crowded city in Vietnam and the population of the
city has increased at an average rate of 3.9% per year, from 7.0 million people in 2008 to 8.2 million
people in 2015.
HCMC population is expected to reach 10 million in 2020, according to World Bank 2015.
HCMC is VN’s most densely populated city with 3,731 persons/km2 (2013), which generates increasing
demand for condominium developments. Due to limited land availability in the city center, there is an
increasing decentralization trend to the city’s outer districts such as District 2, District 7 and District 9,
where infrastructure developments have seen certain improvements.
According to ASEAN Statistic 2014, 69.4%% of the VN population are aged from 15 to 64 years old, which
is the “golden” period to the development of the country. This will add to housing demand in the country
as well as HCMC as Vietnamese people have shifted to a nuclear family model and average household size
is decreasing. Many will look for apartments as prices of landed houses are systematically higher than
condominiums in the same area and household budgets limited.
Increasing household income and stabilizing economic conditions make buying apartments
more affordable
According to Nielsen, 18% of HCMC households had revenues in the $700-$1,400 per-month income range
in 2014, and this percentage is supposed to rise and exceed expectations in the forthcoming years
confirming the emergence of a middle class. According to a recent study of Nam Long in 2014, 32% of
their customers have monthly household income over $1,000 and this percentage is expected to rise
further in the near future.
A steady increasing demand for HCMC is predicted by CBRE
Together with the urbanization and changes in buyers’ preferences, CBRE estimates the current demand
for affordable units (including houses and apartments) to be 201,615 in 2016, increasing 22% compared
to 2015. The demand for affordable uniis expected to continue growing steadily in the next 5 years.
3%18%
38%
31%
9%1%
Household Income Breakdown in HCMC in 2014 (Nielsen, 2015)
1,400+
700 - 1,400
350 - 700
200 - 350
140 - 200
140-
US$/household
10.2%10.5%10.5%10.5%10.5%
11.0%11.5%11.5%
12.0%12.5%12.5%12.5%
11.5%11.0%11.0%
10.4%
9.5% 9.5%10.0%
9.5%
9%
11%
13%
Interest Rate of Major Banks
• Home mortgage debt market: HCMC has more than 35 local banks and 10 international banks offering
home loan products. The standard interest rates range from 9.5% to 13%. Most of the banks offer loan
incentives such as one year of low-interest rate (6-9%), a few banks such as HD Bank offer free interest
rate for the first year subject to certain conditions.
• Most of the banks offer loans up to 70% of property values, a few banks like BIDV offer loans even up to
80% - 100% of property values.
• We take an example of a buyer who borrows 70% of a property value to illustrate the affordability of an
average apartment by EZLAND.
Calculation for a typical apartment purchase: Affordability of EZLAND
Open market financing
Government package (*)
Assumed average property purchase budget($)
38,000 - 65,000 38,000 - 50,000 size from 45-65 sqm, include10% VAT; excludes basicfurniture and moving costs
Loan ($)26,600 -
45,500 26,600 - 35,00070% of property value
Interest rate (per annum) 11.50% 5%Payment terms 17 years 15 years
Monthly payment ($) 297 - 508 210 - 276principal and interest, basedon reducing loan balance
Average household income ($)
991 - 1,693 700 - 920
Monthly reimbursement 30% 30%of average householdincome
Conclusion:
• Apartments with a price range from $40,000 to $70,000 (= EZLAND) are and will become ever more
affordable by the middle income class in HCMC.
• Demand for affordable apartments is already high and increasing sharply due to the growth of the
middle income class and demographic changes of HCMC.
EZLAND PRESENTATION Interest Rates of Major Banks
Page 13 of 19
State-owned banks Foreign banks
* See the explanation on (*) in next page.
EZLAND PRESENTATION Affordable Condominium Shortfall
Page 14 of 19
2013 2014 2015 2016 2017 2018 2019 2020Demand 23,838 33,347 41,036 55,444 67,820 87,975 104,202 130,962Supply 12,128 12,730 12,642 15,447 18,571 22,099 26,208 31,042
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Forecasted Affordable Condominium (only) Supply and Demand - HCMCUnits
Source: CBRE
• Reflecting the increasing demand for affordable housing in general, demand for affordable apartments
in particular is forecasted to increase 5.5 times from 23,838 units per annum in 2013 to 130,962 units
per annum in 2020.
• Though a surge in supply is foreseen at 25% each year to capture this demand, the gap keeps
accumulating, resulting in a shortfall of 333,006 (cumulative 2016-2020) apartment units for the
market.
The is targeting a market showing a current shortfall in the supply of
new units; a near-ideal investment scenario which will only be enhanced over
the term of the Fund
shor
tfal
l
EZLAND PRESENTATION
Page 19 of 19
THANK YOU!
Contact us
Address: Suite 2105, Melinh Point Tower, No. 2 Ngo Duc Ke Street, District 1, HCMC, VietnamTel: (08) 3827 5000Fax: (08) 3827 5050
© 2016 EZLAND Vietnam Co., Ltd. All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to EZLAND. Information contained herein, including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. Readers are for EZLAND professionals, and is not to be used or considered as an offer or the solicitation of an offer to sell or buy or subscribe for securities irresponsible for independently assessing the relevance, accuracy, completeness and currency of the information of this publication. This report is presented for information purposes only, exclusively r other financial instruments. All rights to the material are reserved and none of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party without prior express written permission of EZLAND. Any unauthorized publication or redistribution of EZLAND research reports is prohibited. EZLAND will not be liable for any loss, damage, cost or expense incurred or arising by reason of any person using or relying on information in this publication.