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January 2010
Ha Noi & HCMC Real Estate Market Q4 2009
•Presented by Savills Vietnam Co., Ltd.
DISCLAIMERThe property market research contained in this presentation is verified to the best of Savills Vietnam ability. Savills quarterly report reflects an overview of the current property market and is indicative research only. Savills Vietnam does not guarantee the accuracy of research and forecasts contained herein. Savills Vietnam does not accept any responsibility for losses arising from reliance on the research and forecasting contained within this presentation. Savills recommends that the reader obtain a detailed market study of the specific sector of interest should a deeper understanding of the market be required.Reproduction of this presentation, in any manner whatsoever, in whole or in part, without written prior consent from
Savills Vietnam is prohibited. Approval should be obtained from Savills Vietnam before any reference to this presentation can be made in any statement, published document, or circular.Where information is given without reference to another party in this presentation, it shall be taken that this
information has been obtained or gathered through Savills’ best efforts and to Savills’ best knowledge. Processed data references there from shall be taken as our opinion and shall not be freely quoted without acknowledgement.
PRESENTATION STRUCTURE
• I) Vietnam economy overview• II) Ha Noi market Q4 2009 • and III) HCMC market Q4 2009
1. Office for lease market 2. Retail market 3. Hotel market4. Apartment for sale market 5. Serviced apartment market
• IV) Conclusions and Forecast• V) Risk and Opportunity
Jan 2010
I. VIET NAM ECONOMIC OVERVIEW Q4 2009
Source: General Statistic Office, 2009
0
20
40
60
80
100
US$ Billion
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
GDP at current price 27.2 28.5 30.6 32.3 33.6 38.7 45.4 53.3 61.0 70.0 88.5 84.1
GDP grow th rate 5.80% 4.80% 6.00% 6.80% 6.90% 7.24% 7.70% 8.40% 8.17% 8.48% 6.23% 5.32%
98 99 00 01 02 03 04 05 06 07 08 09
National GDP growth rate and FDI
I-VIET NAM ECONOMIC OVERVIEW
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0Billion US$
Pledged FDI 3.2 4.5 6.8 10.2 20.3 64.0 21.5
Disbursed FDI 2.65 2.85 2.45 3.6 8.3 11.5 10.0
2003 2004 2005 2006 2007 2008 2009
Source: General Statistic Office, 2009
International tourists to Viet Nam (1996 – 2009)
I-VIET NAM ECONOMIC OVERVIEW
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
01/08 03/08 05/08 07/08 09/08 11/08 01/09 03/09 05/09 07/09 09/09 11/09
%
CPI
CPI - Food & Foodstuff
CPI - Construction materials
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
No. of tourists
Tourism Bussiness Visiting relatives Other
International visitors to Viet Nam, HCMC
I-VIET NAM ECONOMIC OVERVIEW
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
No. of foreign visitors (million)
To HCMC (mil)To VN (mil)
Source: GSO & HCMC Statistics Office, 2009
US$ Billion
0
1
2
3
4
5
6
7
8
9
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Remittance
Remittance from overseas Vietnamese
Source: Savills Research & Consultancy, 2009 Ha Noi market
II-1. HA NOI OFFICE Q4 2009Office take–up:
Significant increase in Q4 activityGrade A/ Grade C rent: about double
-10,000
0
10,000
20,000
30,000
40,000
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
sq mGrade A Grade B
0%
20%
40%
60%
80%
100%
Grade A Grade B Grade C0
10
20
30
40
50US$/sq m/month
Occupancy rate Average rent
II-1. HA NOI OFFICE Q4 2009CEO Tower
Ha Noi market Source: Savills Research & Consultancy, 2009
Capital Tower
BIDV Tower
Supply
• 83 buildings: 14 Grade A, 33 Grade B and 36 Grade C
• 605,000 sq m, up 23% q-o-q and up 44% y-o- y
• Q4 2009: 9 new buildings, 18% of total supply • 2009: 18 new buildings, 181,000 sq m
Market performance
• Occupancy: 84%, -1.5% q-o-q• Rent rate: US$29/ sq m/ month, +5% q-o-q
Outlook
• Potential 1.5 M additional sq m by 2013• Mainly in suburban and secondary districts
Source: Savills Research & Consultancy, 2009 Ha Noi market
II-1. HA NOI OFFICE Q4 2009
Future supply
0
100,000
200,000
300,000
400,000
500,000
600,000
2010E 2011E 2012E 2013E
sq mFuture supply
Ha Noi market Source: Savills Research & Consultancy, 2009
II-2. HA NOI RETAIL Q4 2009
Supply• Market remains extremely small vs. region• 372,000 sq m of all categories, up 4% q-o-q
Market performance• Occupancy: 90%, up 2% q-o-q• Prime Rents approx: US$150/ sq m/ month
Outlook• Till 2012: A potential doubling of new supply to
777,000 sq m• At least two major shopping malls
Ha Noi market Source: Savills Research & Consultancy, 2009
II-2. HA NOI RETAIL Q4 2009
Supply by location and type
15%
48%33%
4%
Shopping centres/Department Stores and HypermarketsWholesales CentresSupermarketsRetail Podiums
56%
12%
32%
CBD Secondary Suburban
Ha Noi market Source: Savills Research & Consultancy, 2009
II-2. HA NOI RETAIL Q4 2009
Rental rate of Shopping centres and Department stores
Rental rate of Retail podiums
150
4040
60
0
40
80
120
160
200
CBD Secondary
US$/ sq m/ month
615
70
8085
50
0
20
40
60
80
100
CBD Secondary Suburban
US$/ sq m/ month
Ha Noi market Source: Savills Research & Consultancy, 2009
Future supply up to 2012
II-2. HA NOI RETAIL Q4 2009
0
100,000
200,000
300,000
400,000
500,000
600,000
2010E 2011E 2012E
sq mFuture supply
Ha Noi market Source: Savills Research & Consultancy, 2009
3-star28%
4-star19%
5-star53%
II-3. HA NOI HOTEL Q4 2009Supply
• 5-star: 10 hotels, 3,000 rooms.• 4-star: 6 hotels, 1,100 rooms.• 3-star: 22 hotels, 1,600 rooms.• No new supply in Q4 2009.
Market performance
• Rent and occupancy increased sharply• 5-star: US$124 (+8% q-o-q), 61% (+10% q-o-q)• 4-star: US$77 (+2% q-o-q), 67% (+13% q-o-q)
• Top rate: US$183 (Sofitel Metropole)
Outlook
• Nearly 30 future projects with 6,000 rooms• Mainly in the suburban Tu Liem District
Ha Noi market
Revenue per available room (RevPAR) = Average Daily Room Rate x Occupancy Rate
Source: Savills Research & Consultancy, 2009
0102030405060708090
100110
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
RevPAR (US$)
5-star 4-star 3-star
RevPAR across all grades: up 28% q-o-q
II-3. HA NOI HOTEL Q4 2009
Ha Noi market Source: Savills Research & Consultancy, 2009
Future supply
II-3. HA NOI HOTEL Q4 2009
0
500
1,000
1,500
2,000
2,500
3,000
2010E 2011E 2012E Potential
No. of rooms
Future supply
6%5%
13%
61%
10%
5%
Tu Liem Cau Giay Hoan KiemDong Da Thanh Xuan Hai Ba Trung
Ha Noi market Source: Savills Research & Consultancy, 2009
Canal Park
Hoa Binh Green
Supply• Primary market: 2,200 units, 14 active projects, + 2% q-o-q• New supply in Q4 2009: 6 projects, 1,100 units• Secondary market: very active particularly in Cau Giay, Tu Liem & Hoang Mai districts
Market performance• Avg. primary prices: +1.5% q-o-q
• Grade A: US$2,600 per sq m • Grade B: US$1,260 per sq m• Grade C: US$635 per sq m
• Secondary prices in most districts increased, by up to 15%
Outlook• Supply to primary market to increase significantly year on year• Mainly in the suburban districts
II-4. HA NOI APARTMENT FOR SALE Q4 2009
Ha Noi market Source: Savills Research & Consultancy, 2009
Primary market performance
II-4. HA NOI APARTMENT FOR SALE Q4 2009
0
200
400
600
800
1,000
1,200
1,400
Grade A Grade B Grade C
Units
0
500
1,000
1,500
2,000
2,500
3,000US$/ sq m
Primary supply No. of apartments sold in Q4 2009 Average primary asking price excl. VAT
Ha Noi market Source: Savills Research & Consultancy, 2009
Secondary market performance – asking price
II-4. HA NOI APARTMENT FOR SALE Q4 2009
-500
1,0001,500
2,0002,500
3,0003,500
4,0004,500
HoanKiem
Ba Dinh Tay Ho DongDa
Hai BaTrung
Tu Liem CauGiay
ThanhXuan
HoangMai
LongBien
US$/ sq m
Q1 2009 Q2 2009 Q3 2009 Q4 2009
Ha Noi market Source: Savills Research & Consultancy, 2009
II-4. HA NOI APARTMENT FOR SALE Q4 2009
Future supply up to 2012 by expected Completion year
0
2,000
4,000
6,000
8,000
10,000
12,000
2010E 2011E 2012E Potential
Unit
0
10
20
30
40
50
60Project
No. of units No. of projects
Ha Noi market Source: Savills Research & Consultancy, 2009
II-5. HA NOI SERVICED APARTMENT Q4 2009Supply
• 41 serviced apartment buildings; 220,000 sq m, 2,200 units
• No new projects• Smaller unit sizes dominate market share
Market performance• Rent rate: US$26/sq m/month, +3% q-o-q,
-6% y-o-y• Occupancy: 90%, +2% q-o-q, +1% y-o-y
Outlook
• 10 future projects, 2,400 units• Main future supply in west and north west of
Ha Noi
63%
4%10%
23%
Below 100 sq m From 100 - 150 sq mFrom 150 - 200 sq m Over 200 sq m
Source: Savills Research & Consultancy, 2009 Ha Noi market
Market performance by occupancy & rent
II-5. HA NOI SERVICED APARTMENT Q4 2009
0%
20%
40%
60%
80%
100%
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
%
0
5
10
15
20
25
30US$/sq m/mth
Occupancy Average rent rate
Source: Savills Research & Consultancy, 2009 Ha Noi market
II-5. HA NOI SERVICED APARTMENT Q4 2009
Future supply: huge stock by 2011 (more than 1,600 units)
0
400
800
1,200
1,600
2,000
2010E 2011E 2012E 2013E Potential
Units Future supply
Source: Savills Research & Consultancy, 2009 Ha Noi market
II-5. HA NOI SERVICED APART. v.s HOTEL MARKET
Occupancy - Hotel sector is more volatile due to seasonality Rent – Same upward trend in Q4
0
20
40
60
80
100
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
Occupancy (%)
Hotel Serviced Apt.
0
5
10
15
20
25
30
35
40
45
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
US$/ sq m/ month
0
30
60
90
120
150US$/room/night
Serviced Apt. (RHS) Office (RHS) Hotel (LHS)
HCMC Real Estate Market Q4 2009
Photographed by Peter Adams
Supply
• 6 Grade A and 31 Grade B buildings: 475,000 sq m• Growing market: an increase 38% in 2009
Market performance
• Average asking rents dropped slightly.• Grade A: between US$55 – US$60• Grade B: around US$30
Outlook for 2010:• 240,000 sq m across all grades• New supply still concentrated in District 1,
accounting for over 60% of total new supply
III-1. HCMC OFFICE Q4 2009
Source: Savills Research & Consultancy, 2009 HCMC market
Saigon Centre
III-1. HCMC OFFICE Q4 2009
Supply, occupancy and rent (all grades)
Source: Savills Research & Consultancy, 2009
Future supply
HCMC market
0
200,000
400,000
600,000
800,000
2010E 2011E Potential
sq m Future supply
0
200,000
400,000
600,000
800,000
1,000,000
Q49
6
Q49
7
Q49
8
Q49
9
Q40
0
Q40
1
Q40
2
Q40
3
Q40
4
Q40
5
Q40
6
Q40
7
Q40
8
Q30
9
Q40
9
sq m
10
15
20
25
30
35
40
45US$/ sq m/ month
Leased Area Vacancy Avg Rent
Supply• About 493,000 sq m for all categories• Remains extremely small vs. region
Market performance• Rents up slightly• Top rent: $220 per sq m for kiosks in Diamond Plaza
Outlook for 2010• 127,000 sq m gross area of new retail• Concentrated mainly in District 1, nearly 50% of total
new supply
III-2. HCMC RETAIL Q4 2009
Source: Savills Research & Consultancy, 2009 HCMC market
III-2. HCMC RETAIL Q4 2009
US$/sq m/month
0
5,000
10,000
15,000
20,000
25,000
30,000
Par
kson
Flem
ingt
on
Par
kson
Hun
g V
uong
Par
kson
Sai
gont
ouris
t
Par
kson
CT
Pla
za
Dia
mon
dP
laza
Zen
Pla
za
sq m
0
50
100
150
200
250
Approx. Area Lower rent Upper rentsq m
-
500
1,000
1,500
2,000
2,500
TheManor
OperaView
NewWorldHotel
Rex HotelSheratonSaigon
CaravelleHotel
US$/sq m/month
0
20
40
60
80
100
120
140
160
Approx. Area Upper rent Lower rent
Performance of Department stores and retail podiums
Source: Savills Research & Consultancy, 2009 HCMC market
Total value of retail sales in HCMC
Source: HCMC Statistics Office, 2009
III-2. HCMC RETAIL Q4 2009
Future supply
HCMC market
0
100,000
200,000
300,000
400,000
500,000
2010E 2011E Potential
sq mFuture supply
0
2
4
6
8
10
12
14
16
18
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
%
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000VND Billion
Retail sales value GDP growth rate (%)
Supply
• 5-star: 13 hotels, 4,300 rooms• 4-star: 8 hotels, 1,300 rooms• 3-star: 32 hotels, 2,800 rooms• No new supply since Q3 2009
Market performance
• High season, room rates increased sharply• 5-star: US$126 (up 7% q-o-q)• 4-star: US$82 (up 14% q-o-q)
• Top rate: US$243 (Park Hyatt)
Outlook for 2010
• About 500 new rooms • Expecting strong rebound in international and
domestic visitors
III-3. HCMC HOTEL Q4 2009
Source: Savills Research & Consultancy, 2009 HCMC market
Performance of 3 to 5 star hotels
III-3. HCMC HOTEL Q4 2009
Source: Savills Research & Consultancy, 2009
Future supply of hotel rooms in HCMC (3 to 5-star)
HCMC market
0
400
800
1,200
1,600
2,000
2010E 2011E Potential
No. of rooms
Future supply
0
20
40
60
80
100
120
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 20090
20
40
60
80
100
120RevPAR
Room rate RevPARRoom Rate ((US$/night)
Supply by Q4 2009• Primary market: 41 active projects, 9,600 units available for sale by developers• 145 projects sold to date• New supply: 11 projects, 5,500 units, mainly in suburban districts
Market performance• Avg. primary prices:
• Grade A: US$2,250 per sq m • Grade B: US$1,880 per sq m• Grade C: US$885 per sq m
• Secondary prices down by 4% mainly due to exchange rate adjustment
Outlook• 2010-2012: approximately 50,000 units of additional supply
III-4. HCMC APARTMENT FOR SALE Q4 2009
Source: Savills Research & Consultancy, 2009 HCMC market
Primary market performance up to Q4 2009
III-4. HCMC APARTMENT FOR SALE Q4 2009
Note: Exchange rate changed to 18,500 VND/ US$ in Q4 2009
0
2,000
4,000
6,000
8,000
10,000
12,000
Q1 2009 Q2 2009 Q3 2009 Q4 2009
units
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000US$/ units
Primary supply # of units sold Average Primary Price
Source: Savills Research & Consultancy, 2009 HCMC market
0
500
1,000
1,500
2,000
2,500
3,000
Dis
t. 1
Bin
h Th
anh
Phu
Nhu
an
Dis
t. 5
Dis
t. 3
Dis
t. 7
Dis
t. 11
Dis
t. 2
Dis
t. 4
Nha
Be
Bin
h C
hanh
Dis
t. 6
Tan
Bin
h
Tan
Phu
Thu
Duc
Dis
t. 9
Dis
t. 12
Go
Vap
Dis
t. 8
Bin
h Ta
n
US$/ sq mQ1 2009 Q2 2009 Q3 2009 Q4 2009
Secondary market performance up to Q4 2009
III-4. HCMC APARTMENT FOR SALE Q4 2009
Note: Exchange rate changed to 18,500 VND/ US$ in Q4 2009
Source: Savills Research & Consultancy, 2009 HCMC market
End-user market
Future supply by expected Completion year
III-4. HCMC APARTMENT FOR SALE Q4 2009
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2010E 2011E 2012E 2013-2016E
Units
05
1015
2025
3035
4045
Projects
# of units# of planned projects
Source: Savills Research & Consultancy, 2009 HCMC market
Supply by Q4 2009
• 48 serviced apartment buildings; all grades (2,700 units)
• 2009: only one new Grade A serviced apartment – Kumho Asiana Plaza, 260 units
Market performance• Average rents went up slightly
• Grade A: US$29 (up 5% q-o-q)• Grade B: US$24 (up 1% q-o-q)
Outlook for 2010:
• 480 additional units, increasing by 17% y-o-y• New supply concentrate mainly in districts 3 & 7
III-5. HCMC SERVICED APARTMENT Q4 2009
Source: Savills Research & Consultancy, 2009 HCMC market
Supply, occupancy and rent (all grades)
III-5. HCMC SERVICED APARTMENT Q4 2009
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
Units
0
5
10
15
20
25
30US$/ sq m/ month
Leased Vacancy Avg Rent
Source: Savills Research & Consultancy, 2009 HCMC market
Vietnam• Mysterious residential demand – Don’t try to time the market• The second home market along central coast will be exciting in 2010 and 2011
• Retail development is exploding in Viet Nam• “Hanoi and HCMC urbanization problems” are being repeated in many other provincial cities (traffic, land prices [CBD vs. Suburban])
• Poor infrastructure in HN and HCMC: limiting the speed of urbanization and hampering the real estate market. Keeps land prices high
• Capital for property developments is an urgent issue for developers because land price too high so no $$ left for construction
• Developers more mature and starting to ask the right questions. Starting to think about “what is the highest and best use” for a certain land parcel rather than copying neighbour
IV. CONCLUSIONS AND FORECAST
•Apt. for sale:• In short term, design and price not meeting end user expectations• High pressure on the Grade A segment due to high prices• The market already adjusting to lower grade segment in the next 2 - 3 years •Office for lease:• Rent rate will continue fluctuating in 2010 with a slight downward trend in CBD• In some “planned projects”, ‘gov’t zoning’ not allowing for market dynamics, developers are struggling
•Retail market• Supermarkets will continue booming in the next 2 - 3 years• Disappearance of traditional markets in the CBD• Modern retail malls will start to dominate
IV. CONCLUSIONS AND FORECASTHA NOI MARKET
IV. CONCLUSIONS AND FORECASTHCMC MARKET•Apartment for sale• In 2010 and forward, clear trend of the market moving to the suburban districts, Grade C booming.
• Oversupply in short to medium term• Must find niche – Don’t follow the herd – unit size, price to end user•Office• 2010 Grade A rents bottoming out at US$50/ sq m per month• Short term new supply not true Grade A• Tenant’s market •Retail• Quality design = success• Shops will get bigger• Retail will emerge in the suburban districts•
•RISK• Inflation risk• Interest rate hikes• Over supply in some sectors
and areas• Under supply in others• Competition getting smarter• Exchange rate and trade
balance concerns
V. RISK AND OPPORTUNITY
•OPPORTUNITY• Cash is King• Foreign funds looking to Asia• Retailers interest very high• Infrastructure improving in the mid
term• Focus towards end users• Favorable demographics and
nature resources• Knowledge is POWER
CONTACTHa Noi Office13th Floor, Pacific Place83B Ly Thuong Kiet, HanoiTel: (04) 3946 1300Fax: (04) 3946 [email protected]
HCMC Office18th Floor, Frideco Tower81 - 85 Ham Nghi street, District 1, HCMCTel: (08) 3823 9205Fax: (08) 3823 [email protected]
Saigon South Office2nd Floor, The Laurence S.Ting Building801 Nguyen Van Linh ParkwayTan Phu Ward, District 7, HCMCTel: (08) 3412 0100Fax: (08) 3412 0199
www.savills.com.vn