Hn & Hcm Market Presentation Q4 2009 Final En

Ha Noi & HCMC Real Estate Market Q4 2009

•Presented by Savills Vietnam Co., Ltd.
January 2010

DISCLAIMER
The 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 market
4. Apartment for sale market
5. Serviced apartment market
• IV) Conclusions and Forecast
• V) Risk and Opportunity

I. VIET NAM ECONOMIC OVERVIEW Q4 2009

Jan 2010

I-VIET NAM ECONOMIC OVERVIEW
National GDP growth rate and FDI
US$ Billion Billion US$
100 9% 70.0

8% 60.0
80
7%
50.0
6%
60 40.0
5%

4%
30.0
40
3% 20.0

2%
20 10.0
1%
0.0
0 0% 2003 2004 2005 2006 2007 2008 2009
98 99 00 01 02 03 04 05 06 07 08 09
Pledged FDI 3.2 4.5 6.8 10.2 20.3 64.0 21.5
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
Disbursed FDI 2.65 2.85 2.45 3.6 8.3 11.5 10.0
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%

Source: General Statistic Office, 2009

International tourists to Viet Nam (1996 – 2009)
No. of tourists
4,500,000

4,000,000

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
50.0 %

45.0 CPI
Tourism Bussiness Visiting relatives Other
CPI - Food & Foodstuff
40.0
CPI - Construction materials
35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0
01/08 03/08 05/08 07/08 09/08 11/08 01/09 03/09 05/09 07/09 09/09 11/09

Source: General Statistic Office, 2009

International visitors to Viet Remittance from overseas
Nam, HCMC Vietnamese
To HCMC (mil)
US$ Billion
To VN (mil)
No. of foreign visitors (million) 9
4.5
8
4.0
7
3.5
6
3.0
5
2.5
4
2.0
3

1.5
2

1.0 1

0.5 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Remittance

Source: GSO & HCMC Statistics Office, 2009

II-1. HA NOI OFFICE Q4 2009
Office take–up: Grade A/ Grade C rent: about double
Significant increase in Q4 activity

Occupancy rate Average rent
Grade A Grade B
sq m US$/sq m/month
40,000 100% 50

30,000
80% 40

60% 30
20,000

40% 20
10,000

20% 10
0
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
0% 0
Grade A Grade B Grade C
-10,000

Ha Noi market Source: Savills Research & Consultancy, 2009

Capital Tower Supply CEO Tower

• 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

BIDV Tower
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


Future supply
Future supply
sq m
600,000

500,000

400,000

300,000

200,000

100,000

0
2010E 2011E 2012E 2013E


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


Supply by location and type
Shopping centres/Department Stores and Hypermarkets
Wholesales Centres
Supermarkets
CBD Secondary Suburban
Retail Podiums

4%
12%

32%
33%
48%

56%

15%


Rental rate of Shopping centres and Rental rate of Retail podiums
Department stores
US$/ sq m/ month
US$/ sq m/ month 200
100

85
80 160
80
150
70
60 120
50

40 80
60

20 40
40 40
15
6
0 0
CBD Secondary Suburban CBD Secondary


Future supply up to 2012

Future supply
sq m
600,000

500,000

400,000

300,000

200,000

100,000

0
2010E 2011E 2012E


II-3. HA NOI HOTEL Q4 2009
Supply
• 5-star: 10 hotels, 3,000 rooms.
• No new supply in Q4 2009.
3-star
28%
Market performance
5-star
53% • Rent and occupancy increased sharply
4-star • 5-star: US$124 (+8% q-o-q), 61% (+10% q-o-q)
19% • 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

RevPAR across all grades: up 28% q-o-q
RevPAR (US$)
110
100
90
80
70
60
50
40
30
20
10
0
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

5-star 4-star 3-star

Revenue per available room (RevPAR) = Average Daily Room Rate x Occupancy Rate


Future supply
Future supply

Tu Liem Cau Giay Hoan Kiem No. of rooms
3,000
Dong Da Thanh Xuan Hai Ba Trung

2,500
6%
5%
2,000

13%
1,500

5%
61%
1,000
10%

500

0
2010E 2011E 2012E Potential


II-4. HA NOI APARTMENT FOR SALE Q4 2009
Canal Park
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
Hoa Binh Green
• 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


Primary market performance
Primary supply No. of apartments sold in Q4 2009 Average primary asking price excl. VAT

Units US$/ sq m
1,400 3,000

1,200
2,500

1,000
2,000
800
1,500
600
1,000
400

500
200

0 0
Grade A Grade B Grade C


Secondary market performance – asking price
Q1 2009 Q2 2009 Q3 2009 Q4 2009
US$/ sq m
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
Hoan Ba Dinh Tay Ho Dong Hai Ba Tu Liem Cau Thanh Hoang Long
Kiem Da Trung Giay Xuan Mai Bien


Future supply up to 2012 by expected Completion year
No. of units No. of projects
Unit Project
12,000 60

10,000 50

8,000 40

6,000 30

4,000 20

2,000 10

0 0
2010E 2011E 2012E Potential


II-5. HA NOI SERVICED APARTMENT Q4 2009
Supply
Below 100 sq m From 100 - 150 sq m • 41 serviced apartment buildings; 220,000 sq m,
From 150 - 200 sq m Over 200 sq m 2,200 units
• No new projects
4% • Smaller unit sizes dominate market share
10%
Market performance
• Rent rate: US$26/sq m/month, +3% q-o-q,
23% -6% y-o-y
63% • 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


Market performance by occupancy & rent
Occupancy Average rent rate
% US$/sq m/mth
100% 30

25
80%

20
60%

15
40%
10

20%
5

0% 0
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009


Future supply: huge stock by 2011 (more than 1,600 units)
Future supply
Units
2,000

1,600

1,200

800

400

0
2010E 2011E 2012E 2013E Potential


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

Serviced Apt. (RHS) Office (RHS) Hotel (LHS)
Hotel Serviced Apt.
Occupancy (%) US$/ sq m/ month US$/room/night
100 45 150

40

80 120
35

30
60 90
25

20
40 60
15

20 10
30
5
0
0 0
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009


HCMC Real Estate Market Q4 2009

Photographed by Peter Adams

III-1. HCMC OFFICE Q4 2009
Saigon Centre
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

HCMC market Source: Savills Research & Consultancy, 2009

III-1. HCMC OFFICE Q4 2009
Supply, occupancy and rent (all grades) Future supply
Leased Area Vacancy Avg Rent
Future supply
sq m
sq m US$/ sq m/ month 800,000
1,000,000 45

40
800,000 600,000
35

600,000
30
400,000
25
400,000

20
200,000
200,000
15

0 10
0
Q496

Q497

Q498

Q499

Q400

Q401

Q402

Q403

Q404

Q405

Q406

Q407

Q408

Q309

Q409

2010E 2011E Potential


III-2. HCMC RETAIL Q4 2009
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


Performance of Department stores and retail podiums

Approx. Area Lower rent Upper rent Approx. Area Upper rent Lower rent
sq m US$/sq m/month sq m US$/sq m/month
30,000 250 2,500 160
140
25,000 200 2,000
120
20,000 100
150 1,500
15,000 80
100 1,000 60
10,000
40
5,000 50 500
20
0 0 - 0
H ung Vuong

Ze n P la za
S a ig o n to u rist

P a rkso n C T

The Opera New Rex HotelSheraton Caravelle
Fle m in g to n

D ia m o n d
P a rkso n

P la za
P a rkso n

P a rkso n

P la za

Manor View World Saigon Hotel
Hotel


Total value of retail sales in HCMC Future supply
Retail sales value GDP growth rate (%) Future supply
sq m
% VND Billion 500,000
20 400,000

18 350,000
16 400,000
300,000
14
250,000
12 300,000
10 200,000
8 200,000
150,000
6
100,000
4
100,000
2 50,000

0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0

HCMC market Source: HCMC Statistics Office, 2009

III-3. HCMC HOTEL Q4 2009
Supply

• 5-star: 13 hotels, 4,300 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

Performance of 3 to 5 star hotels Future supply of hotel rooms
in HCMC (3 to 5-star)

Room rate RevPAR Future supply
No. of
Room Rate ((US$/night) RevPAR
rooms
120 120 2,000

100 100 1,600

80 80
1,200

60 60
800
40 40

400
20 20

0 0 0
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009


III-4. HCMC APARTMENT FOR SALE Q4 2009
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


Primary market performance up to Q4 2009
Primary supply # of units sold Average Primary Price
units US$/ units
12,000 4,000

3,500
10,000
3,000
8,000
2,500

6,000 2,000

1,500
4,000
1,000
2,000
500

0 0
Q1 2009 Q2 2009 Q3 2009 Q4 2009

Note: Exchange rate changed to 18,500 VND/ US$ in Q4 2009


Secondary market performance up to Q4 2009
Q1 2009 Q2 2009 Q3 2009 Q4 2009
US$/ sq m
3,000

2,500

2,000

End-user market
1,500

1,000

500

0
Binh Thanh

Phu Nhuan

Binh Chanh

Thu Duc
Tan Phu

Binh Tan
Tan Binh
Nha Be

Go Vap
Dist. 1

Dist. 5

Dist. 3

Dist. 7

Dist. 11

Dist. 2

Dist. 4

Dist. 6

Dist. 9

Dist. 12

Dist. 8
Note: Exchange rate changed to 18,500 VND/ US$ in Q4 2009


Future supply by expected Completion year
# of units
# of planned projects
Units Projects
70,000 45
40
60,000
35
50,000
30
40,000 25
30,000 20
15
20,000
10
10,000
5
0 0
2010E 2011E 2012E 2013-2016E


III-5. HCMC SERVICED APARTMENT Q4 2009

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
Supply, occupancy and rent (all grades)

Leased Vacancy Avg Rent
Units US$/ sq m/ month
3,500 30

3,000 25

2,500
20
2,000
15
1,500
10
1,000

500 5

- 0
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009


IV. CONCLUSIONS AND FORECAST
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

HA NOI MARKET
•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

HCMC 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
•

V. RISK AND OPPORTUNITY

•RISK •OPPORTUNITY
• Inflation risk • Cash is King
• Interest rate hikes • Foreign funds looking to Asia
• Over supply in some sectors • Retailers interest very high
and areas • Infrastructure improving in the mid
• Under supply in others term
• Competition getting smarter • Focus towards end users
• Exchange rate and trade • Favorable demographics and
balance concerns nature resources
• Knowledge is POWER

CONTACT
Ha Noi Office
13th Floor, Pacific Place
83B Ly Thuong Kiet, Hanoi
Tel: (04) 3946 1300
Fax: (04) 3946 1302
Hanoi-info@savills.com.vn
HCMC Office
18th Floor, Frideco Tower
81 - 85 Ham Nghi street, District 1, HCMC
Tel: (08) 3823 9205
Fax: (08) 3823 4571
Hcmc-info@savills.com.vn

Saigon South Office
2nd Floor, The Laurence S.Ting Building
801 Nguyen Van Linh Parkway
Tan Phu Ward, District 7, HCMC
Tel: (08) 3412 0100
Fax: (08) 3412 0199
www.savills.com.vn

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