THE NEW BEGINNINGTHE NEW BEGINNING - CBRE … Harmona Au Co Tower 25 project 9 project Times City HCMC, Hanoi, 11 CBRE | FEARLESS FORECAST 2014 ... Note: Selected newspapers include

THE NEW BEGINNINGTHE NEW BEGINNINGPresented by: Marc Townsend, CBRE VietnamJanuary 8, 2014

2013 IN REVIEW

CBRE ‘Running men’CBRE ‘Running men’

Heaviest snowfalls ever seen in Sapa Typhoon Nari attacked Central Vietnam

And the winner is…

2 CBRE | FEARLESS FORECAST 2014

2013 IN REVIEW

THE NOT-SO-GOOD NEWS THE GOOD NEWS NEWS FROM CBRE

M t b d d bt ll t d• A record 37 companies delisted from exchanges in 2013 (22 delisted in 2012);

• 411 real estate projects

• Lowest interest rates since 2005;

• Lowest CPI in ten years;

• Stock market increased 22% y-o-y,

• Most bad debts collected

• Monthly Dashboard

• Weekly Residential 411 real estate projects (6,645 ha) have been halted in 38 localities (MoC*)

• Retail sector growth falls to

the best performing in SEA

• Gold price fell 24.8% y-o-y;

• Residential prices down to levels

Launch Newspaper Update

• Sunday site tours

four-year low but net growth remained

last seen in 2006 (MoC*);

• VAMC has disbursed over VND566 trillion by Dec2013;

• Flying visit from Kazakhstan colleagues

• 8 trips to Yangon

• Registered FDI up 32.3% y-o-y;

• Cell phones topple garments as Vietnam’s top export;

• 2 more Vietnamese staff RICS accredited

*MoC: Ministry of Construction

• 50% - 60% import duty reduction on cars from Asean countries;


ECONOMIC WHEELS TURNINGKey driver: lowest inflation & interest rates since 2005

Policy ratesBank rates (%)

20%

25%

12

16

%)

y( )

5%

10%

15%

4

8

eres

t Rat

es (

%

0%

5%

2011 2012 2013Mortgage rate (%) Deposit rate (%)

0

4

2005 2007 2009 2011 2013

SB

V In

te

g g ( ) p ( )

Base Rate Rediscounting Rate

Refinancing Rate

2Y 1Y 6M 3M 1M Current

Note:• Mortgage rate is the average lending rate surveyed at ten banks, applied for home loan only. However, the back-dated numbers are the average rate which was announced

publicly at that point of time, applied for all sectors and all banks . • Deposit rate is the average deposit rate of a basket of ten banks in which the rates are announced publicly on their websites and can be tracked backwards. Applied for one-

Mortgage Rate (%) 20.0 14.5 15.3 13.3 12.8 12.9


p g p p y ppyear term only.

ECONOMIC WHEELS TURNINGGold or Stock?

2,00050

ce

D

LOCAL GOLD GLOBAL GOLD

1 200

1,400

1,600

1,800

34

38

42

46

Glo

bal g

old

pric

(US

$)

old

pric

e (V

ND

mill

ion)

The first time in 13 years that gold price remains

Source: SJC, gold.org

1,000

1,200

30

34

Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13Loca

l g

that gold price remains on a sustained downward trend at the year-end

R i l t k k t t i 2013Regional stock markets, y-o-y return in 2013:

Thailand (SET) down -7.4%;

Singapore (SGX) up 6.9%;

( C ) % Indonesia (JCI) up 1.5%;

VNIndex (VNI): up 22%, the highest level was nearly 527 on 31 May.

Source: Bloomberg

REAL ESTATE INDEX 2Y 1Y 6M 3M 1M Current

Real Estate Holding & Development Listed Companies 39.8 39.5 45.4 41.5 43.4 44.9

Real Estate Services Listed Companies 70.0 25.6 26.6 21.1 22.0 32.2

gSource: Stockbiz


p

ECONOMIC WHEELS TURNING… and Stronger FDI

2010 2011 2012 2013

9 000

12,000

15,000

18,000

ster

ed F

DI

lion

US

D)

-

3,000

6,000

9,000

R l E t t M f t i C t ti Oth

Reg

is(m

il

Real Estate Manufacturing Construction Others

Project Nationality LocationIncreased capital

(US$ bil.)Newly registered

(US$ bil.)

Formosa Steel Mill Project Taiwan Ha Tinh 10.0

Nghi Son Refinery Oil Japan Thanh Hoa 2.8

Samsung Electronics Korea Bac Ninh 1.0

Coal-Fired Thermoelectric Power Plant China Vinh Tan 2.0

Samsung Electronics Korea Thai Nguyen 2.0

LG Electric & Electronic Project Korea Hai Phong 1.5

Samsung Electro-mechanics Korea Bac Ninh 1.2

Bus Industrial Center Russia Binh Dinh 1.0


Source: Ministry of Planning and Investment

INVESTMENT OPTIONSReal Estate Becoming Increasingly Attractive

Return by Asset Classes

20%

25%

d

2012 2013

5%

10%

15%

urn

to y

ear

end

-10%

-5%

0%Stock Market (VN

Index) (*) Bank Deposit (**) Gold (SJC) (***) VND/USD Exchange

rate Rental Yield of High-

end Condo (****)

% c

hang

e/re

tu

Source: CBRE; SJC; SBV

-25%

-20%

-15%

%

Source: CBRE; SJC; SBV

(*) VN Index change, 31 Dec 2013 against 2 Jan 2013(**) For term deposit less than one year(***) Gold price per tael change in 31 Dec 2013 against 2 Jan 2013(****) Gross yield of The Vista, The Estella, Xi Riverview Palace in District 2, HCMC


BCI NUMBERSDown!!!

Projects under construction, y-o-y change All future projects (2014 – 2025), y-o-y changej , y y g p j ( ), y y g

50%

100%

ge (

%)

Jan 2013 July 2013 Jan 2014

150%

200%

ge (

%)

Jan 2013 July 2013 Jan 2014

-50%

0%

50%

HCMC Hanoi Da N

Can Th

Nha T

Vung T

Hai Ph

Y-o

-y c

han

-50%

0%

50%

100%

HCMC Hanoi Da N

Can Th

Nha T

Vung T

Hai Ph

Y-o

-y c

han

g

All Future Projects

(2014-2025) HCMC Hanoi

DaNang

Can Tho

NhaTrang

VungTau

HaiPhong

Projects Under

ConstructionHCMC Hanoi

DaNang

Can Tho

NhaTrang

VungTau

HaiPhong

-100% Nang Tho Trang Tau Phong Nang Tho Trang Tau Phong

Office 208 434 63 34 12 27 18

Retail 95 236 33 2 8 24 21

Hospitality and SA

35 54 31 6 38 20 9

Office 111 124 11 13 1 8 8

Retail 48 48 1 1 2 6 18

Hospitality 18 11 8 2 3 9 0 and SA

Residential 308 473 159 17 24 34 19

Total 646 1197 286 59 82 105 67

and SA18 11 8 2 3 9 0

Resi 123 116 17 3 3 4 3

Total 2013 300 299 37 19 9 27 29


Updated: January 3, 2014Source: www.bciasia.com; CBRE

INFRASTRUCTURE2013 Bridges rise to ease traffic congestion

HAI PHONG

HA NOI (Capital)2 bridges completed“ In 2013, US$603

million has been invested to develop

DA NANG

PHONG

4

2 steel flyovers

pnew bridges/ flyovers in Hanoi, Da Nang and HCMC.

” DA NANG4 bridges completed”Source: CBRE

Dragon Bridge Tran Thi Ly Bridge

9 bridges completed

Nguyen Tri Phuong Bridge

Hoa Xuan Bridge

HO CHI MINH CITY

CAN THO

9 bridges completed


6 steel flyovers Saigon 2 bridge Binh Loi bridge Kinh Thanh Da bridge

INFRASTRUCTUREMore international flight routes open

3 new international air carriers have entered Vietnam - Etihad Airways, Air Macau and Nordic GGlobal.

12 new international routes opened in the year.p y

Most of newly opened international routes are between Danang, Nha Trang and China,Danang, Nha Trang and China, Russia, South Korea.

In 2013, Vietjet Air became the first private Vietnamesethe first private Vietnamese airline to fly internationally (HCMC – Bangkok).


RESIDENTIAL FOR SALEIncreasing number of projects completedSaigon Airport

om

ple

ted

om

ple

ted

Airport Plaza

Celadon City – P1

Th h D Vi

33 u

nit

s co

20 u

nit

s coThanh Da View Mulberry Lane

s w

ith

28,

53

s w

ith

7,0

2

Ehome 3 – Phase 1Royal City Mandarin Garden

39 p

roje

cts

25 p

roje

cts

Harmona Times CityAu Co Tower

Han

oi,

3

HC

MC

, Harmona


Him Lam RiversideGood House Hillstate Times City

CONDOMINIUM FOR SALEMarketing spend demonstrating a market that has turned

Advertised by District, HCMC, 2013Advertised by Month, Southern Vietnam*

17%18%

District 7Thu DucDistrict 9District 2

160

200

40

50

sem

ents

ojec

ts

Number of projects Number of advertisements

11%

9%4%

7%

4%

District 2Go VapNha BeTan PhuTan Binh40

80

120

10

20

30

mbe

r of

adv

ertis

Num

ber

of p

ro

8%8%7%

7% District 8 Binh TanOthers

0

40

0

10

Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Num

N

Note: Selected newspapers include Tuoi Tre, Mua & Ban, Vietnam News, Thi truong Bat dong san & Tai san, Saigon Times Daily, Note 2: No statistics available for January and February.

(*): HCMC, Binh Duong and Dong Nai, BR-VT

Number of adverts in December was already 240% higher than March 2013

Projects in District 7 were the most actively promoted


RESIDENTIAL FOR SALE2013 HCMC Review – The New Normal

Payment terms forfinished, unsold products:

35% - 50% upfront toHand over conditions:

Bare shell option

2013

35% 50% upfront tohand-over; 50%-65%

in 1 or 2 years

Bare shell optionSmaller sized units

Promotion/

2013The most flexible year

All media channels are employed for advertsTV, Radio, Youtube, mobile

Promotion/Incentive:

Gift voucher,furniture package, , , ,

phone, flyer, mass-emailair tickets, gold


CONDOMINIUM FOR SALEUnsold stock diminishes thanks to reasonable pricing

Unsold units in HCMC, excluding new launches in 2013Unsold units in D2 & D7 (excl. new launches in 2012 & 2013)

30%

50%

10,000

20,000

ng

e (%

)

So

ld

2012 2013 2013 vs. 2012

12 000

15,000

18,000

Luxury High-end Mid-end Af fordable

-30%

-10%

10%

-10,000

0

Launch Sold Unsold Launch Sold Unsold

District 2 District 7

nso

ld u

nit

ch

an

Un

it la

un

ched

/

0

3,000

6,000

9,000

12,000

Un

itU

nit

-50%-20,000

UnU

Source: CBRE

0

Q1 2013 Q2 2013 Q3 2013 Q4 2013

Affordable units made up the largest proportion of sales (Q4 2013: 49%; Q4 2012: 35%);

Mid-end sales improved as prices soften;

Excluding 2013 new launches, unsold units decreased for four consecutive quarters;

Accumulative unsold units down by 7.9% q-o-q and 16.6% y-o-y;

Most unsold stock is concentrated at unfinished projects.


RESIDENTIAL MARKETHCMC Condominium: 2013 y-o-y price change: -3%

Selling price 2012 2013


Y-o-y change -6% -3%

Strongest decreaseBinh Chanh

Thu DucDistrict 3

Strongest increaseD10D11

Thu Duc

REGIONAL MARKET COMPARISONOffice and Residential market

Asian Pacific, Office Prime Rent in Key Cities, Q3 2013

100

60

80

100

(US

$/sm

/mth

.)

-

20

40

Ask

ing

rent

Asia Pacific, Condominium Price, CBD, Q3 2013

Singapore Jakarta Hanoi HCMC Kuala Lumpur Bangkok Manila

18,000

m)

6 000

9,000

12,000

15,000

g P

rices

(U

S$/

s

0

3,000

6,000

Singapore Bangkok* HCMC Manila* Kuala Lumpur Hanoi Jakatar

Ask

ing

(*): Q1/2013


( ): Q1/2013Source: CBRE

OFFICECompletions in 2013

HCMC HANOI

President Place, D1 Corner Stone, Hoan Kiem PVI Tower, Cau GiayTimes Square, D1 Hong Ha, Hoan Kiem319 Tower, Cau Giay

Lim Tower, D1 Eurowindow Multicomplex, Cau Giay

Empress Tower, D1 Song Hong Park View, Dong Da

Hapulico Complex, Cau Giay

Ngoc Khanh Plaza, Ba Dinh


Saigon Airport Plaza, Tan Binh

Pico Saigon Plaza, Tan Binh

Royal City, Thanh Xuan

OFFICEHCMC and Hanoi: Two directions

Asia Pacific, Office rental cycle, Grade A&B, Q4 2013

Shanghai New DelhiAdelaide Shenzhen

Melbourne

Kuala Lumpur

BeijingJakarta Bangkok

Perth

BangaloreAK

MS

JB

B

SN

P

B

G h

Hanoi

TokyoManila

Taipei

A kl d

Brisbane

SeoulHong Kong Canberra

PerthSydney

Wellington

GCW

ATM

TS

HS

B

H

M Mumbai

TENANTs Landlords

GuangzhouSingapore

Auckland

Ho Chi Minh City HSG A

HCMC

Landlords TENANTs

HANOI

TENANTs

Grade A and B vacancy rate: y-o-y Grade A and B asking rent: slightly –

but watch for Grade B supply

Grade A vacancy rate: Grade B vacancy rate: Grade A and B asking rent: y-o-y


but watch for Grade B supply Grade A and B asking rent: y o y

OFFICEPositive news for downtown landlords in HCMC

Grade A and B office space (*), D.1 HCMC2013 New Supply

600,000

A, s

m)

Q4/2012 Q4/2013Up 9.7%

Up 15.5%

2013 New Supply D.1, HCMC

-

150,000

300,000

450,000

(NL

A

Leased space Existing supply

Grade A and B net absorption, HCMC

Grade A Grade B

“ HCMC seeing increasing net absorption, on a Y-o-Y basis(*).

P l i f

60,000

90,000

(NL

A, s

m)

Source: CBRE

Pre-leasing is a key identifiable trend for the first time in four years.

”Source: CBRE

0

30,000

2011 2012 2013

(


(*) Survey on Grade A and B office buildings in District 1, HCMC

RETAILCompletion in 2013 & 2014 - Decentralisation owing to availability of land

HCMC HN

Aeon Mall Celadon City, Tan Phu Times Square , D1 Hanoi Square, formerly Hang Da GalleriaTrang Tien Plaza

Royal City, Thanh Xuan Times City, Hai Ba TrungParkson Cantavil Premier, D2 SC VivoCity, D7

Pico Plaza Tan Binh Thao Dien Pearl D2 Vi tt l D10 Lotte Shopping Center Ho Guom Plaza Lotte Mart (Mipec Tower)


Pico Plaza, Tan Binh Thao Dien Pearl, D2 Viettel, D10 Lotte Shopping Center Ho Guom Plaza Lotte Mart (Mipec Tower)

RETAILIn 2014, Hanoi supply is twice as much as HCMC’s

HCMC, Retail supply in 2014 (NLA, ‘000 sm) Retail supply by city (NLA, ‘000 sm)

32

41 16 6

2013 Supply

Aeon

1,000

1,200

448

Aeon

SCVivoCity

Thao Dien Pearl

Others

600

800

LA (

‘000

sm

)

Others

HANOI, Retail supply in 2014 (NLA, ‘000 sm) 200

400 NL

-HCMC Hanoi HCMC Hanoi HCMC Hanoi HCMC Hanoi

2011 2012 2013 2014

20

257

2013 Supply

Ho Guom Plaza

Times City (P2)

Lotte CentreExisting supply New supply570

23

100 35

24 20 Lotte Centre

Mo Market Shopping Centre

Lotte (Mipec Tower)

Others


Source: CBRE

23

RETAILF&B groups still remain the most active foreign retailers

• Middle class spending power limited to F&B;• High street corners/roundabouts are more and more

sought-after;• Lack of well-priced space in CBD shopping centre;Lack of well priced space in CBD shopping centre;• In Hanoi, developer tends to occupy more spaces in

shopping centre than HCMC’s. Shops closed at Vincom Center B and Union Square

VinKC VinKE

Tenant Mix, Times City (% of sm)

Tenant Mix, Royal City (% of sm)

Vinpearl Aquarium Vinpearl Ice-rink

McDonald’s sites on Pham Ngu Lao Str. (D1) and Dien Bien Phu Str. (D1)

Dunkin’ Donuts opened on Nguyen Duc Canh Str. (D7)

14%

8%

Aquarium Other retailers

11%1%

Others

6%

72%88%


Source: CBRE

Starbucks open day, February 1, 2013

REGIONAL MARKET COMPARISONRetail and Hotel marketAsian Pacific, Retail Space per Capita, Q3 2013

0 8

0.2

0.4

0.6

0.8

pace

per

cap

ital

(sm

)

0.0

Ban

gkok

Sin

gapo

re

ala

Lum

pur

Jaka

rta

Man

ila

Han

oi

HC

M

nom

Pen

h

Yan

gon

Ret

ail s

p

Asian Pacific, Hotel ADR* in Key Cities, Q3 2013

280

Kua Ph

120

160

200

240

S$/

room

/nig

ht

0

40

80

Singapore HCMC Kuala Lumpur Hanoi Jakarta Bangkok

US

*ADR A D il R t


*ADR: Average Daily Rate

Source: CBRE

HOTELHCMC & Hanoi

Top-tier hotel, RevPAR (US$/room/night)

$200

$250Danang 5 star*

Danang 4 star*

Nha Trang 5 star

$50

$100

$150Nha Trang 4 star

HCMC 5 star

HCMC 4 star

Novotel, HCMC

Source: CBRE

$0

$50

2011 2012 2013

HN 5 star

HN 4 star

Source: CBRE*Beachfront hotels only


JW Marriott Hotel, Hanoi

HOTELThriving coastal hospitality

NHA TRANG

Loads of cranes turning in fueled by Russian vodka & Ruble’s;

Scheduled flights from Moscow and Scheduled flights from Moscow and Domodedovo; and chartered flights from Novosibirsk and Vladivostok;

Backpackers being priced out of the market;p g p

DA NANG

Th th f i l fli ht (f fi iti i The growth of regional flights (from five cities in China, Russia, Korea and Japan);

Connectivity between hotels and the airport is the best in Vietnam;

=> The rebalancing of development in Danang away from the Vietnam’s East Sea


2013 TRANSACTIONSSlow second half after flurry of deals earlier in the year

Sentinel Place, HN CentrePoint, HCMC Gemadept Tower, HCMC

Life Resort, Quy Nhon


Union Square, HCMCLotte Legend Hotel, HCMCy

and Hoi An

INVESTMENTContinued pockets of interest from overseas investors

Significant and varied interest in Vietnam but investors (and agents) frustrated Significant and varied interest in Vietnam but investors (and agents) frustrated by limited deal opportunities;

Demand for deals continues to significantly outstrip supply – particularly for operating assets in D1, HCMC;

For the majority of ‘deals’ the big four questions still remain - Without a realistic and honest approach to these foreign investors will look elsewhere

VALUATION TRANSPARENCY STRUCTURING TRACK RECORD

realistic and honest approach to these, foreign investors will look elsewhere.


CBRE FEARLESS FORECASTCBRE FEARLESS FORECASTDream the Impossible Dream

2014 FEARLESS FORECAST

Capital Markets

1. Recycling capital will be the key in 2014. Opportunity cost will be considered and developers will not want to miss the investment options that will be presented in 2014, so will offer increasingly attractive terms and preferential pricing to move inventory.

2. The most significant transactions of 2014 will be for those involving land, but don’t hold your breath for a HCMC District 1 Golden Sitefor a HCMC District 1 Golden Site.

3. Although we may never know it, Chinese capital becomes the biggest backer of real estate deals.

4. Vietnam sees Real Estate firms delisted as investors looked to break up companies in order to unlock assetsunlock assets

City Planning

5. More cranes to be seen in Thu Thiem as development prospects in D1 HCMC remain difficult to access Infrastructure being a key driveraccess. Infrastructure being a key driver.

Office

6. With limited availability at premium Grade A properties in District 1, HCMC, and no identifiable supply on the horizon landlords take advantage of renewal positions to push rentals Greatersupply on the horizon, landlords take advantage of renewal positions to push rentals. Greater divergence with Hanoi market.

7. HCMC Grade B office market to remain flat as a steady flow of buildings populates the market with new supply.


pp y

2014 FEARLESS FORECASTResidential

8. The middle class rises. By the end of 2014 the volume of sales in the mid-end sector are equal if not greater than those in the affordable sector. g

9. Not only that, but CBRE will re-instate the word luxury back into its vocabulary.

Retail

10 Th t f St b k’ M D ld d Vi t ’ bli ti d WTO t it 100%10. The entrance of Starbuck’s, McDonalds and, Vietnam’s obligations under WTO to permit 100% foreign ownership in the restaurant sector in 2015, sees the widest variety of retailers visit Vietnam during 2014.

HospitalityHospitality

11. The coastal destinations continue to be the top performing hospitality sectors:

11a. Vodka sales to double in 2014. Deep-pocketed Russian will continue to shift strongly from Thailand to NhaTrang and Mui Ne. g

11b. Gambling revenues to surge, most notably in Da Nang’s only casino, as Northern spending power continues to flock to the city and an ever increasing flight schedule provides a wealth of guest.

12. Increasing stability in the hospitality sector, combined with availability of assets, sees more 201operating hotels transact in 2014 than any other property type.

Industrial

13. CNN and Bloomberg run first reports on smog in Vietnam as the industrial revolution gains further


momentum with TPP being signed. Land supply keeps prices stable.

2014 FEARLESS FORECASTAnd finally….


Source: The Saigon Times Daily, No. 4603 January 7, 2014

CBRE GLOBAL OFFICE LOCATIONS

© 2014 CBRE (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CBRE (Vietnam) Co., Ltd. We obtained some of the information above from sourceswe believe to be reliable. However, we have not verified the accuracy of the information which we obtained from other sources and make no guarantee, warranty or representationabout it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us for example only, and they may not representcurrent or future performance of the market This information is designed exclusively for the use of this presentation and cannot be reproduced without prior written permission of


current or future performance of the market. This information is designed exclusively for the use of this presentation, and cannot be reproduced without prior written permission ofCBRE.

THE NEW BEGINNINGTHE NEW BEGINNING - CBRE … Harmona Au Co Tower 25 project 9 project Times City HCMC, Hanoi, 11 CBRE | FEARLESS FORECAST 2014 ... Note: Selected newspapers include

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