CBREVietnamBigBreakfast2014 PDF

IF NOT NOW, WHEN?
Presented by: Marc Townsend, Managing Director, CBRE Vietnam

July 9, 2014
EVERY DAY IS NOT A SATURDAY

Time to look for substitution
Lessons learnt from the Big Game
Dream huge.
If your goal keeper has let in four
goals in seven minutes,
substitute him immediately.
German discipline in, Brazilian
flair out.
Short back & sides beats long &
lanky
Business is business, do not get
sentimental
Team work is more important
than one individual
Scolari to Vietnam???
And finally, always have a Plan B.
IF NOT NOW, WHEN? | Q2 2014
EAST SEA TENSION
INCREASING INTEGRATION AND INVESTMENT
Samsung Wins License for $1 Billion Factory

to Produce High-Resolution Displays
FOREIGN DIRECT INVESTMENT

Increased FDI to real estate
FDI Structure, 6M 2014
13%
Manufacturing
7%
6M 2014: FDI in real estate US$692

million, up 65% y-o-y
Realestate
10%
70%
Construction
Others
Location
US$
million
Mixed-use development
VSIP Binh Hoa Binh Duong
99.6
Singapore investor
Residential project
Ward 22, Binh Thanh, HCMC
200
Sun Wah Vietnam Real Estate

Limited (Hong Kong)
Alma Resort
Khanh Hoa
300
Alma Group (Israel)
Flowers Resort
Cam Ranh, Khanh Hoa
89
State Development Co. (Russia)
Starlake
Tay Ho District, Hanoi
234
T.H.T.
Large real estate FDI

project, 6M 2014
Investors
FREE TRADE AGREEMENTS (FTA)

To ensure sustainable economic growth
Vietnam EU FTA negotiations are undertaken at a greater urge towards the aim of
concluding the negotiation in 2014.
Currently, only 42% of Vietnam products are applicable to EU's GSP. However, if the
FTA with the EU is finalized, at least 90% Vietnam products can enjoy the tax rate of 0%.
TPP would increase

Vietnams GDP in 2025 to
28.4% more than GDP
without TPPs support.
Likewise, export value
would be more than 35.7%.
Marc Townsend went to Washington to

lobby on behalf of TPP and Eximbank
reauthorization.
6
United States Department of Commerce
ECONOMIC INDICATORS
Fluctuated in short term but still remained strong
6M foreign tourists to Vietnam increased 21% y-o-y
VNIndex
Million people
Tensions with
China
650
550
450
40%
30%
20%
10%
0%
2010
Jun-14
May-14
Apr-14
Mar-14
Jan-14
Feb-14
350
2012
2013 6M 2014
Growth rate
Strong export of mobile phones in 6M 2014
25,000
US$ million
2011
Foreign tourists
Stable FDI disbursement in 6M 2014
Growth rate (%)
6M VN-Index Price chart
16%
20,000
Mobilephonesandappliances
Garments&textiles
Shoes
15,000
42%
10,000
13%
Electronics,computersandparts
Crudeoil
5,000
2010
2011
FDI registered
2012
2013
6M 2014
5% 5% 6%
7%
6%
Seafood
Machineryandparts
Others
In 6M 2014, export of mobile phones was US$11.7 billion , an

increase of 18% y-o-y.
FDI implemented
VIETNAM GROWTH OUTLOOK

Medium- and long-term economic prospects remain positive
EuroCham Business Climate Index
Vietnams Business Climate Index on

upward trend
World Bank maintained
Vietnam GDP growth

outlook in 2014 as of
5.5%.
GOVERNMENT MEASURES
On the move
Fiscal policy
VND30trillion stimulus package: 7% disbursed,

up from 4% reported end Feb 2014.
VAMC:
FX policy
Total VND49 trillion NPLs bought in 6M 2014,

increasing VND10 trillion from Dec. 2013.
In April, the systems NPL ratio was 4.03%, up

from the 3.74% recorded in January
The SBV estimated 2014 capital inflows at US$26

billion, more than sufficient to cover trade deficits.
SBV continues to purchase FX in order to rebuild its

reserves
Target to buy about VND70 trillion100 trillion in 2014.
Monetary policy
Considering selling NPLs to foreign investors. The first

batch of NPLs is expected to be available for investors
in the third quarter.
USD/VND Interbank Exchange rate
Cumulative disbursement of VND30trillion package
22,000
VND thousand
2,500
2,000
1,500
1,000
500
21,000
20,000
19,000
18,000
Jun-14
Nov-13
Apr-13
Sep-12
Feb-12
Dec-10
Apr-14
17,000
May-14
Mar-14
Jan-14
Feb-14
Dec-13
Nov-13
Oct-13
Sep-13
Jul-13
Aug-13
Jun-13
Jul-11
VND billion
SBV devaluated the dong 1% on 19 June 2014 to

spur exports.
BCI NUMBERS
Keep going down
Projects under construction, y-o-y change
Percentage change
Compared to 1H 2013
All future projects (2014 2025), y-o-y change
Compared to 2013
Compared to 1H 2013
Percentage change
150%
100%
50%
0%
-50%
-100%
Projects
Under
Construction
HCMC Hanoi
Da
Nang
Can
Tho
Khanh Vung
Hai
Hoa
Tau Phong
0%
HCMC Hanoi
Da
Nang
Compared to 2013
Can
Tho
Khanh Vung
Hai
Hoa
Tau Phong
-10%
-20%
-30%
-40%
-50%
All Future
Projects
(2014-2025)
HCMC
Hanoi
Da
Nang
Can
Tho
Nha
Trang
Vung
Tau
Hai
Phong
Office
188
359
63
30
12
27
14
Retail
85
189
33
10
21
26
45
34
34
19
HCMC
Hanoi
Da
Nang
Can
Tho
Nha
Trang
Vung
Tau
Hai
Phong
Office
107
118
15
Retail
49
42
Hospitality
and SA
14
13
Hospitality
and SA
Resi
119
101
14
Residential
252
390
133
11
18
26
15
Total
289
269
46
21
30
Total
551
983
263
48
74
93
39
Source: www.bciasia.com; CBRE Vietnam, June 2014
Retreived on June 27, 2014
10
INFRASTRUCTURE
Progress of Metro Line No. 1
3 Section on Dien Bien Phu Str., near Saigon Bridge
Sections in District 2
Section on Nguyen Huu Canh Str., near Van Thanh

Expected completion date: January 23, 2017
1
11
1 Section of Metro Line #1 from Thai Van Lung Str. to Ton Duc Thang Str.
INFRASTRUCTURE
Thu Thiem New Urban Area
Thu Thiem in the past
Thu Thiem today (pix taken in Jul 2014)
12
INFRASTRUCTURE
Ports in HCMC replaced by mixed-use projects
1 Saigon New Port

Relocated to Cat Lai Port (2008)
and relocating to Cai Mep Port
Operation stop: May 2015
Converting to mixed-use projects
Partnered with Vingroup
3
2
2 Khanh Hoi - Nha Rong Port

To be converted in Q1 2016.
Partnered with Vingroup
3 Ba Son Shipyard
Waiting for approval on 1/500 plan
Ba Son site will be auctioned.
13
INFRASTRUCTURE - HANOI
Progress of Metro Line No. 2
Major Artery (Completed)
Ring Road (Completed)
Elevated Ring Road (Completed)
HANOI CBD
Elevated Ring Road (Under planning)

UMRT Line 2 (Under Construction)
5
5
DONG DA
Section on Dong Da Lake

4
THANH XUAN
Giai Phong Rd.
3
2
Section on Nguyen Trai street, Ha Dong District.

Expected completion date: September 2015
Section on Nguyen Trai

street, intersect RR #3
Section on Nguyen Trai
street, near Royal City
HA DONG
BUS
STATION
1
14
4
INFRASTRUCTURE - HANOI
More bridges coming online
Nhat Tan Bridge
Thang Long Bridge
Dong Tru Bridge
TAY HO
Nhat Tan Bridge (8.9 km)
CAU GIAY
Chuong Duong Bridge
Exp. comp. Oct 2014
TU LIEM
Vinh Tuy Bridge
Thanh Tri Bridge
HA DONG
HOANG MAI
Dong Tru Bridge (1.1km)

Exp. comp. Oct 2014
15
RESIDENTIAL MARKET
CONDOMINIUMS FOR SALE

Total Supply*
HCMC
HANOI
1%
2%
LUXURY
HIGH END
MID END
18%
29%
29%
29%
30%
Higher price for the same

product quality due to higher
land cost than HCMC.
AFFORDABLE
41%
21%
125,917 units
105,001 units
(*): Accumulative launches since 1999, including both completion and under construction units, sold and unsold units.
Source: CBRE Vietnam, Q2 2014.
17

Prices become more competitive, so are payment terms
Condominiums for Sale, Secondary Asking Price, US$ psm
$3,000
HCMC
HANOI
Secondary asking price

(US$ psm)
$2,500
$2,000
$1,500
$1,000
$500
$0
2008
2009
2010
2011
2012
High-end
2013
2014 2008
Mid-end
2009
2010
2011
2012
2013
2014
Affordable

18

Sales transactions increased steadily
2013
2014
Sold Units by Year and by Segment
2012
HCMC
3,200 2,800 2,400 2,000 1,600 1,200
800
400
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
HANOI
400
800 1,200 1,600 2,000 2,400 2,800 3,200
72% of units sold in HCMC are completed.

Mid-end sales sharply increase due to:
More launches with lower prices
Aggressive sales strategies at existing projects.
19

Unsold stocks decreased steadily
Unsold Units (*) by Year and by Segment
25,000
20,000
HANOI
HCMC
15,000
10,000
5,000
0
Q1
Q2
Q3
Q4
2013
Q1
Q2
Q1
2014
Luxury
Q2
Q3
2013
High-end
Mid-end
Q4
Q1
Q2
2014
Affordable
Despite increasing launches, unsold units decreased steadily since Q4 2013.

Unsold stock concentrated on affordable segment in HCMC due to extremely slow construction of
some existing projects driven by financial shortage.
(*) Unsold unit excludes suspended projects.
20

HCMC - Supply not yet in sync the mass market
>$3,500/sm
$1,400 - $2,000/sm
<$800/sm
Total sold unit

Total unsold unit
12%
19
%
77
%
23
%
Total supply
105,001 units
$2,001 - $3,500/sm
$801 - $1,400/sm
24%
12%
47
%
1%
35
%
51%
Unsold units
25%: 50-70 sm/unit

59%: 70-100 sm/unit
High inventory in affordable segment mainly due to:

Increasing supply
16%: >100 sm/unit
Large unit sizes (>70 sm) -> high unit prices (> US$56,000/unit)

21

Hanoi - Supply not yet in sync the mass market
Total unsold units
Total sold units
17%
50%
84%
16%
15%
39%
44%
36%
Total supply
125,917 units
Unsold units
Majority of current stocks with unit value above US$47,000/unit

due to:
Large unit size
80% of units with

value above
US$47,000/unit
Mostly high-end and mid-end projects

22

HCMC Real demand outstrips supply
7.8 mil. ppl in HCMC
3.1 mil. ppl in

working age*
3.0 mil. ppl

employed
13,060
condos
<US$47k/unit
300,000** ppl
need houses
DEMAND
SUPPLY
(*) GSO: 4.1 mil. people in working age above 15 years old.
CBRE: assumed 3.1 mil. people in working age above 18 years old
(**) It is assumed that 10% of employed people need houses,
including 40,000 new married couples per year
Source: General Statistics Office and CBRE Vietnams assumptions, Q2 2014.
23

HCMC Unit sizes Adapting to a new reality
Common condominium unit sizes
65 sm
110 sm
125 sm
300 sm
Second tier
First tier
Before 2012
After 2012
55 sm
90 sm
110 sm
250 sm
Before 2012
50 sm
91 sm
110 sm
250 sm
After 2012 48 sm
75 sm
90 sm
1BR
150 sm
2BR
3BR
4BR+
(*): First tier: Luxury and high-end products; Second tier: Mid-end and affordable products
24

Future launches in 2H 2014
HANOI
HCMC
Vista Verde
District 2
200 units (Phase 1)
Expected price: US$1,400 psm
Developer: JV CapitaLand,
Thien Duc
Sunview Town - Sapphire

District 9
330 units
Expected price: US$684 psm
Developer: Dat Xanh Group
Ehome 6
District 9
500 units
Developer: Nam Long
Docklands Saigon
District 7
365 units
Expected price: N/A
Developer: Paujar
FLC Complex
Cau Giay Dist.
38 stories
Expected price:
US$981 psm
Developer: FLC Group
Golden Silk (To be re-started)

Hoang Mai District
No. of units: N/A
Expected price: N/A
Developer: Vinaconex 2
25
COMMERCIAL MARKETS
FLC Garden City

Nam Tu Liem District
1,100 units
(Developer: FLC Group
OFFICE
Rent marginal increase in HCMC and decrease in Hanoi
Average asking rent
(US$/sm/month)
HCMC
Grade A
$40
$30
$20
$10
$0
Q1
Q2
Q3
Q4
Q1
Q2
Average asking rent

(US$/sm/month)
2010
Hanoi
Grade B
$50
Q3
Q4
Q1
Q2
2011
Q1
Q2
Q3
Q4
Q1
2010
Q2
Q4
Q1
Q2
2012
Grade A
$50
$40
$30
$20
$10
$0
Q3
Q3
Q3
Q4
Q1
2013
Q2
2014
Grade B
Q4
Q1
2011
Q2
Q3
Q4
Q1
2012
Q2
Q3
Q4
2013
Q1
Q2
2014
27
OFFICE
Vacancy Rate
Vacancy rate (%)
HCMC
Grade A
40%
30%
20%
10%
0%
Q1
Q2
Q3
Q4
Q1
Vacancy rate (%)
2010
Hanoi
Grade B
50%
Q2
Q3
Q4
Q1
2011
Q2
Q3
Q1
2012
Grade A
50%
Q4
Q2
Q3
Q4
2013
Q1
Q2
2014
Grade B
40%
30%
20%
10%
0%
Q1
Q2
Q3
2010
Q4
Q1
Q2
Q3
Q4
2011
Q1
Q2
Q3
2012
Q4
Q1
Q2
Q3
2013
Q4
Q1
Q2
2014
28
OFFICE
Net absorption below 3-year average
NLA (sm)
HCMC
Grade A
Grade B
60,000
Net absorption per quarter 3year average
40,000
20,000
0
Q1
Q2
Q3
Q4
Q1
Q2
2011
Q3
Q4
Grade A
NLA (sm)
Q2
Q3
Q4
Q1
2013
Q2
2014
Grade B
60,000
Hanoi
Q1
2012
Net absorption per quarter 3year average
40,000
20,000
0
Q1
Q2
Q3
Q4
Q1
Q2
2011
Q3
Q4
Q1
2012
Q2
Q3
Q4
2013
Q1
Q2
2014
29
OFFICE
Within APAC market
THE AMERICAS
ASIA PACIFIC
EMEA
Y-o-Y CHANGE IN PRIME RENT
+3.3%
+2.9%
-0.1%
TOP 5 GROWTH MARKETS

60.10%
19.40%
16.70%
15.80%
13.40%
12.50%
11.00%
10.30%
10.20%
13.50%
9.30%
7.90%
7.70%
7.30%
5.70%
Seattle
San
San
Houston Houston
Subburban Francisco Francisco Suburban Downtown
Downtown Peninsula
Jakarta*
Jarkarta*
Kuala
Lumpur
Seoul
Yeouido
Manila
Ho Chi Minh
City
Dublin
London
West End
Lille
Gothenburg Rotterdam
Source: CBRE Global, Q1 2014.
Prime rent definition: average asking rent at top three office buildings in the market. In HCMC, top three buildings include Saigon Tower,
Kumho Asiana Plaza and Sunwah Tower
EMEA: Europe, Middle East and Africa
*Leases in Jakarta are typically written in U.S. dollars, but paid in rupiah, which means the occupancy cost increase is greatly affected by
currency depreciation in Indonesia.
30
OFFICE
Tenant categories
HCMC, by Industry
Hanoi, by Industry
Finance/consultancy
Finance/Consultancy
26%
Technology/Electronic
Technology/Electronics
Pharmaceutical
26%
Finance/Consultant
Finance/Consultancy
26%
Manufacturing
43%
Construction/real estate
Construction/Real
estate
Technology/Electronic
Technology/Electronics
9%
Pharmeceutical
Pharmaceutical
17%
9%
19%
Cosmetic
Cosmetics
13%
Legal
1%
5% 6%
Other
Other
HCMC and Hanoi, by Deal Size

<100
100-300
300-1000
>1000
HN
HCM
0%
10%
20%
30%
40%
50%
60%

Number is calculated based on CBREs enquiries only
31
New letting: New business start-up, newly opened offices/branches
70%
80%
90%
100%
OFFICE
Tenant nationality
9%
15%
U.S.
EMEA
76%*
APAC
Hanoi
*In which 58% are from Vietnam, 18% are from other countries
30%
U.S.
20%
50%**
EMEA
APAC
Ho Chi Minh
City
**In which 13% are from Vietnam, 37% are from other countries
Number is calculated based on CBREs enquiries only
32
OFFICE
Floors available for sale/long term lease - HCMC
Address: 1 Bach Dang, Ward 2, Tan Binh District.
GFA: 18,820 sm
Typical floor plate: 722 sm
Completion: Q2 2013
Average asking price: US$1,750/sm/term
Term: until 2059
Sub-lease right: yes
SAIGON AIRPORT PLAZA
Address: 561A Dien Bien Phu St, Ward 25, Binh Thanh Dist.
GFA: 37,434 sm
Typical floor plate: 1,592 sm
Expected completion date: Q1 2015
Term: until 2058
SSG TOWER
Address: 17-21 Nguyen Van Troi, Ward 12, Phu Nhuan Dist.
GFA: 5,543 sm
Term: until 2064
PRINCE RESIDENCE
33
OFFICE
Floors available for sale/long term lease - Hanoi
Address: 243A La Thanh Str, Dong Da Dist.
GFA: 52,656 sm
Height: 25 floors
Completion: Q2 2012
Average asking price: US$1,300/sm/50 years
ICON4 Tower
Address: 45A Tran Thai Tong Street, Cau Giay Dist.

GFA: 61,400 sm
NLA: 38,957 sm
Height: 25 floors
Completion: Q3 2013
PVI Tower
Address: 27 Tran Duy Hung, Cau Giay Dist.

GFA: 10,000 sm
Floor plate: 1,500 sm
Height: 25 floors
Eurowindow Multicomplex
34
OFFICE
Future supply
Vietcombank Tower
5 Melinh Square, D1
GFA: 77,000 sm
Expected completion:
Q4/2014
Lim Tower 2
158 Vo Van Tan, D3
GFA: 20,467 sm
Estimated completion:
Q1/2015
HCMC
HANOI
Viettel Office & Trade

Center
285 CMT8, D10
GFA: 65,971 sm
Q1/2015
Lotte Center Hanoi

Lieu Giai Street, Ba Dinh Dist
GFA: 65,000 sm
Q3/2014
SSG Tower
561A Dien Bien Phu St, Ward
25, Binh Thanh.
GFA: 37,434 sm
Estimated completion: Q3/2015
Ho Guom Plaza
Mo Lao NUA, Ha Dong Dist.
GFA: 12,000 sm
Estimated completion: 2014
35
Handico Tower
Me Tri NUA, Tu Liem Dist.
GFA: 29,040 sm
Expected completion: 2014
147 Hoang Quoc Viet

147 Hoang Quoc Viet, Cau
Giay Dist.
GFA: 39,419 sm
Estimated completion: 2014
RETAIL
New retailer entries & expansions
Expansion
New retailer entry

Robins department store
Opened 20th store in Q2

2014
1st store in Hanoi in July
2014
1st shopping center in
Hanoi in March 2014
2nd shopping center in
Hanoi in September
2014
3 restaurants opened in
HCMC in 2014.
Opened 8th store in

HCMC and to open 1st
store in Hanoi in Q3
2014.
1st store in Hanoi, 10,000 sqm in Vincom Megamall Royal City,
opened in March 2014
2nd store in HCMC, 12,000 sqm in The Crescent Mall, expected to
open in Nov 2014.
36
To open 2nd mall in Binh

Duong in Q4 2014.
1st mall in Hanoi in 2015
RETAIL
Vietnam remained above the average in terms of global consumer
confidence
Consumer confidence
140
130
120
110
100
90
80
Indonesia Philippines
Thailand
Q2 2013
Singapore
Q3 2013
Vietnam
Q4 2013
Malaysia
Global
Q1 2014
37
RETAIL
Rent decreases, vacancy increases
Rent and Vacancy
140
HANOI
HCMC
600,000
120
500,000
100
400,000
80
300,000
60
200,000
40
100,000
20
US$/sm/month
NLA, sm
700,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2012
Occupied space
2013
2014
Vacant space
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2012
CBD average rent
2013
2014
Non-CBD average rent

38
RETAIL
HCMC and Hanoi are top targets to open stores in 2014
Top 10 CITIES where retailers intend to open stores in 2014
Source: CBRE Survey How Active are Retailers in Asia Pacific 2014?
39
RETAIL
Future supplies with GFA greater than 20,000 sm
HANOI
HCMC
SC VivoCity
District 7
GFA: 72,000 sm
Superstructure U/C. Leasing underway.
To open in 2014
Mo Market
Hai Ba Trung District
GFA: 24,300 sm
Fitting out.
To open in 2014.
SSG Tower
District 3
GFA: 20,500 sm
Superstructure U/C.
To open in 2015
Ciputra Mall Hanoi

Tay Ho
GFA: 130,000 sm
Under planning.
To open in 2015
Sunrise City Phase 2

District 7
GFA: 25,000 sm
Superstructure U/C.
To open in 2015
40
Ho Guom Plaza
Ha Dong District
GFA: 23,400 sm
Completed. Leasing.
To open in 2014.
Aeon Mall
Long Bien district
GFA: 108,000 sm
Under construction.
To open in 2015
Lotte Hanoi Center

Ba Dinh
GFA: 20,000 sm
Completed. Leasing.
To open in 2014.
Vincom Nguyen
Chi Thanh
Dong Da
GFA: 65,400 sm
Under construction.
To open in 2015
HOTEL
China tension an indigestion for tourism industry
Number of Chinese Arrivals to Vietnam by Month
In June
300,000
M-o-m change:
29.5% in Chinese tourist

19.9% in International tourist
200,000
Y-o-y change:
2013
5.5% in Chinese tourist

4.9% in International tourist
Jun
Apr
May
Mar
Jan
Feb
Dec
Oct
Nov
Sep
Jul
Aug
Jun
Apr
May
Mar
Jan
Feb
100,000
2014
14 out of 15 chartered flight routes between China and Da Nang cancelled until at least Sep 2014.
HOWEVER:
Korean Air increased from 4 flights/week (2013) to 7 flights/week (2014);
New route Narita Da Nang (operated by Vietnam Airlines) with 4 flights/week, will open from July 16;
Re-operate route Kuala Lumpur Da Nang by late August.
Source: Vietnam Tourism Department, June 2014.
41
HOTEL
Big investments are seeping into hospitality sector
POSITION
INVESTORS /
DEVELOPERS
Sapa
Sun Group
Hanoi
Thanh Hoa
Construction Corp. *
Nakheel
Sovico Holding
Hanoi
Quang
Ninh
VinGroup
ISC Corporation
Tuan Chau
Hai Phong
VLC
Thanh Hoa
FLC Group
Phu Yen
Vung Ro Petroleum
VinGroup
Ho Chi Minh
City
Phu Quoc
CEO Group
BIM Group
COMPONENTS
Fansipan cable car
Hotel
Entertainment complex
VALUE
$206 mil.
4-star Hotel
Urban- tourism complex

Resort complex
$45 mil.
Casino
Recreation complex
200-room hotel/Accor
24 serviced apartments
18-hole golf course,
Resort complex
Resort complex
$550 mil.
$7,000 mil.
$257.5 mil.
$2,500 mil
27-hole golf course

Resort complex
Resort complex
406-room Hotel (Novotel)
Resort complex
400-room Hotel (Crowne Plaza)
$796 mil.
$210.7 mil.
$70.2 mil
Acquired project from Ha Do Group

Source: Compiled from various sources, Q2 2014.
42
HOTEL
The rise of Phu Quoc Island
LARGE-SCALE PROJECTS LINING UP
50-60% ENERGY COST DROPS WITH POWER
CONNECTED TO NATIONAL GRIDLINE
Lower expected ADR

=> Phu Quoc become more attractive destination
Vinpearl Phu Quoc
Increasing operating revenue as energy

cost is expected to reduce significantly
Salinda Premium Resort & Spa
NEW INTERNATIONAL AIRPORT

Old airport
100
90
450,000
New airport
115
187
760,000
2,700,000
Flights per week

max pax per flight
max pax per year
Flights per week (current capacity)

max pax per flight (current capacity)
max pax per year (current capacity)
max pax per year (expected capacity in 2020)
43
INVESTMENT DEALS IN 1H 2014

LOTS G-H
DEVELOPMENT
SITE
AEON BINH TAN
INDOCHINE PARK TOWER
DEVELOPMENT
SITE
Location: Hanoi
Location: HCMC
Location: HCMC
Seller: Vietin
Seller: Aseana Properties

JV Hoa Lam
Seller: Mulpha
International Bhd
Buyer: Aeon Mall
Buyer: Lemongrass
Master Fund
Buyer: Ha Dong District

Peoples Committee
GALAXY 9
PICO PLAZA
Location: HCMC
Seller: Pico
Buyer: Lotte
ICON 56
LEXINGTON RESIDENCE
MOVENPICK SAIGON
Location: HCMC
Location: HCMC
Location: HCMC
Location: HCMC
Seller: Hoa Binh
Seller: Hoa Binh
Seller: Hoa Binh
Seller: VinaCapital
Buyer: Novaland
Buyer: Novaland
Buyer: Novaland
Buyer: Tung Shin
Source: RCA, retrieved July 1, 2014.

44
INVESTMENT
Between regions APAC, EMEA and America
Investors
Investors in
in the
the three
three regions
regions see
see different
different threats
threats
NORTH AMERICA
ASIA PACIFIC
EUROPE
Tapering
Economic
Perception that
and rising
slowdown driven
property has
interest
by issues around
become over-
rate
the sustainability
priced
of growth in China
Regions most preferred by investors(*)
39% of investors
choosing APAC countries
as investment
destination.
GLOBAL
North America
Asia Pacific
European
0%
Western European
Emerging Asia
CEE
20%
40%
60%
North America
Pacific
Africa and Middle East
80%
100%
Developed Asia
South America
*Regions most preferred by investors if investing outside their own region

CEE: Central and Eastern European Counties
Source: CBRE Investors Intentions Survey 2014.
45
INVESTMENT
Continued pockets of interest from overseas investors
For the majority of deals the big four
questions still remain
Investment deals, 2013-1H 2014

Local-Local
Foreign Involvement
37%
VALUATION
63%
TRANSPARENCY
BIG 4
QUESTIONS
TRACK RECORD
27%
STRUCTURING
73%
Foreign Investor with good track-record in Vietnam

New foreign investors
Source: RCA, retrieved July 1, 2014.
46
2H 2014 OUTLOOK
CBRES FORECASTS 2H 2014

Macro-economic and Infrastructure
TPP will not happen until 2015 at the earliest. The EU FTA will happen first.
Other Asia Pacific countries will put their own relationship with China before
supporting Vietnam in the East Sea (including the US).
No perceptible long-term fall out from the May Uprising except in the Tourism
sector. Most industries are back at work. Shaken badly, yes; pulling out of
Vietnam, no.
Macro-economic statistics and fundamentals, all appear to be in good shape.
Infrastructure continues to amaze, especially the Metro Line No.1 with
construction currently underway in District 1, HCMC and the Metro Line No. 2
in Hanoi.
SOE equitisation is moving ahead, slowly.
Jakarta and Manila are getting all the attention.
48

Residential
Affordable housing is still grabbing the headlines.
Hold your breath for the Foreign Ownership on Land and Property by year-end.
Other developers are dusting off their old Residential and Township plans.
More cranes to be seen on both sides of Hanoi Highway (HCMC) and the Red
River (Hanoi).
As pricing is coming down, people can move up to the next quality bracket.
The mid- to high-end markets will receive more end-users while the high-end
segment will see buy-to-let investors coming back.
District 2 & District 7 took 15 years to develop, so it is realistic to expect the
same success story for Thu Thiem by 2029.
Prime-location projects stay still or convert into other land-use purpose.
Developers are still sending out spam emails & SMS because they didnt come
to CBREs Brand Building events and make use of the WhatsApp and Viber.
49

Office
A strategic approach will be required for major occupiers now planning and
negotiating for leases which expire in mid to late 2014. Rents should be
locked in for the next five years until the next wave of new supply comes
online.
Very few new entrants to the Vietnam market; however, there are a noticeable
number of up-graders and re-inforcers.
Under revised Real Estate Law, strata-title opportunities will open up more
transactions. However, this will require strong DMCs (shared responsibilities
amongst the owners).
Bitten off more than you can chew? perhaps the continued glut of office
space in Hanoi and the unfinished buildings in HCMC. Like Suarez to
Barcelona, it will take a lot of money and some frank discussions to resolve.
50

Retail
Retail market has more confidence and supply
Foreign retail developers with modern, tried and tested international concepts
will create even more competition for struggling local retail formats
No new shopping centre to be developed in the Hanois CBD will result in
more demand for shop space and higher rents.
Shopping centers need to be more creative with their marketing and price
sensitive to compete against high street stores and online shopping in order to
convert window shoppers into consumers
International retailers will pay more attention as Vietnam will open completely
its market in January 2015 under WTO obligations.
Hospitality
Edward Snowden to go on holiday in Phu Quoc as the Russians keep coming.
Coastal cities would be interesting but again, can developments come at the
right price?
51
Investment
Funds continue to dispose of their assets but also be interested in acquiring
well-priced assets.
Local and foreign buyers are STILL looking but not finding well-priced assets.
Skeleton buildings still sit empty and un-loved.
No real urgency in the market.
Still a Tale of Two Cities.
If not now, when?
52
AT CBRE, WE LIVE AND BREATHE THE BUSINESS

OF REAL ESTATE
Every quarter
QUARTERLY REPORT
Ad-hoc
VIEWPOINT & SPECIAL REPORT
53
AT CBRE, WE LIVE AND BREATHE THE BUSINESS

OF REAL ESTATE
Every week
NEWSPAPER UPDATE
Vietnam
Every month
DASHBOARD
Vietnam
Every quarter
MARKETVIEW
Hanoi
Vietnam
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 sources we 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 representation about it. We include projections, opinions, assumptions or estimates which are made with careful
54 may not represent current or future performance of the
IF NOT
NOW,
WHEN?
| Q2 2014
consideration of factors known to us for example only, and they
market.
This
information
is designed
exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE.

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IF NOT NOW, WHEN?

Presented by: Marc Townsend, Managing Director, CBRE Vietnam

EVERY DAY IS NOT A SATURDAY

And finally, always have a Plan B.

IF NOT NOW, WHEN? | Q2 2014

EAST SEA TENSION

IF NOT NOW, WHEN? | Q2 2014

INCREASING INTEGRATION AND INVESTMENT

Samsung Wins License for $1 Billion Factory

IF NOT NOW, WHEN? | Q2 2014

FOREIGN DIRECT INVESTMENT

6M 2014: FDI in real estate US$692

VSIP Binh Hoa Binh Duong

Ward 22, Binh Thanh, HCMC

Sun Wah Vietnam Real Estate

Alma Group (Israel)

Cam Ranh, Khanh Hoa

State Development Co. (Russia)

Tay Ho District, Hanoi

Large real estate FDI

IF NOT NOW, WHEN? | Q2 2014

FREE TRADE AGREEMENTS (FTA)

TPP would increase

Marc Townsend went to Washington to

United States Department of Commerce

IF NOT NOW, WHEN? | Q2 2014

Strong export of mobile phones in 6M 2014

Stable FDI disbursement in 6M 2014

Growth rate (%)

6M VN-Index Price chart

In 6M 2014, export of mobile phones was US$11.7 billion , an

IF NOT NOW, WHEN? | Q2 2014

VIETNAM GROWTH OUTLOOK

Vietnams Business Climate Index on

World Bank maintained

Vietnam GDP growth

IF NOT NOW, WHEN? | Q2 2014

VND30trillion stimulus package: 7% disbursed,

Total VND49 trillion NPLs bought in 6M 2014,

In April, the systems NPL ratio was 4.03%, up

The SBV estimated 2014 capital inflows at US$26

SBV continues to purchase FX in order to rebuild its

Target to buy about VND70 trillion100 trillion in 2014.

Considering selling NPLs to foreign investors. The first

USD/VND Interbank Exchange rate

Cumulative disbursement of VND30trillion package

SBV devaluated the dong 1% on 19 June 2014 to

IF NOT NOW, WHEN? | Q2 2014

All future projects (2014 2025), y-o-y change

Source: www.bciasia.com; CBRE Vietnam, June 2014

Retreived on June 27, 2014

IF NOT NOW, WHEN? | Q2 2014

3 Section on Dien Bien Phu Str., near Saigon Bridge

Section on Nguyen Huu Canh Str., near Van Thanh

IF NOT NOW, WHEN? | Q2 2014

Thu Thiem today (pix taken in Jul 2014)

IF NOT NOW, WHEN? | Q2 2014

1 Saigon New Port

2 Khanh Hoi - Nha Rong Port

IF NOT NOW, WHEN? | Q2 2014

Elevated Ring Road (Under planning)

Section on Dong Da Lake