The Rediscovering Vietnam's real estate potential
Factors driving demand: Strong
economic growth, FDI growth, WTO
access, new multi-national companies,
expansion of existing multi-national
companies, Vietnam companies
upgrading, safety & quality Issues
REDISCOVERING VIETNAM’S REAL
ESTATE POTENTIAL
Presented by:
Marc Townsend – Managing Director
1st March, 2007
Renaissance Hotel, Kuala Lumpur, Malaysia
WHAT HAS BEEN DRIVING THE PROPERTY MARKET
SINCE 2003?
•Limited capital markets
•An emerging condo market in Hanoi and HCMC
• Conspicuous consumption
• Ability to borrow from local banks at 10-11% per annum
• Consistently rising GDP and FDI
• China + 1, APRC, the Stock Market and entry to WTO has put Vietnam on the radar
screen, coupled with the ML report in Feb and the Euro Money Conference in Mar 2006
• Saturation in other South East Asian markets
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CB Richard Ellis | Page 2
MAP OF VIETNAM
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CB Richard Ellis | Page 3
HO CHI MINH CITY
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VIETNAM TODAY
• No Starbucks and No MacDonalds
• World leaders in pepper, coffee, cashew, shoes, fish/prawns, oil & gas exports
• No shortage of land, just good sites
• “If you build it, they will come” still exists but may not last much longer
• Many similarities to China in the early 90s in terms of work ethic, chaos on the
streets, migration of work force and market driven decisions
• Traffic, complete absence of infrastructure, MRT/MTR, bridges and tunnels
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HCMC OFFICE MARKET
HCMC Prime Office Stock End of Q1.2007
sqm
350,000
300,000
250,000
200,000
04
04
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Office Stock at the beginning of the quarter New supply during the quarter
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HCMC OFFICE MARKET
Prime Office Rental Index
160
140
120 US-VN Bilateral
Index (Q1 1998 = 100)
Trade Agreement
100
80
60
40
And the upward trend will continue due to:
20 • Growing demand
• Delays in new supply
0
Q1 98
Q2 98
Q3 98
Q4 98
Q1 99
Q2 99
Q3 99
Q4 99
Q1 00
Q2 00
Q3 00
Q4 00
Q1 01
Q2 01
Q3 01
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Q1 02
Q2 02
Q3 02
Q4 02
Q1 03
Q2 03
Q3 03
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Q1 04
Q2 04
Q3 04
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Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Q4 06
Q1.07
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Vimedimex
Golden Tower Major Buildings
Sacombank Existing - Future
9 DTH PetroVietnam
Saigon Trade Center
EVN
Centec Saigon Tower
Gemadept
Pacific Place Asiana Plaza
Sailing Tower Diamond Plaza
Metropolitan
Bao Viet
Vietcombank
Me Linh Point
Saigon Center Times Square
Sun Wah Financial Tower
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CB Richard Ellis | Page 8 VPBank M&C Tower
HCMC OFFICE MARKET
SOME OF THE NEW OFFICE BUILDINGS COMPLETED IN
Q1. 2007
Opera View, Dist. 1 Lancaster, Dist. 1 Rosaco, Dist. 1
Estimated Total Supply in
Q1. 2007: 47,843 sqm
Petro Vietnam,
Dist. 1 E – Town 2, Tan Binh District
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HCMC OFFICE MARKET
Take up and vacancy rate of
s qm %
HCMC office buildings
18,000 8.0%
16,000 7.0%
14,000 6.0%
12,000
5.0%
10,000
4.0%
8,000
3.0%
6,000
4,000 2.0%
2,000 1.0%
- 0.0%
Q1.04 Q2.04 Q3.04 Q4.04 Q1.05 Q2.05 Q3.05 Q4.05 Q1.06 Q2.06 Q3.06 Q4.06
Take-up (Sqm) Vacancy Rate (%)
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HCMC OFFICE MARKET – Rental Rates
Rental growth of Grade A
2006 - 2007 Q1 - 2006 $23.00
growth rate 28% 29.5 Q1 - 2007 $29.50
unit: US$
23
Increase of 28%
Occupancy 100%
Q1/2006 Q1/2007
*Note: Rents excluding S. C and VAT
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HCMC OFFICE MARKET – Rental Rates
Rental Growth of Grade B
2006 - 2007 Q1 - 2006 $21.00
unit:US$ growth rate 26% Q1 - 2007 $26.50
26.5
21
Increase of 26%
Occupancy 99%
Q1/2006 Q1/2007
* Note: rents excluding S.C and VAT
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HCMC OFFICE MARKET – Rental Rates
Rental Growth of Grade C
2006 - 2007 Q1 - 2006 $17.50
growth rate 17%
Q1 - 2007 $20.50
unit: US$
20.5
17.5 Increase of 17%
Occupancy 95%
Q1/2006 Q1/2007
* Note: rents excluding S.C and VAT
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HCMC OFFICE MARKET
Market Outlook in 2007:
9 Limited grade A office space still Supply of
remains. Expected new grade Expected
9 Some new supply of Grade B office year of A, B & C supply
space expected to come on line during completion buildings (sqm)
2007.
9Factors driving demand: Strong 2007 27 158,798
economic growth, FDI growth, WTO
access, new multi-national companies,
expansion of existing multi-national
2008 18 180,657
companies, Vietnam companies
upgrading, safety & quality Issues 2009 15 187,824
9 Grade A office rental rates reflects
upward momentum and growing demand 2010 12 273,146
vis-à-vis tight supply
9 Vacancy rate remains low, grade A (0%) TOTAL 72 800,425
and B ( HCMC OFFICE MARKET
HCMC MAJOR UNDER CONSTRUCTION OFFICE DEVELOPMENTS IN Q1&Q2/07
Manulife - Dist. 7 6,000
Cetpa - Tan Binh 11,945
Q 2 .2 0 0 7
N'Orch - Dist. 1 6,000
ITAXA, Dist. 3 7,600
E-Star, Dist. 3 3,960
Vimedimex - Dist. 1 10,780
Petro VN, Dist. 1 10,143
Lancaster 1,600
Q 1 .2 0 0 7
E-Town 2 - Tan Binh 27,000
Rosaco Tower - Dist. 1 8,000
sqm
Opera View - Dist. 1 3,100
0 5,000 10,000 15,000 20,000 25,000 30,000
(Source: CBRE)
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HCMC OFFICE MARKET
EX PECTED FUTUR E SUPPLY O FFI CE SPACE
(2 0 0 7 - 2 0 1 0 )
(u n it s q m )
273,146
180,657 187,824
158,798
Exp ect ed co mp l et i o n i n Exp ect ed co mp l et i o n i n Exp ect ed co mp l et i o n i n Exp ect ed co mp l et i o n i n
2007 2008 2009 2010
2007 2008 2009 2010
Rosaco Tower Petro VN VP Bank Tower Sacom Bank Centec Asiana Financial Tower Vietcombank
Plaza Tower
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THE MARKET’S TIMING – LARGER BUILDINGS
2008 2009 2010
Bao Viet Centec Vietcombank
20,000 sqm 25,000 sqm 77,000 sqm
(owner
occupied)
VPBank Asiana Plaza
20,000 sqm 32,000 sqm M&C Tower
(12,000 sqm 35,000 sqm
for lease)
HCMC Power
Head Office
20,000 sqm A&B Financial Tower
(10,000 sqm 25,000 sqm 100,000 sqm
for lease) 2010 2011
Gemadept Times Square
16,500 sqm 31,000 sqm
(10,000 sqm
for lease) 2010
76,500 sqm 113,000 sqm 212,000 sqm
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(32,000 sqm Goes Here
for lease)
CB Richard Ellis | Page 17
RESIDENTIAL CONDO HCMC
Number of Condos and Projects launched year-by-year
12,000 50
40
9,000
30
P ro j ects
Condos
6,000
20
3,000
10
0 0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Uni ts 648 0 0 0 150 0 0 124 1,234 3,418 7,644 10,37 11,47 7,270
P r oj e ct s 1 0 0 0 1 0 0 1 3 16 27 42 33 9
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MAP OF CONDO PROJECTS IN HCMC
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RESIDENTIAL CONDO HCMC
Completed Condominium Units year-by-year
2500
2000
1500
1000
500
0
1999 2003 2004 2005 2006 Q1/07
Over U S$2, 000 141 252
U S$1, 501 - U S$2, 000 526
U S$1, 001 - U S$1, 500 97 66 270 405
U S$600 - U S$1, 000 798 124 1, 110 1, 965 1, 330
Less U S$600 552 1, 594 881
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