CBRE Vietnam Q HCMC Tenants Evening

Transcription

1 CBRE Vietnam Q HCMC Tenants Evening 22 nd May 2012 Presented by: Greg Ohan Vincom Center, 47 Ly Tu Trong District 1, HCMC, Vietnam

2 Today s Message To You!... 2 drivers in business 1. Fear 2. Greed Landlord & Tenants = motivated by same factors If you know the enemy & know yourself, you need not fear the result of a hundred battles (Sun Tzu, The Art of War) Renewal VS Relocation = Strategic Chess match, KNOW the market Greed is Good (Gordon Gecko, Wall St) Is it? CBRE Page 2

3 Presentation What s HOT & What s Not? Market Overview Upgrading Your Lease Leasing Strategies What you need to know? Supply How this affects you? Building Your Lease Key factors CBRE Page 3

4 HCMC & Hanoi, Top 50 cities with highest prime rents EVEN after sharp fall HCMC Vs Others HCMC = 27 th (drop 8 spots) Hanoi = 32 nd (drop 3 spots) HCMC 2 nd & Hanoi 3 rd most expensive in Sth East Asia after Singapore HK & London s West End, top 2 CBRE Page 4

5 Recent Headlines May CPI, lowest since 2004! There s no way we can meet the economic growth target of 6 percent this year when so many companies are in serious trouble, said Le Dang Doanh, an economist who has advised Prime Minister Nguyen Tan Dung CBRE Page 5

6 HCMC Office MKT Overview S*x BACK in the city - Companies returning to the centre / fringe with more attractive terms on offer... FOR NOW! Upgrading from Grade B to Grade A without the $$ Landlords who were holding out for higher rental rates, have been flexible Face rents flat effective rents negotiable Dong denominated leases in affect Q1/2012, significant take up. Grade A absorptions in Q1/ % greater than the quarterly average Attractive Incentives in selected buildings 2012 Supply delayed only 9,000 sm CBRE Page 6

7 HCMC Office MKT Overview What keeps your Landlord awake at night? 1. Competition - Increased competition & new supply / relocation options in Q4/2012, Q1/ Vacancy - Landlord(s) looking to secure Tenants NOW, rather than face half empty buildings Asking Rents (US$ psm per month) Grade A Grade B Shift in key Landlord(s) mentalities are fuelling take up CBRE Page 7 Asking Rentals across Grade A & B steadily declining / flattening

8 Upgrade? Tenants from decentralized districts / lower grades relocating to Prime CBD buildings Overall D1 D1 - Excluding Key buildings D1 - Key Active Buildings Tenants who were NOT considering relocation; have chosen to relocate Key D1 buildings are allowing Tenants to shift their occupancy strategies Overall D1 D1 - Excluding Key buildings D1 - Key Active Buildings Good quality, location, availability have allowed key buildings to emerge as highly sought after options CBRE Page 8

9 Upgrade? Key Transactions 1H 2012 Building Market Tenant Bitexco Financial Tower CBD Hoffmann la Roche Bitexco Financial Tower CBD Fonterra Bitexco Financial Tower CBD Toyota Finance Services Vincom Center CBD Kirin Vincom Center CBD Veolia Vincom Centre CBD PV Wells Service Vincom Centre CBD Evonik Degussa Saigon Finance Centre CBD Viet Phat (Inbisco) Saigon Finance Centre CBD Payoo Gemadept CBD UASC Gemadept CBD Jardine Shipping Sunwah Tower CBD Emirates Green Power CBD Bao Viet Tokio Marine Metropolitan CBD Nokia Vietnam Ree Tower CBD New Balance SFC CBD JW Pharma Central Park CBD Grass Savoye Capital Place CBD Cathay Insurance Vietnam Bao Viet Building CBD Halliburton Etown Non CBD Swagelok Ree Tower Non CBD ABB Ree Tower Non CBD Fubon Life CBRE Page 9 Tenants from decentralized / lower grade buildings relocating to Prime / Fringe CBD

10 Upgrade? CBRE Office Services Transactions for 1H % - CBD 39% - 2 key D1 buildings Asking Rents (US$ psm per month) Grade A Grade B Absorption in Grade A Market Q1/2012 ; > 13,000 sm VS Q1/2011 ; 8,500 sm. Overall Grade A Occupancy now > 90%. Mature Grade A > 95% As occupancy levels rise and New supply delayed, Grade A Market, appears to be approaching a short term bottom CBRE Page 10

11 Don t Get Caught With Your Pants Down! / Jun 2002 Apr 2005 Jul 2005 Dec 2006 Dec 2007 May 2008 Jan 2009 Doubled and Halved Low Zone Mid zone Jan 2010 Jan 2011 Jan 2012 High Zone CBRE Page 11 Notes: Rents excl SC & VAT

12 Supply & Your Strategy Only 9,000 sm of New Supply in 2012 (expectation was 84,000 sm). 11% of expected! 5 buildings targeted 2012 completion realistically, 1 perhaps 2 will be completed What does this mean for Tenant s? 1. Limited relocation options available for a Q3 & Q4/2012 expiry! sm or > Tenant with expiry in 2H 2012, only has 1-2 mth window to secure a stunning deal 3. MUST think quick and act fast! CBRE Page 12

13 Supply: The Reality Q4/2011 Vs Today Presidents Place D1, A Grade (Nguyen Du / Nam Khi Khoi Nghia) Target Handover Was June August Size 9,100 sm leasable over 12/F Floor plate 748 sm NFA (LEED Gold) Q4/2011 Q2/2012 VS CBRE Page 13

14 Supply: The Reality Q4/2011 Vs Today Saigon One Tower D1, A Grade (Nguyen Hue / Ton Duc Thang) Target Handover Was March 2012 Size 40,000 sm leasable Mixed use Floor plate 1,017 1,175 sm NFA (LEED Gold) Q4/2011 Q2/2012 VS CBRE Page 14

15 Supply: The Reality Q4/2011 Vs Today Times Square - D1, A Grade (Nguyen Hue / Dong Khoi) Target Handover Size Floor plate Was March 2012 Likely Q4 12,704 sm leasable over 8/F Mixed Use 1,588 sm NFA Q4/2011 Q2/2012 VS CBRE Page 15

16 Supply: The Reality Q4/2011 Vs Today Le Meridian - D1, A Grade (Ton Duc Thang) Target Handover Size Floor plate Was July 2012, Now October TBC Now approx 9,125 sm 1,520 sm NFA approx Q4/2011 Q2/2012 VS CBRE Page 16

17 After 2012.No Quality CBD Supply Until 2015! Q4/2011 Q2/2012 VS Vietcombank Tower - (Ton Duc Thang / Hai Ba Trung) Q4/2011 Q2/2012 VS CBRE Page 17 BIDV Tower (Nguyen Hue)

18 Securing a Good Deal Drivers? Strategy & Speed is KEY CBRE Page 18

19 The Give Covenant Strength Payment terms Deposits Longer Leases Forego penalty-free termination clauses Acquired space Speed to deal & Securing a Good Deal? The Take Rent Free Stepped / Fixed Rents Free / Reduced Parking Attractive signage Target effective Rentals after all incentives CBRE Page 19

20 Securing a Good Deal - When To Strike? Rapid take up & tightening market 1H 2012 = limited options Vacancy (%) Grade A Grade B Does your Landlord know this? Of course! 1. Only 1-2 months remaining to secure a Net Effective sub $30 p/ sm p/mth rate in Grade A 2. Committing to a new building, prior to completion = Rental Premium (best deals done 3-9 mths after) 3. Landlord s with rising occupancy now considering rental increases. Landlord s reaching their break even point CBRE Page 20

21 Major Buildings - What Is Available Today? Occupancy / Q Lettable Area (approx) Occupancy / Q Lettable Area (approx) Bitexco Financial Tower D % 24, sm 60.00% 13, sm Kumho D % 1, sm 98.00% sm Metropolitan D % 1, sm 95.00% 1, sm Sun Wah Tower D % sm 96.80% sm Diamond Plaza D % 0.00 sm 98.00% sm Saigon Centre D % sm 90.00% 1, sm Saigon Tower D % sm 99.45% sm Me Linh Point Tower D % 0.00 sm 97.00% sm A&B Tower D % 1, sm 98.00% sm Green Power D % 3, sm 90.00% 1, sm Vincom D % 37, sm 67.00% 25, sm CENTEC D % sm 98.00% sm Saigon Trade Center D % 3, sm 93.00% 5, sm Maritime Bank Tower D % 8, sm 69.40% 6, sm CentrePoint PN 97.50% sm 98.00% sm e town TB 98.80% 1, sm 99.38% sm REE Tower D % 13, sm 85.00% 2, sm Flemington D % 7, sm 75.00% 5, sm Source: Verified by Landlords or Landlords Representatives TOTAL 105,910 sm 64,460 sm Q4/2011 Q2/2012 = 41,450 sm Leased Q4/2011 Q2/2012 Q1/2012 CBRE Page 21 Q2/2012 = 22,93 sm Leased

22 HCMC Office Absorption Rate by Grade 2007 Total 665,486 sm 2008 Total 908,972 sm 2009 Total 1,222,303 sm 2010 Total 1,648,216 sm 2011 Total 1,892,700 sm Q1/2012 1,924,683 sm 2012 Take-Up*: Local 87.5% vs. Foreign 12.5% Sustainable? FDI Sensitive? *Approximate numbers based on CBRE CBRE Page 22

23 Incentives DO Count 16% Saving Off The Face Rent Effective Rent Area 1,361 sm Rent (based on NET area) $30.00 sm / month Service Charge $6.00 sm / month VAT 10% Total Rent Inclusive $39.60 sm / month $39.60 sm / month Total Monthly Rent Only $40,830.00USD Total Monthly Service Charge $8,166.00USD Total Monthly VAT $4,899.60USD Total Monthly Rental inclusive $53,895.60USD Lease Period 60Months Total Rent during Lease period $3,233,736.00USD Incentives Rent Free Rent Free amount Signage (1m x 1.2m) Market Rate Total Signage Cost for 5 year lease Free Parking Cars Market Rate Total Car Parking for 5 year lease Motorbikes Market Rate Total Motorbike parking for 5 year lease Contribution Towards Fitting Out 9Months $367,470.00USD $4.50 sm / month $35.10 sm / month 1.20 sm $ sm / month $18,000.00USD $0.22 sm / month $34.88 sm / month 4spaces $200.00month $48,000.00USD $0.59 sm / month $34.29 sm / month 70spaces $20.00month $84,000.00USD $1.03 sm / month $33.26 sm / month $0.00 sm / month Effective Rent after all incentives $33.26 sm / month CBRE Page 23

24 How Incentives Offset CAPEX Live Examples Area 365 sm 1,361 sm Rent $40.00 sm / month $33.00 sm / month 1st year rent $35.00 sm / month $30.00 sm / month Monthly Rent $14,600 / month $44,913 / month Fit Out Cost $350 sm $350 sm Approximate Fit Out $127, $476, Rent Free Period 2 month(s) 5 month(s) Rent Free Amount $29, $224, Stepped Rent Saving $18, $28, Total Incentive $47, $253, Rent free as % of fit out 37.14% 53.14% CBRE Page 24

25 A Firmer Dong Source: Standard Chartered Bank; VND denominated lease agreements Fixed annual increments ranging from 5-10% Returning Deposit in Primary Currency State Bank targeting 3% fluctuation Date Exchange USD Effective VND % increase October VND 16, $25.00 $25.00 VND 415, October VND 17, $25.00 $26.89 VND 446, % December VND 21, $25.00 $31.65 VND 525, % November VND 21, $25.00 $31.63 VND 525, % May VND 20, $25.00 $31.43 VND 521, % For indicative purposes only based on Vietcombank Transfer rate CBRE Page 25

26 Think About Your NEW Space Maximize Usage Use an experienced space planner Make best use of the space Keep it flexible to allow for growth i.e. converting storage for desks as headcounts increase CBRE Page 26

27 Summary The window is now CLOSING your Landlords are ready and willing - BUT will not be waiting too much longer Tenant s with a Lease Expiry in 2012 need to act quick to secure a deal Supply for 2H 2012, actual is 11% of what was forecasted with no firm indication of remaining Supply We are approaching a short term bottom with Timing of the next wave of Supply, the biggest indicator Plan, Strategies, Call CBRE CBRE Page 27

28 Over 300 markets in more than 50 countries 49 Thank You 33 We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. We include projections, opinions, assumptions or estimates for example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct your own investigation of the property and transaction. CBRE Page 28