DA NANG CITY. Economics Quick Stats. Hot Topics. Real GDP Growth Rate & GDP per Capita Da Nang

Transcription

1 CB RICHARD ELLIS VIETNAM DA NANG CITY April 211 Economics Quick Stats Hot Topics ECONOMY: Da Nang ranked as having the best economic governance in the Provincial Competitive Index 21 OFFICE: Overall q-o-q occupancy rose 7.3 percentage points while overall rents decreased 7.5% CONDOMINIUM: Developers are shifting their priority to mid-end projects Change from last DA NANG Current Yr. Real GDP Growth 12.7% FDI Exports Imports CPI (average) $26.2 mil $19.1 mil $213 mil 2.39% (Mar) Tourism (arrivals) 436,57 Retail Turnover VND1,42 bil *The arrows are trend indicators over the specified time period and do not represent a positive or negative value. 2 nd HOME VILLA: Launches are up in the last 3 quarters. RETAIL: With the opening of two shops specialised in electronics, more specialised retail types are expected HOTEL: International tourist arrivals up 45% y-o-y SERVICED APARTMENTS: Vietnamese account for 31% of all serviced apartment tenants LAND PLOT: The land plot market in Da Nang is hot since a sharp increase in supply started in Q3/21 VIETNAM Q1/211 saw the Vietnamese Government shift focus from a growth centred policy to an inflationary control policy. Inflation in Q1/211 stood at 12.8% y-o-y, or 2.2% m-o-m in March, reflecting the highest levels seen since Q1/29. The Government tightened monetary policy during the quarter, with the State Bank raising both its discount and refinancing rate. The refinancing rate rose from 9.% to 11% in February and then to 12.% in March, making it increasing difficult for commercial banks to borrow from the State Bank and thus limiting lending into the economy. In a bid to improve the national trade deficit and counter a US Dollar shortage, the Vietnamese Dong was devalued for a fourth time since November 29. The Dong was devalued by 9.3% against the US Dollar and the daily trading band was decreased from +/-3% to +/-1%. Reflecting the tougher economic conditions that have been seen during Q1/211, GDP growth slowed to 5.4% y-o-y, in comparison with 5.8% in the same period last year. Despite these downsides it must be noted that industrial production continued to increase with Q1/211 seeing a 14.1% y-o-y increase. Real GDP Growth Rate & GDP per Capita Da Nang 35, 3, 25, 2, 15, 1, 5, DA NANG CITY Da Nang s GDP grew 12.7% y-o-y in the first quarter of 211. This surpassed the 1.3% recorded in HCMC and the 9.2% recorded in Hanoi, a positive sign for Vietnam s third largest city. GDP per capita rose to VND31,71, in 21, a y-o-y increase of 15%. Imports in the first quarter increased 49.5% y-o-y to US$213 million, while exports in the same period were US$191 million. Da Nang s government is targeting foreign trade for 211 to be US$785 million worth of exports and US$86 million imports, hoping to push down trade deficit of US$75 million in 211, from the trade deficit of US$ 124 million in 21. Notably Da Nang was ranked as having the best economic governance in the Provincial Competitive Index in the year of 21. Da Nang has been number one for three straight years. Tourism arrivals is a bright spot in Da Nang s economy with a total of 436,5 arrivals in the first quarter of 211. This is a 15% y-o-y increase, compared with a 12% increase in Hanoi and a 6% increase in HCMC in the same period. Real GDP growth, Da Nang (%) GDP per capita, Da Nang (US$) 16.% 11.% 6.% 1.% -4.% 211, CB Richard Ellis, (Vietnam) Co., Ltd.

2 OFFICE MARKET GRADE A GRADE B GRADE C TOTAL Number of buildings NLA (sm) 6,314 35,9 35,644 77,48 Occupancy rate (%) 67.% 56.2% 66.7% 62.% Q-o-q change (pts) 6. pts 9.3 pts 4.3pts 7.3 pts Y-o-y change (pts) 8. pts 14.6pts -4.8 pts 16.9 pts Average asking rent (US$ psm per month) $19. $13.42 $1.31 $11.4 Q-o-q change (%).% -6.%.3% -7.5% Y-o-y change (%) 11.8% -7.5% 14.1% 5.6% Average occupancy rate (%) 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Asking Rents (US$ psm per month) Grade A Grade B Grade C Q1/9Q2/9Q3/9Q4/9Q1/1Q2/1Q3/1Q4/1Q1/11 Grade A Grade B Grade C Q1/9 Q2/9 Q3/9 Q4/9 Q1/1 Q2/1 Q3/1 Q4/1 Q1/11 Q1/211 saw no new Grade A or Grade B Space delivered in the market. Grade C space increased by 6,395 sm with the addition of one new office building, the Thanh Loi Building, and the conversion of the Danang Plaza retail podium to office. Grades B and C space now each have the same proportion of the market, 46%. As there is only one Grade A office building in Da Nang, when compared to Hanoi and HCMC Grades B and C are in higher demand as Da Nang office tenants are more price sensitive due to their entrepreneurial nature. Total office supply is 77,48 sm NLA at the end of Q1/211. New office space delivery in 21 and planned 211 is driven by owner occupied company headquarters buildings that include additional space for lease. Average Grade B rents declined 6.% q-o-q from US$14.27 to US$13.42 psm. Grade C increased slightly.3% to US$1.31 psm per month. Occupancy rose to 62.% in the first quarter of 211. Overall q-o-q occupancy rose 7.3 percentage points while Grade B occupancy increased 9.3 percentage points as occupancy in one prime Grade B building rose from 41.% in the fourth quarter to 98.% in the first quarter. This is due to large leasing transactions from new government projects. Future supply is expected to triple by the end of 214 with most of the space coming online in , CB Richard Ellis, (Vietnam) Co., Ltd. MarketView DA NANG CITY April 211

3 CONDOMINIUMS FOR SALE MARKET Condominium Supply (units) 2,5 2, 1,5 1, 5 Asking Price (US$ psm) Opening supply Change in quarter Luxury High-end Mid-end LUXURY HIGH-END MID-END TOTAL Total supply (projects) Total supply (units) ,14 2,333 New launch (units) Average asking price (US$ psm) 2,994 1, Q-o-q change (%) 1.7% -3.% 4.4% Y-o-y change (%) 1.5% 56.2% -23.2% Average sold rate (%) 85.2% 33.3% 32.6% 39.3% Q-o-q change (pts) 3.9pts 2.7pts 3.9pts 2.1pts Y-o-y change (pts) 33.2pts 7.9pts 32.6pts 16.4pts 3, 2, 1, Q1/9Q2/9Q3/9Q4/9Q1/1Q2/1Q3/1Q4/1Q1/11 Q1/9Q2/9Q3/9Q4/9Q1/1Q2/1Q3/1Q4/1Q1/11 Da Nang luxury residential prices remained steady over the last three quarters. Condo prices in the high-end segment fell slightly q-o-q from US$1,842 to US$1,787 psm. Mid-end condo prices peaked in the second quarter of 21, fell in the third quarter of 21, and have risen in the last two quarters. There has been no additional luxury or high-end supply in the last three quarters. The most recent new supply was in the mid-end segment with the second and fourth quarters of 21 and the first quarter of 211 welcoming one new mid-end project each. Developers are shifting their priority to mid-end projects to deliver more affordably priced units to a larger market of potential buyers. Currently the mid-end segment accounts for the largest market share at 47% of the total residential market supply. In Q % of total luxury condo supply had been sold. This is mainly due to the maturity of the luxury projects; they were launched in the last two years and therefore have had a longer sales period than the proportionally newer high- and mid-end development. The sales rate of high-end projects is flat, while mid-end projects are increasing, reflecting the market shift to the midend range. The mid-end sales rate is 32.6%. Buyers from Hanoi continue to drive the market due to Da Nang s close proximity to the nation s capital, as well as the comparatively advantageous weather and the beach. In the first quarter of % of buyers were from Hanoi, 39% were from Da Nang. Future supply through 214 will be an additional 2,5 units across all segments 211, CB Richard Ellis, (Vietnam) Co., Ltd. MarketView DA NANG CITY April 211

4 SECOND HOME VILLA FOR SALE MARKET 2 nd Home Villa Supply (units) Average sold rate (%) 1.% 9.% 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% Total supply (projects) 8 Opening supply Change in quarter TOTAL Total supply (units) 471 New launch (units) 15 Average sold rate (%) 52.2% Q-o-q change (pts) Y-o-y change (pts) Q1/9 Q2/9 Q3/9 Q4/9 Q1/1 Q2/1 Q3/1 Q4/1 Q1/11 Q1/9Q2/9Q3/9Q4/9Q1/1Q2/1Q3/1Q4/1Q1/11 9.5pts -.6pts The fourth quarter of 21 saw 114 new villas come online with the addition of the Sun Villas project. In the first quarter of 211 The Dunes development added 15 new units to supply. The addition of these two projects brings the total villa supply in the Da Nang market to 471 in eight projects. Late 29 and early 21 saw a slowdown in the number of launches and new development, but that trend has reversed in recent quarters. The overall rate of villas sold was 52.2% in the first quarter of 211. This is a q-o-q increase of 9.5 percentage points but a y-o-y decrease of.6 percentage point. 57% of villa supply is in the price range of US$5, - $9,; and approximately 8% of buyers are from Hanoi. In 211 we will see an increase in re-launched villa projects, along with new villa launches including the Norman Estates, the fifth phase of Ocean Villas, Mercure Son Tra, InterContintential Bai Bac, and Montgomerie Links Villas. Land near the beach will become more scarce and the villa market will shift to re-sales as the beach becomes fully developed. Through 213 an additional 694 villas will come online, with 11 new villas coming online in 211. Owners of villas in mature developments are looking to sell and reinvest in newer developments. Buyers recognise the up to date architecture and amenities offered in newer projects have more value. Competition from villas is coming from land plots within the city, although this trend is new and not well defined. Villas mainly attract investors while speculators focus mainly on land plots. The affordability of land plots provides an opportunity for a wider range of buyers. 211, CB Richard Ellis, (Vietnam) Co., Ltd. MarketView DA NANG CITY April 211

5 RETAIL MARKET SHOPPING CENTRES SUPERMARKET TOTAL Total supply (GFA, sm) 41,439 53,7 73,139 New supply (GFA, sm) Average asking rents (US$ psm per month) $3.12 Q-o-q change (%) 6.7% Y-o-y change (%) 6.7% Occupancy rate (%) 93.7% Q-o-q change (pts) Y-o-y change (pts) Occupancy Rate (%) 1% 9% 8% 7% 6% 5% Asking Rents (US$ psm per month) Shopping Centre Q1/9Q2/9Q3/9Q4/9Q1/1Q2/1Q3/1Q4/1Q1/11 Shopping Centre Q1/9 Q2/9 Q3/9 Q4/9 Q1/1 Q2/1 Q3/1 Q4/1 Q1/11-2.5pts.pts The Da Nang retail market is divided into two sectors, supermarkets and shopping centres. The first quarter of 211 welcomed two new specialised shops which cater to electronics retailers. This is an encouraging sign for demand in the Da Nang market and may be a prelude to other speciality shops in the future. Comparatively modern retail formats are much more developed in Hanoi and HCMC when compared to Da Nang. Supermarkets account for a large proportion of modern retail in Da Nang, and supermarkets target a wide range of consumer. The shopping centres target upmarket shoppers, especially more wealthy tourists from Hanoi. Rental rates rose slightly, but when accounting for inflation rental rates remained flat in 21. Shopping centre rents rose 6.7% q-o-q to US$3.12. Through 211 rental rates are expected to be stable, with a possibility of a slight increase in rental rates. Occupancy in Q1 211 dropped 2.5 percentage points to 93.7% as some retailers returned their space. No new shopping centres will come on line in 211, but Nguyen Kim electronics shop will launch in the fourth quarter of 211 with total supply of 6, sm NLA of which 3,6 sm NLA will be set aside for retail. As with the two new shops specialised in electronics, further retail specialisation is expected. Increasing brand expansion is expected in 211, and two international retailers with established market positions in Vietnam are expected to enter the market in Da Nang in Two new shopping centres expected between 212 and 214, World Trade Centre providing 5, sm GFA and Golden Square providing 2, sm GFA. 211, CB Richard Ellis, (Vietnam) Co., Ltd. MarketView DA NANG CITY April 211

6 HOTEL MARKET Average Daily Rate(US$) Occupancy (%) 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 5 STAR 4 STAR 3 STAR TOTAL Number of hotels Total supply (room) 1, ,812 3,155 New supply (room) Average occupancy rate (%) 37.6% 53.8% Q-o-q change (%) 8.4pts 15.3pts Y-o-y change (%) -5.4pts.8pts Average room rate (US$/room/night) Q-o-q change (%) 3.3% 12.9% Y-o-y change (%) -.3% 18.6% 5 star 4 star Q1/9 Q2/9 Q3/9 Q4/9 Q1/1 Q2/1 Q3/1 Q4/1 Q1/11 5 star 4 star Q1/9 Q2/9 Q3/9 Q4/9 Q1/1 Q2/1 Q3/1 Q4/1 Q1/11 Da Nang s economy relies heavily on tourism and related services, and this sector is expected to see steady growth in 211. There are a number of things that can account for the growth in this sector. Among them, Da Nang s investment in infrastructure with improving air links and direct international flights. Improvements once tourists are on the ground, in the form of roads and bridges, encourage tourists to stay once they arrive. The average length of stay has increased from 1.7 days per tourist in 29 to 2 days per tourist in the 21. The first quarter of 211 welcomed 1 new 5-star hotel rooms to the market, but there were no new hotel projects as these 1 units were released in an existing hotel. In the 4-star market no new hotel rooms came online. In the 3-star market five new hotels opened providing 293 additional hotel rooms to the market. As the fourth quarter is the tail end of the low season, and the first quarter sees increasing demand, the q-o-q numbers in the first quarter are usually very attractive. As such, average occupancy rose dramatically in both the 4- and 5-star sectors. The q-o-q occupancy in 4-star hotels rose 17.3 percentage points, and in 5-star hotels the occupancy rose 8.6 percentage points q-o-q. The 5-star occupancy is not as encouraging when compared y-o-y, as occupancy dropped 5.2 percentage points from 43.% in the first quarter of 21 to 37.8% in the first quarter of star hotels fared better, with a y-o-y increase of 2.8 percentage points. Da Nang s new international airport terminal will open in Q2/211, and new hotel projects will bring an additional 4,13 rooms to the market through , CB Richard Ellis, (Vietnam) Co., Ltd. MarketView DA NANG CITY April 211

7 SERVICED APARTMENT MARKET GRADE A GRADE B GRADE C TOTAL Total supply (projects) Total supply (units) Occupancy rate (%) 5.8% 83.3% Average asking rents (US$ psm per month) $17.6 $13.3 Total Supply (sm) Q2/8 Q1/8 Q4/8 Q3/8 Q2/9 Q1/9 Somerset Blooming Towers Q4/9 Q3/9 Opening supply Change in quarter Q3/1 Q2/1 Q1/1 Q1/11 Q4/1 Serviced apartment supply in Da Nang is 15 units in five projects. Vinh Trung Plaza accounts for 6% of total supply with 14 units. The remaining serviced apartment projects have less than 2 units each. The most recent new supply is Green Plaza, which came online in the third quarter of 21. Grade B serviced apartments account for 6% of projects but 84% of units. Grade B projects are in or adjacent to the CBD, while Grade C units are located closer to the beach. Serviced apartment demand comes from both Vietnamese people and the approximately 1, expatriates living in Da Nang, the majority of whom are Japanese, American and Australian. Vietnamese people from Hanoi or HCMC who are stationed in Da Nang for their job account for 31% of all serviced apartment tenants. Serviced apartment occupancy of Grade B was 5.8% in the first quarter of 211. This low occupancy is due to competition from villas close to the beach as an entire villa can be leased for the same price as a serviced apartment. There were 2 of 24 Grade C services apartments have been leased achieving high occupancy of 83.3%. This is due to the affordable rents and suitable location for many expats who tend to live near the beach, the premises also functioning as their place of work. Future supply includes the Somerset Da Nang Bay and Hilton Bach Dang will provide 161 serviced apartments. These are expected to come online in More small scale Grade C supply expected in areas near the beach and occupancy is expected to be high, but serviced apartment rents will be effected by the upcoming buy-to-let supply. 211, CB Richard Ellis, (Vietnam) Co., Ltd. MarketView DA NANG CITY April 211

8 LAND PLOT MARKET Total supply Price range by submarkets (VND mil psm) Maximum price Average price Northwest East South TOTAL Number of projects Total supply (plots) 4, ,652 7,6 New supply (plot) 3, ,218 Average price (VND per sm) VND mil VND14-44mil VND9-14.6mil Q-o-q change (%) 1-4% <5% 2-3% 12, 1, 8, 6, 4, 2, Thuy Tu area Lien Chieu area Man Quang Son Tra area Opening supply Change in quarter 1997Q1/9Q2/9Q3/9Q4/9Q1/1Q2/1Q3/1Q4/1Q1/ (est) Bac My An Ngu Hanh Son Cam Le The land plot market in Da Nang is hot since a sharp increase in land plot supply started in the third quarter of 21. The government allocates land to developers who then subdivided it and sell plots. Most land buyers are speculators, those who are looking for a profit within a shorter time horizon. Speculators are less concerned about the future use or development on the land. Investors, on the other hand, are buyers hoping to realise a profit within a longer time horizon, and who are more concerned with the future use of the land, whether condo or villa. The total new launches in the first quarter of 211 was 24% more than the number of new launches in all of 21, with 2,59 new land plots launched in 21 and 3,218 land plots launched in the first quarter of 211. In the next three quarters an additional 5,2 land plots are expected to come to the market. There are seven key submarkets for land plots, grouped in three areas around the city. The area northwest of the CBD includes three submarkets and saw the largest rise in land plot prices with q- o-q increases of 1% to 4%. This area is the most affordable, and therefore has the most room for price appreciation. The beachside area also includestwosubmarketsandsawthelowestq-o-q price appreciation. This area is currently the most expensive and therefore has the lease room for price appreciation. The third area, south of the CBD, includes two submarkets. This southern area is preferred by Da Nang residents as it is a new development area in the city and its proximity to both the CBD and Hoi An make it popular with current residents. More than 5, additional plots are expected to launch in the next three quarters and prices are expected to continue to rise as speculators move into land plots. New trend for developers to sell land plots and houses within the same development 211, CB Richard Ellis, (Vietnam) Co., Ltd. MarketView DA NANG CITY April 211

9 MarketView DA NANG CITY For more information regarding this MarketView or to find out more about any aspect of our services, please contact: CB Richard Ellis (Vietnam) Co., Ltd. RESEARCH & CONSULTING Marc Townsend, Managing Director m e. marc.townsend@cbre.com Rudolf Hever, Associate Director m e. rudolf.hever@cbre.com Central Business District (CBD) The Central Business District in Da Nang is Hai Chau District, the commercial, administrative and tourism centre. Interest Rate The base rate set by the SBV is used as a reference by other banks and financial institutions. The discount rate is the interest rate that the SBV charges member banks for short-term loans via discounting commercial paper or other debt instruments. The refinancing rate is the interest rate that the SBV charges on loans to member banks. David Scribner III, Branch Manager m e. david.scribner@cbre.com Nguyen Dac Trung, Manager m e. trung.nguyen@cbre.com Le Hoang Lan Nhu Ngoc, Publication Manager m e. ngoc.le@cbre.com William Peter O connor, Senior Research Analyst m e. w.oconnor@cbre.com Gross Floor Area (GFA) Gross Floor Area includes all areas contained within the external walls at each floor level and the whole thickness of the external walls. In general, mechanical and electrical services rooms, refuse chambers and rooms, water tanks, car parking floors and all lifts and staircases passing through these floors are excluded from the Gross Floor Area calculation. Da Nang City Map Net Leasable Area (NLA) In a building or project, floor space that may be rented to tenants; area upon which rental payments are based. It generally excludes common areas and space devoted to the heating, cooling, and other equipment of a building Rent Rent is quoted as the average asking rent, without accounting for any incentives. Rents are stated in US$ per square metre (psm) as well as in those terms gross or net, inclusive (including management fees and/or property taxes) or exclusive (excluding management fees and property taxes) that are customarily employed in the respective sector. Rents are quoted on the following basis: Office: Asking rents, NLA, exclusive of VAT and service charges Retail: Asking rents, NLA, exclusive of VAT and service charges Serviced Apartments: Asking rents, NLA, inclusive of VAT and service charges Residential Supply Existing supply : is the total number of units that have been handed over for occupation. New launch : the number of units that were released to the market by developers (official start of sales for a project) in the review quarter. All units in each development are included in the calculations, however, the developer may divide sales into numerous phases and thus not all units may come online at launch date. 211 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CB Richard Ellis (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 consideration of factors known to us for example only, and they may not represent current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.