QUARTERLY REPORTS FOR HCMC & HANOI. Market Insights from CBRE s HCMC Quarterly Report Q4 2010

Transcription

1 Market Insights from CBRE s HCMC Quarterly Report Q CBRE RESEARCH & CONSULTING Presented by: Rudolf Hever Tam Le Associate Director Financial Analyst CB Richard Ellis (Vietnam) Co., Ltd. Wednesday, January 12, 2011 QUARTERLY REPORTS FOR HCMC & HANOI Economic Overview Current Rents & Prices Office Residential for Sale Retail Serviced Apartments Hotel Investment quarterlyreports@cbrevietnam.com Available in English and Vietnamese Legal Updates Construction Costs 2 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

2 VIETNAM ECONOMIC OVERVIEW GDP Growth Rate (y-o-y) Est. 2011f 8.5% 6.2% 5.3% 6.8% Lending Rate 14%-16% 12% 12.75% Down from 21% in Q3 16%-17% (Late 2010) 15% 2 Inflation (Average, y-o-y) 8.3% 22.9% 6.9% 9.2% (Dec.10: 11.8%) 11.5% 2 Trade Deficit US$-12.5 bil US$-18 bil US$-12.8 bil US$-12.4 bil US$-14.0 bil 3 Gold Price (per Tael) VND16.16 mil VND17.8 mil (Dec. 31, 2008, up 7.2% y-o-y) VND26.7 mil (Dec. 31, 2009, up (50% y-o-y)) VND36.1 mil (Dec. 31, 2010, up 35.2% y-o-y) N/A USD/VND (Commercial banks) 16,030 (Dec. 31, 2007) 17,400 (Dec. 31, 2008) 18,497 (Dec. 31, 2009) 19,500 (Dec. 31, 2010) (Devalued by 5.4% vs. Dec. 31, 2009) 19,500 2 USD/VND (Unofficial market) 16,070 (Dec. 31, 2007) 17,510 (Dec. 31, 2008) 19,470 (Dec. 31, 2009) 21,010 (Dec. 31, 2010) N/A Committed FDI US$21.3 bil US$71.7 bil US$22.6 bil US$18.6 bil US$20 bil 3 Implemented FDI US$8.0 bil US$11.7 bil US$10 bil US$11 bil US$ bil 3 Source: Historical data by GSO, 1 GSO 2 BMI Q1/2011 Report, 3 Ministry of Planning and Investment 3 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 VIETNAM ECONOMIC OVERVIEW Q GDP growth rate: 7.3% y-o-y 2010 GDP growth rate expanded by 6.8% y-o-y, higher than the target of 6.5% y-o-y Industrial production stayed strong, increasing by 14% y-o-y in 2010 Implemented FDI showed an improvement of 10% y-o-y in 2010, yet total committed FDI remained negative, with a decrease of 17.8% y-o-y to US$18.6 billion With US$6.84 billion in FDI attraction in 2010, the real estate sector was the top sector for attracting investment Exports rose significantly, by 25.5% y-o-y, to US$71.63 billion in 2010 but the trade deficit remained at US$12.37 billion CPI surged rapidly in the last three months of 2010: December: +11.8% y-o-y, nearly 2% m-o-m Average 2010: +9.2% y-o-y The dong remained under strong pressure to devalue. However, the USD/VND exchange rate was kept unchanged, having being last depreciated in August The Base Interest Rate was increased to 9% from 8% on Nov 05, 2010 deposit and lending rates elevated accordingly. The current deposit rate is capped at 14% per year, while loan rates are approximately 16%-17% p.a. However, home loans remained much higher in the range of 19%-20% p.a. 4 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

3 HCMC ECONOMIC OVERVIEW The quarterly GDP growth rate continued to increase throughout Q GDP growth rate rose by 13.0% y- o-y, sending the 2010 GDP growth rate to a 11.8% increase against 2009 New FDI showed an impressive 76% y-o-y increase to US$1.83 billion in 2010 Exports brought the city US$20.97 billion, increasing by 4.4% y-o-y in 2010 International arrivals to HCMC surged sharply, by 28.6% q-o-q in the fourth quarter. In 2010, the city welcomed 3.1 million foreign arrivals, representing a y-o-y growth rate of 19.2%. 5 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 HCMC URBAN INFRASTRUCTURE East West Highway Extension In December 2010, N4 branch, the final part of Thu Thiem Bridge No.1 was opened to traffic Also in December 2010, the first phase of Rach Chiec Bridge, on the Hanoi Highway was completed The first phase of the Long Thanh International airport will be built from The second phase will be from In October 2010, the Ministry of Transport approved the East West Highway extension to connect to HCMC Trung Luong Highway The demolition of Ben Thanh bus station began in the final quarter of 2010, the site will be home to a planned Metro station Ben Thanh Bus Station 6 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

4 OFFICE If the two most recent Grade A buildings are excluded from the calculations, Grade A vacancy in Q4 decreased by 2.0 percentage points to 4.9% and Grade A rents were US$35.20 psm per month, down 0.9% q-o-q. 7 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 OFFICE Bitexco Financial Tower, the tallest building in HCMC, opened in October, providing 37,710 sm NLA Grade A office space, increasing supply by19.4% q-o-q Grade A rents were US$35.06 psm per month, reflecting a 4.5% q-o-q decline Three new Grade B buildings, with a total of 51,020 sm GFA, and eight new Grade C buildings, with a total of 39,729 sm GFA, were put into operation Grade B rents dropped by 2.37% q-o-q to US$19.55 The total net absorption for 2010 was 226,970 sm NLA, almost 50% above the 154,458 sm net absorption recorded in Q net absorption: 34,545 sm NLA The overall vacancy increased to 17.8%, up 4.4 percentage points, a reflection of the newly completed office stock 8 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

5 OFFICE Saigon M&C Tower (D.1) OUTLOOK A significant amount of new stock, with 280,000+ sm in 2011 and 1.1million+ sm in the next 3 years Grade A Rents expected to come down to the same levels as other regional cities such as Shanghai, Beijing (US$31-33 psm per month) Absorption is expected to continue to grow in 2011 when many local companies, looking for professional working environments, take higher quality space Tenants concerns towards quality and facilities of buildings, such as car parking and space & energy efficiency, grows More and more single tenants - from local banks and financial firms Landlords are having to be increasingly competitive with regards to commercial terms and incentives (rent free, parking, signage, etc) in order to attract major tenants 9 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 RESIDENTIAL FOR SALE New completion is handover in this quarter. These units are included in existing supply. New launch is the official start of the sales period. New launch includes all units in a development, however, the developer may divide the sales into numerous phases and thus not all units may come to the market at launch. 10 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

6 RESIDENTIAL FOR SALE 9 residential projects launched sales in Q4, a total of 2,894 units, down 47% q-o-q. More than half of these were affordable projects (US$520 US$840 psm) In the secondary market, high and mid-end asking prices were still flat with only 0.68% and 0.98% q-o-q decreases, respectively. Affordable segment edged upwards 0.2% q-o-q As at Q4, average prices stood at US$4,401 psm for luxury, US$1,885 psm high-end, US$984 psm mid-end and US$727 psm for affordable units Mid-end and affordable segment still favoured Loan interest rate prohibitive for buyers, with mortgage rates in the range of 18% - 20% p.a. with terms of years Developers not only increasing advertising and marketing spend, payment terms, incentives but must also differentiate As many as 79 projects that are under construction/development remain un-launched, with developers patiently awaiting the return of buyer confidence Developers more familiar with Decree 71 and Circular CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 RESIDENTIAL FOR SALE Cantavil Premier (D.) OUTLOOK More affordable projects to be developed surrounding HCMC Dong Nai, Binh Duong and Long An. By both local and foregin developers, including: Vinacapital, Berjaya, Keppel Land, Posco, Capitaland, SP Setia and Gamuda VND/USD complications and possible over heating of the gold market begin to stir some interest in the property market as investment channel again New regulations will be issued improving market transparency for both developers and buyers M & A s to increase, both behind close doors and publicly Buyers retain wait & see attitude hoping to see prices and loan interest rates come down Trading outside of trading floors dominates the secondary market 12 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

7 RETAIL Kumho Asiana Plaza and Parkson Saigon Paragon have been excluded from the calculation as they both are going under reconfiguration. 13 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 RETAIL Overall shopping centre vacancy was 8.7%, higher than Q by 1.9 percentage points due to the soft opening (at 65% occupancy) of Thien Son Plaza CBD Shopping centre rents increased by 1% q-o-q to an average of US$ psm per month, this was a reflection of the 25% increase in rents at Zen Plaza following it s renovation Non-CBD rents: follow the downward trend since early 2009 by recording a further 8.6% decrease mainly driven by the competitive rents offered at Thien Son Plaza New boutique shop grand-openings: Burberry, Cartier (Rex Arcade) and will be followed by Chanel, Bulgari, Ralph Lauren Brands opened shops in the CBD fringe: G2000, Breadtalk, Kichi-Kichi on Cao Thang Street (D.3) Holdover of developments: Bitexco Financial Tower (D.1)., Parkson Saigon Paragon (D.7), Flemington Phase 2 (D.11) 14 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

8 RETAIL OUTLOOK 2011 will be the year of the shophouses due to limited retail supply in the CBD, most popular streets: CBD: Dong Khoi, Dong Du, Nguyen Trai, Hai Ba Trung, Ly Tu Trong, Mac Thi Buoi Outside CBD: Cao Thang, Vo Van Tan, Le Van Sy Nova Sunrise (D.7) Rex Arcade (D.1) Outside CBD, rents continue to decrease as landlords compete for tenants Continued arrival of new foreign retailers, including both food and non-food brands, coming to Vietnam by partnering with local companies but Economic Needs Test (ENT) remains an issue Japanese retailers surveying the market, including the convenience store chains Ministop and Family Mart, as well as the department store operators Takashimaya and Isetan Mitsukoshi 15 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 SERVICED APARTMENTS 16 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

9 SERVICED APARTMENTS Q4 new supply: 111 units Grade B: Crescent Residence 2 (40 units, D.7) and Lafayette de Saigon (18 units, D.1) Grade C: Kim Sa (19 units, D.3), AVA Residence 2&3 (26 units, D.2) and 62 Vo Thi Sau (8 units, D.1) Rents recovering to 2008 levels: Average rents across all grades achieved a positive y-o-y growth rate of 3.9%, with Grade A up 8.4% to US$32.42 and Grade B up 2.9% to US$26.64 Sedona Suite and InterContinental Asiana Saigon Residences achieved new pricing records, above US$42/sm/month Q4 is the low season but occupancy remained stable as tenants prefer not to move during the holiday season. Q4 overall vacancy rate again decreased 1 percentage point to 15.5%, Grade A down 4.3 percentage points to 5.7%. CBRE enquiries bigger budget: 80% above US$2,500/month from new expat staff who are looking for serviced apartments to move in February/March 17 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 SERVICED APARTMENTS IWA Square (D.1) 28 units OUTLOOK SUPPLY: The number of Grade C units is likely to equal that of Grade A by the end of 2011, a reflection of the emerging trend of boutique serviced apartments 2011 is forecast to see 12 new projects to come online, with 717 units: Q1 Crescent Residence 2: 71 Mai.Har Land Apartments: 38 Morning Sun 2: 60 IWA Square: 28 Bach Long Apartments: 25 Q2 The Vista: /95 Dien Bien Phu: 24 Saigon City Residence: 16 Supply will double in the next three years. DEMAND: Entering 2011, occupancy rates remain high, approaching 90% Demand remains strong, with first signs of budget recovery COMPETITION: Fierce competition from villas and buy-to-let apartments, however housing budgets are increasing again and thus there appears to be sustained demand in the market, particularly at the top end 18 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011 Q3 Q4 Thao Dien Xanh: 19 An Phu Plaza: 50 Icon: 186 Fraser Place: 100

10 3-5 STAR HOTELS Pullman Saigon Centre (D.1) Liberty Central (140 rooms) officially ranked 4-star 5-star Le Meridien, Grand Extension, Novotel and Times Square are seeing significant progress Pullman Hotel, Diep Bach Duong s Senla Boutique Hotel and Eden A, with quality equivalent to 5-star, either broke ground or cleared site Average occupancy rates of 3-5 star hotels increased 18% y-o-y (67% in 2010) Average room rates decreased 8% y-o-y (US$82.0 in 2010) International tourist arrivals to HCMC, in 2010, reached approx. 3.1 million, 20% y-o-y: Vietnam ranks 12th in long-term tourism growth (according to WTTC) Opening/renewal of many direct flights to HCMC from Paris, Beijing, Yangoon, Doha, Vientian Return of MICE and business guests Third Private Airline in VN (Mekong Air) began operation in October 19 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY STAR HOTELS Eden A (D.1) OUTLOOK 3-star and budget hotels, with international quality, continue to have strong performance despite fierce competition from new supply Occupancy rates likely to have y-o-y increase Hotel to be built in a mix-used complex, with retail or golf course Local developers, including banks and family-run companies show increased interest in investing into hotel sector: Ocean Bank invests into Saigon Star City More brands from international operators to enter the market: Ritz Carlton, Marriot, Centara, MGM Resort New concepts to materialise: condo-tel hotel, luxury travel Tourism continues to see steady growth 20 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011

11 For further information and order details, please contact Q released Thursday, January CB Richard Ellis, 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. 21 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE s HCMC QUARTERLY REPORT JANUARY 2011