Fearless Forecast Do not let a good crisis go to waste

Transcription

1 Fearless Forecast Do not let a good crisis go to waste February 2012 Presented by: Marc Townsend Managing Director CB Richard Ellis (Vietnam) Co., Ltd.

2 CBRE Vietnam Page 2 CBRE Vietnam Fearless Forecast 2012

3 AGENDA Review CBRE 2011 Fearless Forecasts Hanoi key projects Vietnam 2011 key macroeconomic indicators Hanoi RE market sectors Reviews/Forecasts 2012 Office Residential Retail Hotel Serviced Apartments M&A CBRE 2012 MOST Fearless Forecasts CBRE Vietnam Page 3 CBRE Vietnam Fearless Forecast 2012

4 Review 2011 MOST Fearless Forecasts Office Tenants Multiple choices and softening rents Hospitality Ritz Carlton, St. Regis, Mandarin Oriental, Shangri-La and Four Seasons to enter market within the next 5 years Retail Shopping centres grow in size on average! Non-CBD locations are dominating! Shopping centres open with high occupancy rates! CBRE Vietnam Page 4 CBRE Vietnam Fearless Forecast 2012

5 Review 2011 MOST Fearless Forecasts Investors Property investment remains dangerous for your health Change in asset class as gold dips and people moved in other directions Developers Marketing spend TRIPLES as developers search for new ways to sell / lease their units Increased use of technology in property building management systems, CRM systems Local companies seek capital through IPO s and more sophisticated financial structures Some residential developers will convert units for sale to units for lease due to unsold units in completed buildings, or instituting rental pools (guarantees) Demand for data centres grows due to the continuing movement online, as our businesses become more immediate with wi-fi, smart phones and ipads. Developers prepared to deliver with the requirements needed to support these trends will profit. CBRE Vietnam Page 5 CBRE Vietnam Fearless Forecast 2012

6 Hanoi Changes Jan 11 Indochina Plaza Hanoi Mipec Tower Keangnam Landmark 72 Feb 12 CBRE Vietnam Page 6 CBRE Vietnam Fearless Forecast 2012

7 Vincom Village Hanoi Changes Hoang Thanh Tower Oct 11 Feb 11 Feb 12 Feb 12 CBRE Vietnam Page 7 CBRE Vietnam Fearless Forecast 2012

8 Hanoi Jan-Feb 2012 JW Marriott Royal City Lotte Center Hanoi Mandarin Garden CBRE Vietnam Page 8 CBRE Vietnam Fearless Forecast 2012

9 According to BCI Asia All Future Projects HCMC Hanoi Da Nang Can Tho Nha Trang (Khanh Hoa) Vung Tau Hai Phong Office Retail Hospitality and SA Residential Projects Under Construction HCMC Hanoi Da Nang Can Tho Nha Trang (Khanh Hoa) Vung Tau Hai Phong Office Retail Hospitality and SA Residential Source: CBRE Vietnam CBRE Vietnam Page 9 CBRE Vietnam Fearless Forecast 2012

10 Hanoi Key Projects East of Hanoi to open up: crossing the river is not a psychological barrier anymore CBRE Vietnam Page 10 CBRE Vietnam Fearless Forecast 2012

11 Infrastructure 2011 Milestones Hanoi Master plan approved (Jul 2011) Construction of Mai Dich Linh Dam HW on Pham Hung Rd Hanoi Infrastructure: Building to the next level Roads & Bridges City West: Mai Dich - Linh Dam elevated HW City North: Nhat Tan - Noi Bai HW kicked off Nov 11 City North: Nhat Tan Bridge City South East: Vinh Tuy 1 Bridge completed; Vinh Tuy 2 Bridge to start construction Metro lines Ha Dong- Cat Linh: Ha Dong depot and 30% piers under construction Nhon- Hanoi Station: land-clearing Proposal of 24 car parks to 2015 in inner city and along Ring Road No. 3 was approved Air North: Noi Bai s Terminal 2 broke ground (75% ODA funded) - 10 million arrivals per year Ha Dong Cat Linh Metro line at Hoang Cau Vinh Tuy Bridge CBRE Vietnam Page 11 CBRE Vietnam Fearless Forecast 2012

12 Infrastructure 2012 Policies Changing working hours is implemented Limiting private cars in inner city is considered Roads 4 flyovers to be completed in 2012 (8 by 2015) West: Pham Van Dong Road to be expanded East: Nguyen Van Linh Road to be expanded Hanoi- Lao Cai Highway to be completed by end Construction of Nhat Tan Bridge Construction of Thai Ha Lang Ha Flyover CBRE Vietnam Page 12 CBRE Vietnam Fearless Forecast 2012

13 2011 Vietnam Economic Overview GDP Growth Rate (y-o-y) Lending Rate 12% Inflation (Average, y-o-y) e 2012 f 6.2% 5.3% 6.8% % Down from 21% in Q3 16%-17.0% (Late 2010) 22.9% 6.9% 1 9.2% (Dec 10: 11.8%) 22% - 25% 2 N/A 18.58% % 3 Exports US$62.7 bil US$57.1 bil US$71.6 bil US$96.3 bil US$ Imports US$80.7 bil US$69.9 bil US$84.0 bil US$105.8 bil US$ Gold Price (per Tael) 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) VND41.8mil 4 (Dec. 30,2011. up 15.8% y-o-y) N/A US$/VND (Commercial banks) 17,400 (Dec. 31, 2008) 18,497 (Dec. 31, 2009) 19,500 (Dec. 31, 2010) Devalued by 5.4% vs. Dec ,036 (Dec.31, 2011) Devalued by 7.9% vs Dec. 2010) 21,735 7 US$/VND (Unofficial market) 17,510 (Dec. 31, 2008) 19,470 (Dec. 31, 2009) 21,010 (Dec. 31, 2010) 21,275 (Dec. 31, 2011) N/A Committed FDI US$71.7 bil US$22.6 bil 1 US$18.6 bil (US$6.8 bil real estate) US$14.7 bil 1 (US$845.6 mil real estate) US$15-16 bil 6 Implemented FDI US$11.7 bil US$10 bil US$11 bil US$11 bil 1 N/A Source: Historical data by GSO, 1 GSO, 2 SBV, 3 IMF, 4 SJC, 5 World Bank, 6 Ministry of Investment, 7 Oxford Economics CBRE Vietnam Page 13 CBRE Vietnam Fearless Forecast 2012

14 2011 Regional Economic Comparison Hong Kong Thailand Singapore China Malaysia Vietnam Indonesia GDP Growth Rate 4.9% 1.6% 5.0% 9.0% 4.9% 5.9% 6.3% Consumer Price Index 5.3% 3.9% 5.0% 5.6% 3.2% 18.6% 5.4% Gold Price ( per gram in US$ equivalent) US$51.80 US$50.50 US$52.18 US$51.88 US$52.17 US$ % higher than regional average US$52.72 Trade Balance -$55.4 bn $27 bn $48.3 bn $111.9 bn $47.1 bn -$9.5 bn $38.2 bn FDI (net inflow in current US$, 2010) $68.9 bn $6.3 bn $38.6 bn $185.1 bn $9.5 bn $11.0 bn (Source: World Bank) $13.3 bn Source: Oxford Economics, Vietnamese General Statistics Office, World Bank, Goldprice.org, goldpricethai.com, pecunix.com CBRE Vietnam Page 14 CBRE Vietnam Fearless Forecast 2012

15 A look ahead to 2012 With demand from the eurozone and US expected to remain weak for some time,emergingeastasiashouldcontinueto work toward increasing intraregional trade and financial integration, and expanding links with other emerging economies. - ADB, Asia Economic Monitor, December GDP (% y-o-y) CPI (% y-o-y) Vietnam Hong Kong Thailand Singapore China Malaysia Indonesia Source: Oxford Economics. Note: GDP growth for Vietnam in 2012, The World Bank, IMF and ADB range between 6.1% 6.5%. CBRE Vietnam Page 15 CBRE Vietnam Fearless Forecast 2012

16 2011 Economic Overview Inflation Inflation continues Price of rebar in Hanoi: Dec ,500 VND/Kg Nov ,050 VND/Kg Price of cement in Hanoi: Dec ,200 VND/Kg Nov ,500 VND/Kg Price of one carton of Heineken in Hanoi: Jan ,000 VND Jan ,000 VND Price of food and foodstuffs: Dec. 2010: 16.2% y-o-y Dec. 2011: 24.8% y-o-y CPI figure Dec. 2010: 11.8% y-o-y Dec. 2011: 18.13% y-o-y 2011: 18.58% y-o-y Fuel Price Change Source: General Statistics Office, Petrolimex CBRE Vietnam Page 16 CBRE Vietnam Fearless Forecast 2012

17 2011 Economic Overview FDI Implemented FDI Source: Ministry of Planning & Investment CBRE Vietnam Page 17 CBRE Vietnam Fearless Forecast 2012

18 2011 Economic Overview Currencies As per 2010, in 2011 the US Dollar appreciated in Vietnam. However, in 2011 the US Dollar also appreciated against the Thai Baht and Singapore Dollar Source: Google Finance CBRE Vietnam Page 18 CBRE Vietnam Fearless Forecast 2012

19 2011 Vietnam Stock Market At the beginning of 2011, some expected a rise. Going into 2012, some are wondering where the bottom is. VN Index dropped 28%, real estate companies fell approx. 45% Little support from those holding gold 2012 YTD: the stock markets are up 19%! Source: FPT Securities CBRE Vietnam Page 19 CBRE Vietnam Fearless Forecast 2012

20 2011 Regional Stock Market Comparison Source: ADB Since 01/01/2012 some Asian markets have picked up!? CBRE Vietnam Page 20 CBRE Vietnam Fearless Forecast 2012

21 2011 Gold Market Vietnam market: in 2011, Gold price increased 25.7% y-o-y Global market: 2012 s average gold price to be US$1,766 per ounce, 12.3% increase from 2011 s, according to a survey by The London Bullion Market Association. HSBC predicts is US$1,850 per ounce. Source: kitco.com CBRE Vietnam Page 21 CBRE Vietnam Fearless Forecast 2012

22 2012: Gold Supply in Vietnam Increases The magic from Trinh Duc s performance in the Rugby World Cup is overshadowed by: Quy Phuc is expected to win the gold in 100 m freestyle Anh Tuan is expected to win the gold in <56 kg weightlifting Ha Thanh is expected to win the gold in the floor exercise Source: vov.vn; giadinh.net.vn; tuoitre.vn ; 1star1objet.fr CBRE Vietnam Page 22 CBRE Vietnam Fearless Forecast 2012

23 Car Sales Kia New Morning VND357,000,000 (US$17,000) Entry Level Mercedes VND1,500,000,000 (US$70,000) VET: Private passenger car sales saw a 22.1% JUMP to 40,858 units in 2011 Car Sales (units) YoY CAR SALES GROWTH OF SOME MANUFACTURERS (2011) Bentley GTC Speed in Hanoi CBRE Vietnam Page 23 CBRE Vietnam Fearless Forecast 2012

24 2011 International Arrivals 6 million to Vietnam (19.1% y-o-y) 3.5 million to HCMC (13% y-o-y) 1.3 million to Hanoi (4% y-o-y) Tourism arrivals to Vietnam by country 2011 China 1,416,804 South Korea 536,408 Japan 481,519 US 439,872 Cambodia 423,440 Taiwan 361,051 Australia 289,762 Malaysia 233,132 France 211,444 Thailand 181,820 Others 1,438,779 CBRE Vietnam Page 24 CBRE Vietnam Fearless Forecast 2012

25 2011 Government Decrees Pricing in Dong Decree 95/2011/ND-CP dated October 20, 2011 VND must be used for quotation or advertising of goods and services, etc. Apartment Service Fees Decision No. 4520/QĐ-UBND dated September 29, 2011: Statutory Apartment Service Fee: max VND4,000 (~US$0.2) psm Statutory Fee to be applied only when no agreement reached on Apartment Service Fee in advance Non-Agricultural Land-Use Tax Decree No. 53/2011/ND-CP, effective from January 01, 2012 Pilot program for NALU Tax in 2011: To collect NALU tax in certain areas of Ha Noi, Can Tho City & Bac Ninh province. To identify taxation areas, connect & exploit databases of local agencies on tax & natural resources. Requirement for Environmental Impact Statement Decree No. 29/2011/ ND-CP dated April 18, 2011: First guidance on the assessment of environmental impact Proscribes many requirements and procedures for specific development projects CBRE Vietnam Page 25 CBRE Vietnam Fearless Forecast 2012

26 Regional Rental Comparison As at Q4/2011: 190 RevPAR (MAT) Indexed Local Currency Thg6 07Thg12 07Thg6 08Thg12 08Thg6 09Thg12 09Thg6 10Thg12 10Thg6 1 Vietnam Singapore LUXURY APARTMENT PRIME PRICES & RENTS IN KEY ASIAN MARKETS Price (US$ psm) $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 $80 $70 $60 $50 $40 $30 $20 $10 $0 Rent (US$ psm per month) CBRE Vietnam Page 26 CBRE Vietnam Fearless Forecast 2012 Price Rent

27 Office Supply & Absorption Supply by Grade (sm) 1.11 mil. Vacancy? 2.7 mil. 2.4 mil mil new supply: 400,000 sm ( 54% y-o-y) 2012 absorption max: 100,000 sm 2012 vacancy: 500,000 sm Supply Demand Dynamics F Supply by Location (sm) Total Supply (sm) 700,000 1,100,000 New supply (sm) 220, , mil mil. 2.4 mil. 2.7 mil. Leased Area (sm) 530, ,000 % 73% 57% Net absorption (sm) 101, ,000 % 15% 10% Vacancy (sm) 200, ,000 Vacany rate 27% 43% Only 10% vacancy in CBD area (20,000 sm) CBRE Vietnam Page 27 CBRE Vietnam Fearless Forecast 2012

28 Condominium - 3 Year Price Movement Luxury Condominium (US$ psm) High-end Condominium (US$ psm) Q2-3% Q4 Q1-7.5% Q4 Mid-end Condominium (US$ psm) Low-end Condominium (US$ psm) Q1-7.5% Q4 Q1-6.5% Q4 CBRE Vietnam Page 28 CBRE Vietnam Fearless Forecast 2012

29 Condominium - 3 Year Price Movement HN vs. HCMC HN: Price upside potential in the past, but will eventually follow the flat/downward pattern of HCMC? Luxury Condominium (US$ psm) High-end Condominium (US$ psm) Upside Upside Mid-end Condominium (US$ psm) HN: Higher price level at the same quality! Low-end Condominium (US$ psm) Upside Upside CBRE Vietnam Page 29 CBRE Vietnam Fearless Forecast 2012

30 Condominium - Take-up vs. Hangover HN Take-Up Rate (%) New Supply: 22,000 units Accumulated Hangover: 16,500 units Sales : 12,700 units Total Supply: 38,500 units HN Sold Units (Units) HN Accumulated Unsold Units (Units) CBRE Vietnam Page 30 CBRE Vietnam Fearless Forecast 2012

31 Condominium - Supply Supply (Units) 30,000 25,000 20,000 15,000 10,000 5,000 0 New Launch vs. New Completion Supply 25,100 29,900 25,100 21,600 4, F 2013F 2014F New Launch New Completion Based on Developers Planning Late hand-over: to be widespread ( large planned completion in +2012F vs. small actual completion ~2011) Some are waking up with their head in their hands CBRE Vietnam Page 31 CBRE Vietnam Fearless Forecast 2012

32 Dong Devaluation (9.3%) The Residential Nightmare More strict control on dolarisation price list in VND Resolution 11 PVN Tower: 102 -> 79 floors Condo Service Fee disputes Q1 9,100 launches 0.8% price (q-o-q) Q2 8,100 launches 0.7% price (q-o-q) More sales incentives: stop pegging condo prices to CPI 2012 Death, Disc ount or Opportunity? Property sector, the most attractive investment channel, but more cautious to invest in 1-3 years (survey by Grant Thornton Vietnam) Discount Headlines 4,300 launches 3.1% price (q-o-q) Q4 PVN Tower: PVN withdrawal 3,600 launches 1.3% price (q-o-q) Q3 More heated Condo Service Fee disputes No. 4520/QD-UBND : cap Condo Service Fee at VND4,000 psm (US$0.2) unless otherwise agreed Some banks stopped offering mortgage Hanoi Masteplan officially approved Doc /NHNN-CSTT: Remove 4 real estate groups out of the nonproductive loan category CBRE Vietnam Page 32 CBRE Vietnam Fearless Forecast 2012

33 HN Retail Supply & Vacancy 12% 20% 30% Retail Market 2011 (NLA) 2012F (GFA) CBD Non-CBD CBD Non-CBD Total Supply (sm) 42, ,000 56, ,000 New Supply (sm) 6, ,000 14, ,000 Vacancy (sm) 2,400 24, ,000 Vacancy rate (%) 6% 12% 0% 30% 2011: Occupancy in CBD: 94%; Non-CBD: 88% 2012: Wild Wild West Tu Liem, Cau Giay and Ha Dong see highest additional supply in 2012 Indochina Plaza Hanoi Habico Tower Melinh Plaza Ha Dong CBRE Vietnam Page 33 CBRE Vietnam Fearless Forecast 2012

34 Kenzo Hang Bai / Ly Thuong Kiet Street Development for international Brands Trang Tien Plaza Panerai Metropole Arcade Retail Market Development for domestic Brands Maturing of VN Retail brands Metropole Arcade Opera Business Center Press Club Gallery Royale Korloff Hang Bai Street Runway Kenzo & Korloff Luxury Shop Expansions Existing Luxury Shops Expansion of domestic Brands in secondary street locations (e.g. Kim Ma, Cau Giay Street) Expansion of Hanoi s Luxury Node Trang Tien a more luxurious Street in 2012 CBRE Vietnam Page 34 CBRE Vietnam Fearless Forecast 2012

35 Hotel Market 2012 A challenging year for Hanoi Hotel Demand A slight & smaller increase of int l visitor arrivals A small reduction in domestic arrivals 2012 Hanoi Hotel Performance 4-5 star: Stable / slightly decreased ADR & Occupancy 3-star: More stable RevPAR 5, STAR HOTEL SUPPLY (rooms) 4,000 3,000 2,000 1,000 3,130 1,510 3,780 4,757 1,750 1, f 5-star 4-star CBRE Vietnam Page 35 CBRE Vietnam Fearless Forecast 2012

36 Hotel Market Year of local players More Hotel Acquisition of Local Investors from Foreign Partners Local Hoteliers: more aggressive in expanding high-end market share New International Brands keep showing interest in Hanoi high-end market. Negotiations with several developers are actively underway. CBRE Vietnam Page 36 CBRE Vietnam Fearless Forecast 2012

37 Serviced Apartments 2012 Vietnam will be the 11 th most common destination of companies sending staff on international assignments up to Therefore, this is likely to ensure that the demand for accommodation from companies sending staff into Vietnam is likely to remain strong in the next three years. --- Trends in Managing Mobility Survey 2010, ECA International (units) Crowne Plaza Grand Plaza Landmark 72 More apartment buildings will be converted to serviced apartments, fully or partially, as condos struggle to sell. Supply: 2011: 2,400 units 2012: 3,000 units Performance differs by location: Western area: Occupancy rate Below 50% (Q4/2011) 25% total supply (not yet including Landmark 72) The rest: Occupancy rate 90% in Q4/2011 Top demand of <$2,500 budget for a studio / 1BR / 2BR CBRE Vietnam Page 37 CBRE Vietnam Fearless Forecast 2012

38 Investment Sales Pacific Place, Hanoi Q Reported 12% CentrePoint, HCMC Q Reported % We expect more investment sales to come in 2012 Saigon Tower, HCMC Q Reported 8.5% CBRE Vietnam Page 38 CBRE Vietnam Fearless Forecast 2012

39 2012 CBRE s 10 Most Fearless Forecasts 1. OFFICE Banks are still dominant occupiers. Commercial office struggles, built-to-suit continues especially for banks Tenants create the trend (large space occupiers create the market: KPMG, PWC, Standard Chartered Bank others follow). Western sub-market: occupancy to be positive, rents continue to drop (due to competitiveness, not just because of excess supply) >< CBD prime office landlords still not reducing rents. 2011: landlords/tenants share the bargaining power. 2012: tenants have the upper hand 2. RESIDENTIAL Real demand for products of 21 million VND or below Developers expect margins to drop 15%-20% Developers focus on quick returns & direct discounts on sales prices Landed houses sell only in gated communities with good infrastructure & visible progress Luxury residential in the CBD WILL sell. 3. RETAIL New retail luxury node for Trang Tien area; Multiple location tenants no longer happy to expand, or even plan to reduce premises; while anchor retailers still pursuing long term plans. Non-CBD: landlords and tenants: Live or Die TOGETHER Expect to see some big empty spaces CBRE Vietnam Page 39 CBRE Vietnam Fearless Forecast 2012

40 2012 CBRE s 10 Most Fearless Forecasts 4. East of Hanoi opens up: crossing the river is no longer a psychological barrier 5. Stock market: 2012 closes on a much happier note! 6. Deposit interest rates come down to 10%-12% pa 7. Registered FDI into real estate triples in 2012 as Vietnam sees 20 new foreign investors. 8. Gold price declines with new supply from Vietnam s two gold medals at the London Olympics Revenue from cleared sites skyrockets as they are converted into temporary car parks, car wash, mini soccer fields, bia hoi, etc. 10. Several big investment deals done between Local developers and Local/foreign investors 11. Jack Dorsey to spend Christmas 2012 in to have 50,000 followers CBRE Vietnam Page 40 CBRE Vietnam Fearless Forecast 2012

41 CBRE Vietnam - HCMC & Hanoi Quarterly Reports The most insightful real estate publication in Vietnam! Plan your future with two quarter and eight quarter forward looking analysis. Contact for complimentary sample: quarterlyreports@cbrevietnam.com THANK YOU 2012 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 considerationoffactorsknowntousfor 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. CBRE Vietnam Page 41 CBRE Vietnam Fearless Forecast 2012