VIETNAM RESEARCH & FORECAST REPORT 4Q Accelerating success

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1 VIETNAM RESEARCH & FORECAST REPORT 4Q 212 Accelerating success

2 4Q 212 RESEARCH & FORECAST REPORT VIETNAM REAL ESTATE MARKET 212 IN REVIEW Problematic macro-economic factors, that had been formulating and plaguing Vietnam over previous years, meant that the main focus for the Government of the Socialist Republic of Vietnam in 212 was one of economic recovery. In an effort to curb the rampant inflation of 211 (18.13%) the State Bank of Vietnam raised refinancing interest rates, and 212 saw rates reach as high as 15% before subsiding to around 9% at year end. Property developers, as a result of the Governmental controls, had difficulty in raising finance and/or refinancing projects. Construction sites and projects under development in 212 were in many cases delayed or halted completely. Investors, that had the desire and capital available to finance stalled projects were able to seize and capitalize on this opportunity. The protracted downturn in the economy also meant that the commercial office, retail, and residential markets also had a tough period in 212. Retail, in particular food and beverage, outperformed other sectors due to the completion of new retail centers and international brands entering the market to take advantage of Vietnam s young demographic population base, which have an increasing amount of disposable income. Commercial Grade A office rental rates were generally still in sharp decline for the first half of 212 but the second half has seen a push back from landlords who wish to maintain face and market rental values and are now offering attractive incentives for large occupiers who provide a longer term lease commitment. Incentives typically involve longer fitting out periods; free signage; supplementing fitting out costs and/or other payment reductions to induce tenant relocation. The residential market, which in recent years has been proliferated and driven by private investors looking for buy to lease investments, has also changed, with buyers being more cautious on purchases and the buyer profile changing to end user occupiers. High end developments showed the biggest decline in value over the period with low cost and affordable market segments showing the best performance. 213 WILL BE A BUYER, TENANT, AND INVESTOR MARKET Colliers International forecast that the markets will not see much of a recovery in first half of 213 but property cycles should start to see some improvement as the year progresses in some of the submarkets. The market will continue to favor capital rich long term investors with access to significant capital that can take advantage of stalled projects and decreased land values. In the commercial office market, tenants will be able to take advantage of economies of scale and decreased market rentals. Large corporate tenants that are able to sign long term leases with up front cash payments will secure very favorable leases and incentive packages, but asking rental rates are not expected to slide further. The residential market will continue facing difficulty will limited access to loan capital and as the market adjusts to actual demands of end users rather than speculators. 1

3 VIETNAM 4Q 212 ECONOMIC UPDATE VIETNAM S GDP GROWTH RATE VIETNAM S CPI YEAR-ON-YEAR REGISTERED FDI CAPITAL BY SECTOR 14.22% 8.97% 3.16% 3.71% 69.93% EXPORT & IMPORT TURNOVER Source: General Statistics Office of Vietnam Processing and Manafacturing Real Estate Wholesale, Retail and Repair Information and Media Others GDP GROWTH REACHES 5.3% IN 212 Amid continuing global economic difficulty and Vietnam s continued macroeconomic instability, the country s GDP growth rate reached 5.3% in 212,.86% below 211 levels and slightly below the International Monetary fund s estimated 5.1%. According to the World Economic Outlook produced by the IMF, the GDP growth rate of Vietnam is estimated to reach 5.9% in 213, higher than the average forecasted for the ASEAN as a whole. The IMF also forecasts that the country s GDP growth rate will reach 7.5% by 217. INFLATION EASES One of Vietnam s major victories over 212 was easing the inflation that had plagued the country during 211. The CPI saw growth of 6.81% y-o-y as compared to 18.13% in 211 and 11.5% in 21. Inflation was seen as the government s main obstacle to overcome in 212 and the easing of inflation should contribute to the stabilizing of the country s macroeconomic situation and lead to gradual easing of interest rates throughout 213. During 4Q 212 in particular, inflation slowed from the increases witnessed in September 212 (+2.2%) and saw an increase of only 1.59% throughout the entire quarter. Most of the increases were seen in the Medication and Healthcare sector. FDI DOMINATED BY JAPAN Vietnam s total FDI registered capital in 212 was approximately US$ 13 billion, representing 84.7% of the same period last year. The total newly registered FDI during 212 totaled approximately US$ 7.9 billion. The total disbursed FDI during the year reached US$ 1.5 billion. Japan remained the major contributor with 51% of total newly registered FDI capital, followed by South Korea, Hong Kong and Singapore. On a provincial level, Binh Duong saw the highest influx of FDI capital, followed by Hai Phong and Ha Noi. The real estate sector attracted a total registered capital value of approximately US$ 1.81 billion for eight projects, accounting for 14.2% of the total registered capital of all sectors. The majority of the FDI capital injected into the real estate market is a result of the US$ 1.2 billion project Tokyu Binh Duong Garden City, a joint venture between Becamex IDC and Japanese Tokyu Corporation. FIRST TRADE SURPLUS SINCE saw Vietnam s first trade surplus since The trend started in 3Q 212 and continued through 4Q 212 with export turnover reaching US$ billion over the year, an increase of 18.3% y-o-y. The total Import turnover during 212 reached US$ billion, and increase of 7.1%. By investment sector, FDI sector enterprises reached a trade surplus of approximately US$ 12 billion while domestically invested enterprises saw a trade deficit of approximately US$ 11.7 billion. 2

4 HO CHI MINH CITY & HANOI 4Q 212 ECONOMIC UPDATE GDP GROWTH RATE CPI MONTH-ON-MONTH HO CHI MINH CITY ECONOMIC UPDATE Ho Chi Minh City (HCMC) saw its GDP grow to US$ billion, an 8.2% y-o-y increase. This was lower than the 1.3% growth seen in 211, and was mostly attributed to low production in the beginning of the year. On a quarterly basis, the y-o-y growth rate reached: 7.3%, 8.8%, 9.6% and 1.4% respectively. The Services sector remained the top contributor, accounting for 53.5% of the total GDP, followed by the Industrial and Construction sector with 45.3%, and the Agriculture, Forestry and Fishery sector at only 1.2%. The CPI saw an increase of only.17% m-o-m in December 212, slowing from its peak of 2.47% in September. The city s average CPI growth rate in 212 settled at 7.74%, considerably better than the 15.12% increase seen during the same period last year. The total sales of retail goods and services reached US$ billion in 212, an increase of 17.3% y-o-y. HCMC enjoyed a trade surplus of US$ 3.83 billion; export turnover increased 6.3% against the same period last year while import turnover decreased by 4.6%. RETAIL SALES GROWTH RATE FOREIGN INVESTMENT CAPITAL Up to 15 Dec 212, HCMC recorded 23,78 newly established enterprises with total registered capital of US$ 1.4 billion. HCMC granted investment certificates for 41 new FDI projects with registered capital of US$ 541 million. As of December 212, there were 4,59 valid operating FDI projects with total capital of US$ 31.6 billion. HANOI ECONOMIC UPDATE Hanoi saw a GDP growth rate of 8.1% y-o-y during 212. The Services sector contributed 52% of total GDP; Construction & Industries also performed well with 43%; while Agriculture, Forestry and Fisheries made up only 5%. Hanoi s CPI rose by.26% m-o-m in December, also slowing from its peak of 2.47% in September. The average CPI during 212 saw an increase of 8.57% y-o-y. Total sales of retail goods and services increased by 18.8% y-o-y. Total exports and imports turnover in 212 were estimated at US$ 1.3 billion and US$ billion, respectively. Although exports turnover rose by 5.3% y-o-y and imports turnover declined by 3%, the city still saw a trade deficit during 212. The total number of newly established enterprises in Hanoi in 212 was recorded at approximately 15,, with a total registered capital value at US$ 4 million. Throughout the year, 73 enterprises submitted their dissolution applications and another 1,9 ceased business activities. Hanoi granted investment certificates for a total 283 FDI projects, with a total registered capital value of US$ 985 million, equivalent to 51.6% of last year s total. Source: General Statistics Office of Vietnam 3

5 HO CHI MINH CITY & HANOI 4Q 212 INFRASTRUCTURE FLYOVER AT THU DUC INTERSECTION VEC GROUND-BREAKING CEREMONY HO CHI MINH CITY Inaugurations of the first two flyover projects, Thu Duc Intersection and Hang Xanh Round abound overpass are to be held on the 27th of January and attention will turn to construction of Lang Cha Ca steel overpass, 24 meters long and 6.5 meters wide, with two approach roads stretching 16 meters each. The overpass will serve to reduce traffic in Tan Binh District in the area of the airport and should be completed in approximately 13 days, by June 213. The project will also involve the burying of electricity cables and other utility lines in the area. Construction of the first phrase of component No.1 of HCMC s East-West Highway s intersection with the HCMC-Long Thanh- Dau Giay Expressway, commenced on Friday, 21 December. This phase was funded by package No. 7 worth VND1.4 trillion and will be carried out over an estimated 24 months, covering 2 kilometers in length out of the total 4 kilometer connection road. It will consist of an intersection, over 6 meters of bridge, a drainage system, trees and a lighting system. Next year Ho Chi Minh City will also see the commencement of work on Thu Thiem Bridge 2, a 4 lane project connecting Districts 1 and 2. The project will be meter long, and 19.3 meters wide with a 2-meter-wide divider for landscaping, and pedestrian lanes on both sides. LE VAN LUONG - LANG HA OVERPASS HANOI Three more overpasses officially opened in 4Q, including Lang - Le Van Luong, Tran Duy Hung - Nguyen Chi Thanh (315-m-long each) and Nam Hong intersection (1.6-km-long). The five overpasses opened in 212 helped reduce traffic pressure significantly. Two others were proposed and would start construction in early 213. The elevated highway portion of Ring Road No. 3 (Mai Dich - Linh Dam package) inaugurated in October, linking the South- Western districts altogether and forming the first major ring road of Hanoi. NHAT TAN BRIDGE Nhat Tan bridge (passing the Red River) and Dong Tru (over Duong River) had delayed their construction progress, mostly due to the site clearance issue. The expected completion points would be October and June of 214, respectively. According to the Hanoi s Transportation master plan, 14 interprovincial truck stations, 9 bus and coach stations will be built in outskirt districts. 8 parking stations will also be upgraded or newly-built in 1 urban districts, Dong Anh and Tu Liem districts. 4

6 HO CHI MINH CITY 4Q 212 OFFICE SUPPLY BY GRADE, 4Q % 36% 52% Grade A Grade B Grade C AVERAGE OCCUPANCY AND RENTS PERFORMANCE BY GRADE, 4Q 212 ESTIMATED FUTURE SUPPLY Source: Colliers International MARKET OVERVIEW As of 4Q 212, the HCMC office market has approximately 1.3 million sq m NFA from over 16 office buildings. One grade A building, President Place, and two grade B properties, An Phu Plaza and HMTC building, entered the market. A few Grade C buildings withdrew from the rental market due to demolition, closure, or continued refurbishment. In the last quarter of 212, new properties contributed approximately 4, sq m of office space to the total supply of Ho Chi Minh city. The share of Grade A stock slightly increased by 1%, gaining some of the share from Grade C supply. The Grade B proportion remained unchanged at 52% in comparison with 3Q 212. The market is still in a position of relative oversupply and landlords are responding through competition with regard to management quality, and, in the case of newer properties, offerings of incentives for early lease commitment. MARKET OPERATION Average rental rates showed a slight increase during the last quarter with a modest US$1. improvement, reaching US$23.9/ sq m/ month. This was due to a price rise in both the Grade A and B office segments. The mean occupancy rate still has yet to overcome 9% and during this quarter dropped another percent to 88%. Percentage of vacancy inflated further across all three grades, especially Grade B, which lost its stance by approximately 2% due mostly to relocation of some tenants to Grade A properties in light of the current market slump. GRADE A MARKET MOVEMENT HCMC s grade A office market maintained a fairly stable performance throughout the quarter. Due to the entry of new properties, particularly President Place, the average occupancy rate decreased slightly to 86.5% from the additional supply while the average rental reached US$35.4/ sq m/ month. The total Grade A vacancy was approximately 2, sq m in 4Q 212, the majority coming from the newly completed buildings and the Bitexco Financial Tower. OUTLOOK In 213, HCMC office market is welcoming an additional 13, sq m and approximately 9, sq m in the next 4 years. However a large portion of future supply has been delayed due to difficulties in obtaining financing and a number will remain in planning stages. In the first half of 213, the HCMC office market in will see the addition of approximately 37, sq m NFA of office space from 3 grade A projects, including Times Square, The LIM tower and Le Meridien, which will put more competitive pressure on the grade A and B markets in the CBD. 5

7 HANOI 4Q 212 OFFICE SUPPLY BY GRADE, 4Q 212 sqm 75, 8 6, 6 45, 4 3, 2 15, Grade A Grade B Grade C NLA Number of projects GRADE A OFFICE PERFORMANCE US$/sqm/month 1% 55 9% 5 8% 45 7% 4 6% 35 5% Q1-12 Q2-12 Q3-12 Q4-12 Average Occupancy Rate Average Asking Rent GRADE B OFFICE PERFORMANCE US$/sqm/month 1% 35 9% 3 8% 25 7% 2 6% 5% Q1-12 Q2-12 Q3-12 Q4-12 Average Occupancy Rate Average Asking Rent ESTIMATED FUTURE SUPPLY, BY YEAR sqm 6, 5, 4, 3, 2, 1, onward Source: Colliers International MARKET OVERVIEW The total office supply in Hanoi reached 1.3 million sq m NFA in 4Q 212, an increase of 34% against 4Q 211. The market welcomed one Grade-A building, Indochina Plaza Hanoi, and two Grade-B buildings, Hapro Building and LICOGI 13 Tower. This added a total of 31,8 sq m to the office market, equivalent to q -o-q growth of 5%. All the three new supply projects are located in non-cbd areas, leading to a further decrease in the market s average rent, which ended at US$25.14/ sq m/ month. The Grade-A submarket witnessed a remarkable q-o-q rental decline of 4% following this trend. GRADE A - CONTINUING RENTAL DECREASE In 4Q 212, the average rent in the Grade A office market was US$38.9/ sq m/ month, showing a significant q-o-q decrease of 4%. This is mostly attributed to the rent reduction of 7% in non- CBD districts, where Indochina Plaza Hanoi and Keangnam Landmark are still working to lease a large amount of remaining vacant space. Even some of the CBD buildings in prime locations lowered their asking rents by up to 1% q-o-q as vacancy increased, in large part due to the relocation of tenants to the outer districts. Average occupancy rate decreased by 1.5 percentage points, down to 76.9%. GRADE B POOR PERFORMANCE The Grade-B market segment showed another quarter of disappointing performance with the average rent decreasing to US$ 21.6/ sq m/ month, down 3.8% against 3Q 212. The four inner districts saw a major decline of 3% while outer districts stood at US$ 17.8/ sq m/ month, almost no change from the last quarter. The average occupancy saw a minor increase from 3Q 212, reaching 77.9%. This segment faced competition for tenants from the Grade-A submarket in the West, resulting in a total vacancy of 137, sq m in The Grade B submarket throughout the city. OUTLOOK In 213, a additional 5, sq m is expected to come online. However, construction progress may be affected by the economic downturn and sluggish market movements. Over the next year, it is predicted that rental rates and occupancy will continue to decrease, especially in Grade B and outer districts sub-markets. Not only new entrants but existing landlords as well have began to cut rental rates and offer a number of incentives to attract tenants as the competition grows. Longterm leases will likely become more popular as developers seek cash to solve problems with liquidity. P2 COLLIERS INTERNATIONAL 6

8 HO CHI MINH CITY 4Q 212 RETAIL SUPPLY BY RETAIL TYPES, 3Q 212 MARKET OVERVIEW In 4Q 212, the HCMC retail supply saw an addition of 76, sq m from two shopping centers, Vincom Center A and Pandora City. The addition of these two buildings brought the total supply to approximately 782, sq m. Despite the high volume of supply that Vincom Center A has added to the CBD, the development is performing well in terms of both occupancy and rental metrics. The performance of Pandora Place is less impressive due to the recent development of other supply in outer districts and hesitation of major brands to expand outside the CBD. AVERAGE OCCUPANCY AND RENTS The shopping center sector increased its market share to 44%, compared to 39% in previous quarter. Supermarkets and department stores made up 3% and 14% of the retail market respectively. The Podium and wholesale sectors accounted for only 12% of the total market space. MARKET OPERATION AVERAGE RENTS BY TYPES The HCMC retail market maintained its performance with the average asking rent decreasing only slightly to approximately US$ 62./ sq m/ month. The average occupancy rate remained unchanged at approximately 83%. The highest occupancy rate recorded was that of department stores at 99.2%, followed by shopping centers with 9%. Retail podiums had the lowest occupancy rate of only 61% in 4Q 212. The rents for shopping centers averaged US$ 53.6/ sq m/ month. Retail space in prime locations (CBD) are still commanding rents over US$ 1/sq m/ month while developments in outer areas (Districts 7, 2, Tan Binh, Phu Nhuan) are asking lowering rents in order to attract tenants and create a tenant mix of more affordable mid-tier brands. The department store sector did not experience any major movement in terms of asking rent and maintained US$ 59./sq m/ month throughout the quarter. OUTLOOK ESTIMATED FUTURE SUPPLY In 213, the HCMC retail market could see the addition of approximately 13, sq m NFA of retail space from over 1 projects, including Times Square, Pico Plaza, and Cantavil Premier, and Thao Dien Pearl. However, some of these projects may see delays due to either difficulty of accessing capital for completion or in attracting tenants. Due to the economic downturn, a large number of projects have been delayed or cancelled, so we can expect a number of them to remain in planning stages or halted mid-construction. Of those projects planned, the market could expect over 6, sq m to enter the market in next 4 years. Source: Colliers International 7

9 HANOI 4Q 212 RETAIL SUPPLY BY DISTRICT, 4Q , 1, AVERAGE OCCUPANCY AND RENTS 1% 8, 6, 4, 2, 9% 8% 7% 6% 5% sqm Long Bien Tu Liem Dong Da Cau Giay AVERAGE RENT BY TYPES ESTIMATED FUTURE SUPPLY, BY YEAR Source: Colliers International Dong Anh Ha Dong Hai Ba Hoang Hoan Others Trung Mai Kiem US$/sqm/month Q1-12 Q2-12 Q3-12 Q4-12 US$/sqm/month , 5, 4, 3, 2, 1, sqm Average occupancy rate Average asking rent Retail Podium Department Store Shopping Center Min average asking rent Max average asking rent onward MARKET OVERVIEW In 4Q 212, the total retail supply in Hanoi was recorded at 78, sq m, an increase of 4.3% q-o-q. While Grand Plaza ceased leasing activities for renovation, the market welcomed the large-scale Me Linh Plaza Ha Dong shopping centre, together with three other furniture centers, totaling 45,5 sq m NFA. Due to the temporary closure of Grand Plaza, Cau Giay has lost its leading supplier position to the eastern Long Bien district. The four inner districts accounted for only 28% market supply. As a whole, the market saw the addition of only 15, sq m of retail supply from 15 projects that online in 212, compared to 15 projects with 175, sq m in 211. However, the supply is expected to boom in 213 as a number of large-scale retail complexes come online. MARKET OPERATION The average market rent was recorded at US$ 65.6/ sq m/ month, down 1.8% against 3Q 212 and 6.3% y-o-y. The decline can be explained in part by the lower rents being offered at Non-CBD retail centres - both existing and newly-launched - to maintain occupancy. In the CBD, even the prominent Vincom Center Ba Trieu had to cut rental to fill up the entire fourth floor left by Best Carings, while Hang Da Galleria has shown poor performance despite further rent reductions and incentive packages. Thanks to the impressive occupancy at Me Linh Plaza Ha Dong and the closure of Grand Plaza (whose vacancy was almost 66% in 3Q), the market s average occupancy reached 88.8% in 4Q 212, up by 1.6 percentage point. However, many other retail centers witnessed minor decreases in occupancy against last quarter as fewer shop openings were observed than closures, and shopping demand showed signs of a slowdown. OUTLOOK In 213, the market will see the addition of 55, sq m NFA retail supply, equivalent to 78% of current total stock. The two major retail complexes of VinGroup, Royal City and Times City, will add 23,-sqm GFA each and are actively leasing. Rents are expected to see further decline, especially in Non-CBD areas including Ha Dong, Thanh Xuan and the West. Electronics marts, classy furniture stores and fitness centers have plans to expand their markets as new locations open in the next few years. F&B will likely still be the most active tenant, remaining active in both modern retail centers traditional streetside shop-house properties. Until the economic picture improves and retail sales rise again, developers will have to be creative in development strategy and incentives to attract tenants. P2 COLLIERS INTERNATIONAL 8

10 HO CHI MINH CITY 4Q 212 APARTMENTS FOR SALE OVERALL MARKET OPERATION, 4Q 212 PRIMARY MARKET, 4Q 212 SECONDARY MARKET, 4Q 212 FUTURE SUPPLY MARKET OVERVIEW Currently, the HCMC apartment market has a total supply of approximately 9, units. Both primary and secondary markets experienced downward trends this quarter, leading to the implementation of large-scale marketing campaigns by developers and investors in order to attract more buyers. Common promotions and incentives were long term installment loans, flexible payment terms, low interest rates and discounts on lump-sum payments. On average, the prices have been discounted from 1% to 35% across the market. During the last quarter, the market welcomed nearly 1,9 apartments from 4 residential projects. The average ratio of transactions was recorded at 48% while the affordable segment achieved 7%. Some projects have been able to sell a high quantity of units as a result of bank support, reasonable prices, the developer s reputation and credibility. THE PRIMARY MARKET At year end, the primary apartment market had 25, units on sale from 75 projects. Fifty-eight percentage of the total supply is located in Districts 7, 2, Binh Tan and Tan Phu. The prices offered ranged from US$ 511/ sq m to US$2,29/sq m. The average price stood at US$ 1,125/ sq m, a drop of 4% q-o-q. In 4Q 212, the apartment market was predominantly driven by price adjustments as various projects offered competitive price rates and discount promotions. The affordable segment still outperformed other segments as a likely result of lower prices. THE SECONDARY MARKET The secondary market saw a total of 64,3 apartments listed. District 7 recorded the highest number of units, followed by Districts 4, 2 and Binh Thanh. These areas represented 49% of market share. In efforts to reduce inventory and cut investment losses, secondary apartments were sold by investors at 5%- 1% discounts compared to their counterparts on the primary market. In consequence, the average price has fallen by 2% q-o -q and was recorded at US$1,1/ sq m. MARKET OUTLOOK Throughout 213, the HCMC apartment market could see an additional 11, units from 2 projects, including 45,2 units from projects either on-hold or currently vacant-land. It is expected that a number of these projects will be delayed until the market recovers, during which time developers may investigate ways of altering product design to meet market demands, seek support for financing from domestic or international investors, or await market recovery. The affordable segment is likely to continue heading the market in terms of performance for the foreseeable future as investors are finding the market difficult to navigate and buyer profile is heading toward end-users. Source: Colliers International 9

11 HANOI 4Q 212 APARTMENTS FOR SALE NEWLY-LAUNCHED UNITS, 4Q SECONDARY SUPPLY, 4Q 212 3, 25, 2, 15, 1, 5, 12, 1, 8, 6, 4, 2, units Affordable Mid-end High-end units Ha Dong units Tu Liem Tu Liem Number of units Min. of asking price FUTURE SUPPLY, BY DISTRICT Ha Dong Cau Thanh Giay Xuan Total Units Dong Da Hai Ba Trung Tay Ho Source: Colliers International Average asking price Max. of asking price Long Bien Cau Giay Hoang Dong Mai Da Average Asking Price Hoai Duc Tay Ho Long Bien US$/sqm 2, US$/sqm Hoai Duc Hoang Mai $ 1,6 1,2 8 4 $2,5 $2, $1,5 $1, $5 Others MARKET OVERVIEW 212 proved to be a difficult year for the Hanoi apartment-forsale market, especially for developers. As the economic downturn has not shown clear signs of recovery, and the financial distress affected a great number of developers, the sales volume also went down dramatically. However, as a result products prices decreased and there are plenty of options in affordable housing putting end users in a favorable position. 4Q 212 continued along the same trends as the previous quarters with modest launches of supply and lowered asking prices. Some projects claimed to be high-end while launching even their first units in the mid-end pricing range. THE PRIMARY MARKET In 4Q 212, the market saw nearly 1,9 newly-launched units from 11 projects, 35% of which were located in the West (including Cau Giay and Tu Liem districts). In 212 as a whole, total launch new supply witnessed a major fall of 55% y-o-y, while most of the new launches came from affordable and midend segments. Due to the market uncertainty and poor demand, the developers of high-end projects had to switch their target customers to end-users instead of investors by offering various sale options, incentives and promotions. One of the most noticeable launches was of an affordable commercial project in Thanh Tri district, whose asking price was less than US$5/ sq m, even lower than other social housing ones. This can be considered a new low-end benchmark for pricing levels across the entire market. The average asking price of all the projects launched in 212 was recorded at US$1,195/ sq m, down 16% against 211. THE SECONDARY MARKET The total secondary supply in Hanoi remained unchanged from 3Q 212, at 99,5 units. As of 4Q 212 secondary prices averaged US$1,444/ sq m, decreasing 14.5% y-o-y. However, the q- o-q average price decline of 2.5% in 4Q was much lower than the declines of the previous three quarters: 4.5%, 3.9% and 4.3%, respectively. The average prices of affordable, mid-end and high-end were recorded at US$1,45, US$1,397 and US$1,978 per sq m, respectively. As there are a huge number of outstanding primary units at lower asking prices together with attractive offers, secondary prices are expected to decrease even further in a few next years. OUTLOOK Hanoi could welcome up to 34, units from 5 projects in the coming years. However, a large portion of the future supply will likely be delayed due to the current market slump. Unsold stock in the primary market remains high, and as a result transactions will remain sluggish, mostly arising in projects with highly attractive pricing, good products and timely construction progress. P2 COLLIERS INTERNATIONAL 1

12 RESEARCH & FORECAST REPORT 4Q 212 VIETNAM 522 offices in 62 countries on 6 continents United States : 147 Canada : 39 Latin America : 19 Asia Pacific: 21 EMEA : 118 With more than 1 professionals in 2 offices in Vietnam, the Team is market driven and has proven and successful track record with both international and local experience. From Hanoi to Ho Chi Minh City, we provide a full range of real estate services Research > Market research across all sectors and geographical locations > Market analysis, development recommendation, pricing and marketing strategy Valuation & Advisory Services > Valuation for land, existing property or development sites > Feasibility study to determine NPV, IRR and highest & best use Office Services > Tenant Representation > Landlord Representation Residential Sales & Leasing COLLIERS INTERNATIONAL HO CHI MINH CITY Bitexco Building, 7th Fl, Nguyen Hue, District 1, HCM City, Vietnam Tel: HANOI Capital Tower, 1th Fl, 19 Tran Hung Dao Street, Hoan Kiem District, Hanoi, Vietnam Tel: Dale R. Watkins Head of Research Mobile: dale.watkins@colliers.com Retail Services Investment Services Real Estate Management Services Corporate Services This document/ has been prepared by Colliers International for advertising Industrial Leasing The foundation of our services is the strength and depth of our experience.