COLLIERS INSIGHTS VALUATION & ADVISORY SERVICES ASIA MARCH 2019 DECODING SOUTH EAST ASIA REAL ESTATE: INSIGHTS FOR OWNERS

COLLIERS INSIGHTS VALUATION & ADVISORY SERVICES ASIA MARCH 2019 DECODING SOUTH EAST ASIA REAL ESTATE: INSIGHTS FOR OWNERS

FOREWORD With the growth in cross border investment in general and the focus on intra-asia investment, the ASEAN countries have seen greater interest from foreign investors especially from North Asia. The challenge for investors is how to find ways to enter and cash in on growth without taking an unreasonable amount of risk. This is of course easier said than done! Basic caution needs to be exercised before making an investment decision whether the new market makes it a worthy addition to a portfolio. In this paper, we look at some basic facts for six emerging markets across South East Asia highlighting where the opportunities lie in each market, some basic information on the land ownership, taxation and suggestions as to the sectors and geography foreign investors are likely to focus on in the next one to two years. We are happy to discuss any aspects of this report with you and provide further information about these markets as you need. DAVID FAULKNER Managing Director Valuation & Advisory Services Asia Tel: +852 2822 0525 Email: David.Faulkner@colliers.com

INDONESIA The property market is concentrated in the two major cities Jakarta and Surabaya, though infrastructure improvements are helping development elsewhere on Java and Sumatra Islands. Foreign and domestic investment has increased due to government policy changes, opening more areas for foreign investment, such as in healthcare and logistics. Infrastructure development is now the main government focus, including toll roads, mass transportation (MRT, LRT, high-speed rail), airports, and seaports. This creates opportunities for transit-oriented (TODs) and industrial estate developments. We see opportunities in property investments and developments in TOD s and industrial estates. Dependent on property type, the typical yields available are between 6 and 10%.

INDONESIA COUNTRY PROFILE 1,916,862 sq km Area 261.9 million Population 3.9 people Average Household Size 54% Urban Proportion USD3,707.1 GDP/capita 66.7% Labour Force Participation Rate 5% GDP Growth USD970.6 billion Gross Domestic Product (GDP) 28.6 years Average Age of Population Jakarta Capital 5.1% Economic Growth Jakarta Surabaya Economic Centres JAKARTA Soekarno Hatta International Airport Pelabuhan Tanjung Priok SEMARANG Ahmad Yani International Airport Pelabuhan Tanjung Emas SURABAYA Juanda International Airport Pelabuhan Tanjung Perak MAKASSAR Pelabuhan Soekarno Hatta MEDAN Kualanamu International Airport Pelabuhan Belawan BALI Ngurah Rai International Airport Pelabuhan Benoa YOGYAKARTA Adisutjipto International Airport Legend Capital Major City Economic Centre Major Airport Major Port 4

INDONESIA PROPERTY OWNERSHIP Land Title in Indonesia Hak Milik (HM) or Right to Own > > HM is the most complete land title available under the Indonesian law. HM is transferable and may be encumbered. HM is equivalent to freehold land or fee simple absolute under the common law system Hak Guna Bangunan (HGB) or Right to Build > > HGB is the right to construct and own buildings on land. HGB is transferable and may be encumbered. Land with an HGB title may be owned by (i) Indonesian citizens and (ii) legal entities established under the Indonesian law and domiciled in Indonesia, including foreign-owned companies (known as Perseroan Terbatas Penanaman Modal Asing PT PMA). HGB is granted for a period of up to 30 years and extendable for a further 20-year period Hak Pakai (HP) or Right to Use > > HP is the right to use and/or to harvest from land, which is directly controlled by the State, or land of other persons. HP may be encumbered. Ordinarily, HP is granted for a period of up to 30 years and can be extended for 20 years PROPERTY INVESTMENT POLICIES Foreigners are not able to own freehold property in their own name. Right-to-use titles, or SHP (Sertifikat Hak Pakai), are essentially leaseholds that are open to foreigners. Leasehold titles are granted for 25 years and can be extended for another 45 years for a total of 70 years. The preferable way for foreign to invest and develop property in Indonesia is by way of establishing an Indonesian based company under the Indonesian law. The company shall domiciled in Indonesia. Indonesian citizen investors may get more favourable terms and conditions. FOREIGN OWNERSHIP FOR PROPERTY Foreigner having an appropriate stay permit (Resident Foreigner) may own a house or an apartment with Hak Pakai (Right to Use). If the Resident Foreigner is deceased, the house or apartment can be inherited as long as the heir is a Resident Foreigner. For strata title apartments (known as Hak Milik Atas Satuan Rumah Susun or HMSRS), the title of the underlying land will remain as a HGB title. The title can be converted into a Hak Pakai strata title (known as Hak Pakai Atas Satuan Rumah Susun or HPSRS). Resident Foreigners can own an en-bloc apartment once the ownership of all units have been unified and the land can be converted to Hak Pakai title. New conditions imposed for 1st hand residential stratatitle transaction that is a HPSRS which is derived from the conversion of a HMSRS it is valid for 30 years and can be extended for 20 years + 30 years renewal. According to the local regulation, Resident Foreigner can only purchase apartments with minimum unit price of IDR3,000,000,000 or USD205,500.¹ ¹ USD1 = IDR14,600 SECTOR TRENDS TAXES Vacancy Corporate Income Tax 25% Land and Building Tax¹ 0.3% Duty on the acquisition of land and building rights 5% Value Added Tax (VAT) 10% Income Tax (Final) Stock Luxury Tax² 20% Super Luxury Tax³ 5% Supply * Yield means the current average capitalisation rate Note: The above data refer to prime assets in the respective city and sector; Vacancy means the existing average vacancy rate; Stock means the existing completed stock; Supply means the anticipated supply in the next 3 years. 2.5% for property sale for landlord Yield* 18.1% 9,694,699 1,409,662 6 7% 22.3% 16.4% 21.6% 40% 41% 13.3% 18.6% 5.8% 340,789 OFFICE JAKARTA SURABAYA 4,648,998 1,087,303 RETAIL JAKARTA SURABAYA 41,173 rooms 16,346 rooms HOTEL JAKARTA SURABAYA 201,817 units 34,998 units APARTMENT JAKARTA SURABAYA INDUSTRIAL JAKARTA-BEKASI 11,518 ha 240,000 434,760 150,000 4,087 rooms 2,634 rooms 41,677 units 31,417 units 100 ha 6% 7 8% 10% 10% 5 6% 5% 8 10% ¹ The tax due is calculated by applying the tax rate on the sale value of the tax object (Nilai Jual Objek Pajak/NJOP) deducted by non-taxable NJOP. The non-taxable NJOP is set at Rp 10 million at the minimum. ² Transaction Price > IDR 10 billion. ³ Transaction Price > IDR 5 billion. 7% 5

MALAYSIA The Malaysian Government is focusing policies in three areas: to implement institutional reforms, to ensure the socio-economic wellbeing of Malaysians and to foster an entrepreneurial economy. GDP grew by 4.7% in 2018, supported by continued expansion in domestic demand and positive growth in net exports. Tax incentives are proposed to help address these priorities such as digitalising the industrial sector, stabilising the property market, and relieving the cost of doing business in Malaysia via improvements to the Sales and Service Tax (SST) regime. The aim is to improve Malaysia s attractiveness to foreign capital. The situation continues to evolve following the change of Government in late 2018. Property market opportunities are concentrated around Kuala Lumpur. Favourable areas for property investment are in the office and retail sectors. Yields are in the region of 5.5% to 6.5%. We see vacancies reducing with time.

MALAYSIA COUNTRY PROFILE 329,613 sq km Area 32.6 million Population 4.03 people Average Household Size 77.1% Urban Proportion USD10,703 GDP/capita 68.5% Labour Force Participation Rate 4.7% GDP Growth USD347.29 billion Gross Regional Domestic Product (GRDP) 28.1 years Average Age of Population Kuala Lumpur Capital Kuala Lumpur Economic Centre PETALING JAYA (SELANGOR) KUALA LUMPUR Kuala Lumpur International Airport GEORGE TOWN, PENANG Penang International Airport Penang Port Sapangar Bay Port IPOH Kemaman Port KOTA KINABULU (SABAH) Kota Kinabalu International Airport Kota Kinabalu Port Sandakan Port Tawau Port Kuantan Port Bintulu Port Port Klang MALACCA CITY Port of Tanjung Pelepas KUCHING (SARAWAK) Kuching International Airport JOHOR BAHRU Senai International Airport Johor Port Legend Capital Major City Economic Centre Major Airport Major Port 7

MALAYSIA PROPERTY OWNERSHIP Land Titles in Malaysia > > Freehold ownership in perpetuity > > Leasehold For fixed terms (30, 60 or 99 years) and upon expiry of the said fixed term, the land will revert to the State government When a lease expires, an application for a renewal or extension of lease can be made, subject to the payment of premium to the land office PROPERTY INVESTMENT LAWS For foreign acquisition of property, the Economic Planning Unit (EPU) Guidelines apply. Approval is also needed from State Authorities. Investment rules in Malaysia are affected by policies that benefit the Bumiputra i.e. the ethnic Malay and indigenous peoples groups in Malaysia. Under the EPU Guideline, two situations require their approval for the acquisition of property: > > For acquisition of property valued at RM20 million (USD4.96 million) and above that involves the dilution in the ownership of the property held by Bumiputra and/or government interest. > > When there is an indirect acquisition of property by other than Bumiputra interest and/or government agency, having property more than 50% of its total assets, and the said property is valued more than RM20 million (USD4.96 million) In order to acquire a property as mentioned above, a company needs to satisfy the equity and paid-up capital conditions as follows: > > Equity condition companies to have at least 30% Bumiputra interest shareholding > > Paid-up capital conditions local company owned by local interest or foreign interest to have at least RM100,000 or RM250,000 (USD24,805 or USD62,013) paid-up capital respectively For direct acquisition of property, the equity and paid-up capital conditions imposed by the EPU must be complied with before the transfer of the property s ownership and within one year after the issuance of written approval. State authorities can vary the EPU Guidelines on the acquisition of property by a foreign interest based on the location and type of property. FOREIGN OWNERSHIP FOR PROPERTY Foreigners require EPU approval of any property acquisition except in the following circumstances: > > Residential units under the Malaysia My Second Home Programme > > Multimedia Super Corridor (MSC) status companies acquiring property in the MSC for operational needs > > In approved areas in any regional development corridor by companies, subject to status > > Companies with endorsement from the Secretariat of the Malaysian International lslamic Financial Centre (MIFC) > > Residential units valued at RM100,000 (USD24,805) and above to be occupied as a hostels for company s employees, subject to state authority approval > > Acquisition of industrial land by a manufacturing company > > Properties in privatisation projects, whether at the Federal or State level, involving companies that are the original signatories in the contracts for the privatised projects > > Acquisition of properties by companies that have been granted the status of International Procurement Centers, Operational Headquarters, Representative Offices, Regional Offices, Labuan offshore companies and Bio-Nexus or other special status by the Ministry of Finance, Ministry of International Trade and Industry and other ministries, Economic Planning Unit, Prime Minister s Department SECTOR TRENDS TAXES Vacancy Corporate Income Tax 24% Capital Gain Tax 0% Sales and Services Tax (SST) 15% Stamp Duty 4% Transfer Tax 0% Real Property Gains Tax (RPGT) Real Property Tax Stock 3.03 million Supply 14.7% 663,300 RETAIL: KUALA LUMPUR 8.89 million 18.9% 1.44 million PURPOSE BUILT OFFICE: KUALA LUMPUR 13.5% 473,884 143,284 RESIDENTIAL: KUALA LUMPUR units 30% and 10% for disposals within and after 5 years after acquisition, respectively Individual states in Malaysia levy quit rent and assessments at varying rates Yield 5.5 6% 6 6.5% 3 5% Note: The above data refer to prime assets in the respective city and sector; Vacancy means the existing average vacancy rate; Stock means the existing completed stock; Supply means the anticipated supply in the next 3 years; Yield means the current capitalisation rate. units 8

MYANMAR Government continues to enact new laws and regulations to attract foreign investors such as the new retail and wholesale regulations, relaxation of the insurance sector, and further liberalisation of the banking and finance sectors. The number of mid-income families in Myanmar is growing translating into higher consumption and overall spending. Investment opportunities occur mainly around the economic centre Yangon. Colliers see the retail market as providing investment opportunities as lifestyle destination malls with wide offerings of entertainment and leisure activities become increasingly available. Vacancy rates are at 5% and yields around 8%. Investments in offices and serviced apartments also offer high yields of up to 10.5%, though with higher vacancy levels.

MYANMAR COUNTRY PROFILE 676,578 sq km Area 34.7% Urban Proportion USD1,298.9 GDP/capita Nay Pyi Taw Capital Yangon Economic Centre 55.1 million Population 65.1% Labour Force Participation Rate 6.7% GDP Growth 4.3 people Average Household Size USD69.32 billion Gross Regional Domestic Product (GRDP) 27.7 years Average Age of Population NAY PYI TAW Nay Pyi Taw International Airport MANDALAY Mandalay International Airport Sittwe Kyaukpyu YANGON Yangon International Airport Pathein Thilawa Port of Yangon/Rangoon Mawlamyine (Moulmein) Dawei Legend Capital Major City Economic Centre Major Airport Major Port 10

MYANMAR PROPERTY OWNERSHIP Freehold Land > > An outright title with no restriction to lease, transfer or sell interest to a Myanmar citizen > > Owner can only lease to a foreign investor for a maximum of one year. If longer, it will be subject to Myanmar Investment Commiions (MIC) approval Grant Land > > From government and usually for perpetual use. Build-Operate-Transfer (B.O.T.) land, is also leased from the government, for 50 years plus two 10-year extensions and shall be transferred back to the government once the lease expires > > May lease to a foreign investor with approval from MIC if lease is over 1 year (the lease period typically is 60 years and can be renewed perpetually unless required for public use. Government Leased Land > > Government owned land, most common basis of a foreign invested project > > Long term leases of 10/60/90 years > > Lease directly from the Government or sub-lease if government lease allows PROPERTY INVESTMENT LAWS Via the BOT agreement, foreign investors can lease the land for initially 50 years, extendable for two consecutive 10 years, with necessary Government approvals. Lease agreements shall be registered at the register office of Deeds and Assurances. There are three common types of property investment practices: a) incorporated joint venture with a local entity contributing the land for lease, b) unincorporated joint venture with a local landholder, c) locally-owned foreign company or joint venture with BOT (Built-Operate- Transfer) contracts for government-owned land. Investors who invest in the least developed and remote regions will get longer periods for the rights to lease and use land. While local investors have the rights to invest on their owned land or property, Myanmar citizen investors may get more favourable terms and conditions. FOREIGN OWNERSHIP FOR PROPERTY Myanmar does not allow transfer/acquisition of immoveable property to foreigners by sale, purchase, give, away, gift, pawn, exchange or transfer. For inheritance of property, it requires government s approval in accordance with the Inheritance Act in case of death or departures from Myanmar. Joint ventures are permitted and commonly found in residential (apartment and condominiums), housing near industrial areas, commercial, low- cost housing, and new townships developments. 100% of foreign investment is allowed only under a BOT contract for infrastructure, hotels (four and five-star), commercial, townships and office developments. Approval is required from MIC for lease terms over one year for a foreign company. SECTOR TRENDS TAXES Corporate Income Tax 25% Withholding Tax > > 15% on all interest payments made to a non-resident > > 0% resident national Withholding Tax on Goods and Services > > 2% on goods and services from local providers > > 3.5% on services from foreign providers > > 0% on goods from foreign providers Income Tax > > 35% for non-residents deriving salary in Myanmar > > 25% for foreigners working in Myanmar as residents Capital Gains Tax > > 10% Resident companies and individuals Property Taxes Undisclosed Income Tax Stamp Duty Vacancy 28% OFFICE: YANGON 5% RETAIL: YANGON 57% UPPER-SCALE HOTEL: YANGON 387,903 403,747 5,334 keys > > 40% for non-resident companies and individuals Not to exceed 20%, 12%, 15% (including general tax, lighting, water, conservancy tax respectively) 30% for buyers of immovable property who are unable to demonstrate the tax of the funds used 1.5% for 1 3 years lease 225,748 180,816 1,693 keys 21% 2,242 2,413 SERVICED APARTMENT: YANGON Stock units Supply units Yield* 10.5% 8.4% 8.7% 9.7% * All yields are indicative due to limited information Note: The above data refer to prime assets in the respective city and sector; Vacancy means the existing average vacancy rate; Stock means the existing completed stock; Supply means the anticipated supply in the next 3 years; Yield means the current average capitalisation rate office refers to Grade A developments and serviced apartment refers to Grade A developments 11

PHILIPPINES Economic activity in the Philippines is concentrated in and around Manila. Government is investing in large scale infrastructure improvements including new roads, railways, and a new airport to the north of Manila. Metro Manila s office sector remains robust, maintaining a 5% vacancy level in spite of the substantial 36% YoY growth in supply. Outsourcing companies continue to fuel demand. Philippines Economic Zone Authority (PEZA)-accredited buildings attract most tenants. Yields for prime office assets are in the region of 5.6%. Residential take-up for 2018 resulted in a new record high of 54,000 units. Colliers believes that future take-up will be slowly affected by the lack of developable land and land price increases. Yields are about 4.5%. Government policies are friendly to foreign capital. Opportunities are in the fringe areas of major CBDs and areas beside upcoming major infrastructure projects.

PHILIPPINES COUNTRY PROFILE 300,000 sq km Area 60.2% Labour Force Participation Rate 6.2% GDP Growth 105 million Population USD313 billion Gross Regional Domestic Product (GRDP) 23.4 years Average Age of Population 4.38 people Average Household Size USD2,987 GDP/capita Manila Capital Makati Economic Centre Clark International Airport MANILA Ninoy Aquino International Airport Sunic Port Port of Capinpin (Bataan) North Harbour Batangas Port MAKATI Mindoro Kalibo International Airport Iloilo International Airport Puerto Princesa International Airports Iloilo Port CEBU Dumaguete Port Port of Ozamiz Mactan-Cebu International Airport New Bohol-Panglao International Airport Port of Tagbilaran Port of Zamboanga Davao International Airport DAVAO Port of Talicud Legend Capital Major City Economic Centre Major Airport Major Port 13

PHILIPPINES PROPERTY OWNERSHIP Freehold > > Private freehold land is only available for Philippine nationals or corporations of which 60% of the equity is Filipino-owned > > Foreign nationals and corporations may own condominium units, subject to the provisions of the Condominium Act Leasehold > > Foreign investors may lease private land for a maximum period of 50 years and may be renewed once for another 25 years at the option of the landowner PROPERTY INVESTMENT LAWS In case of a Filipino-owned Condominium Corporation, no interest may be transferred to a foreign individual or corporation that will exceed 40% of capital stock which is owned by foreign nationals. There is a REIT Law passed in 2009, which did not take-off due to ownership structure and taxation issues. However, government agencies have announced that a new Implementing Rules and Regulation for REIT will be released which will relax ownership requirements and allow tax exemptions for initial transfers of properties. FOREIGN OWNERSHIP FOR PROPERTY It is required that at least 60% of the capital of a real estate property must be owned by Filipino citizens and corporations or partnerships. Foreign acquisition of real estate in the Philippines is only allowed in the following cases: > > Acquisition before the 1935 Constitution > > Acquisition by hereditary succession > > Purchase of not more than 40% of the units in a condominium project > > Purchase by former natural born Filipino citizens, subject to the requirements or limitations prescribed by law under BP 185 SECTOR TRENDS TAXES Vacancy OFFICE: MAKATI CBD HOTEL: MAKATI CBD Note: The above data refer to prime assets in the respective city and sector Vacancy means the existing average vacancy rate; Stock means the existing completed stock; Supply means the anticipated supply in the next 3 years Yield means the current average capitalisation rate. Income Tax 30% Value Added Tax 12% Capital Gains Tax 6% Document Stamp Tax 1.5% Transfer Tax (depends on the location of the real property) Stock 3.3 million Supply 1% 286,000 2% 470,300 73,000 RETAIL: MAKATI CBD (AS OF 3Q 2018) 79% 3,000 1,200 rooms units 10.8% 27,000 1,700 RESIDENTIAL: MAKATI CBD units units Yield 5.6% USD30.7 Ayala Center Rental Rates USD120 Room Rate 4.5% Prime 3BRs > > Provincial tax must not exceed 50% of the 1% tax base > > Metro Manila and any city in the Philippines tax must not exceed 75% of the 1% tax base 14

THAILAND Bangkok drives the Thai economy, particularly in the hospitality and office sectors. Tourist arrivals have continued to increase, and hotel investors can capitalise on this, as well as the Bangkok luxury sector with an extensive demand for food and beverage (F&B) facilities. Yields are in the region of 6%. Opportunities are available for office renovation projects in the Bangkok central business district (CBD), where the market is currently experiencing stock shortage. Despite the expectation for many new grade A stock to reach the market in approximately 2 years, refurbishment of existing stock can still lead to a higher rate of return. Office yields are around 5.5% at this time. The export-oriented Eastern Economic Corridor in the eastern seaboard area, targeted for high-value investment, can also be considered for property investment.

THAILAND COUNTRY PROFILE 513,115 sq km Area 52.7% Urban Proportion USD6,883.3 GDP/capita 66.32 million Population 68.1% Labour Force Participation Rate 4.1% GDP Growth 3.2 people Average Household Size USD455.4 billion Gross Domestic Product (GDP) 37.3 years Average Age of Population Bangkok Capital Bangkok Economic Centre Chiang Saen Port Chiang Khong Port Mae Fah Luang Chiang Rai International Airport CHIANG MAI Chiang Mai International Airport Udon Thani International Airport BANGKOK Don Mueang International Airport Suvarnabhumi International Airport Bangkok Port BANGKOK Laem Chabang Port PATTAYA U-Tapao International Airport PATTAYA Ranong Port Phuket International Airport PHUKET Krabi International Airport Samui International Airport Surat Thani International Airport Hat Yai International Airport Legend Capital Major City Economic Centre Major Airport Major Port Eastern Economic Corridor (EEC) 16

THAILAND PROPERTY OWNERSHIP Freehold > > Available on land and properties registered under full title deeds > > Condominium law allows the purchase of individual strata titles within a building registered under freehold ownership Leasehold > > Foreign investors are able to lease land and properties for a period of up to either 30 or 50 years, depending on the intended utilisation PROPERTY INVESTMENT LAWS Foreign investors can lease land from a freeholder for a period of either 30 or 50 years, depending on the property use. The condominium law allows foreigners to purchase up to 49% of individual strata titles within a building registered under freehold ownership. While local investors have the right to purchase freehold property. All land plots and property ownership are recorded at the local provincial land offices. And in order to register a sale and/or disposal of a property, it must be recorded in person at the land office i.e. cannot be done electronically or by post. FOREIGN OWNERSHIP FOR PROPERTY Foreigners are generally not allowed to own freehold property, according to Thai law. However, leaseholds can be purchased for a period of either 30 or 50 years in total length. The Thailand Board of Investment (BOI) can provide a permit for 100% foreign ownership for certain business purposes, upon application. Condominium law allows up to 49% of the strata titles to be purchased by foreigners. EASTERN ECONOMIC CORRIDOR (EEC) Thailand is targeting high-value investment in the eastern seaboard area by offering incentives to both foreign and local investors. The Eastern Economic Corridor, as the area is known, is a developing economic zone that Thailand wants to build export-oriented companies. The government is also keen to promote new industries, including healthcare and aircraft maintenance, in addition to the successful auto, petrochemical and logistics sectors. Logistics infrastructure, and an ease of doing business, will provide opportunity for investors of industrial and supporting industries, such as in hospitality and serviced apartments. SECTOR TRENDS TAXES Vacancy HOTEL: BANGKOK CBD Stock 3.43 million Note: The above data refer to prime assets in the respective city and sector Vacancy means the existing average vacancy rate; Stock means the existing completed stock; Supply means the anticipated supply in the next 3 years Yield means the current average capitalisation rate. Corporate Income Tax 20% Capital Gain Tax 0% Property Tax 12.5% Stamp Duty 0.5% Property Transfer Tax 2% Supply 7.3% 467,000 OFFICE: BANGKOK CBD 19% 11,436 3,051 keys keys 27% 590,000 20,000 CONDOMINIUM: BANGKOK CBD units units 27% 22,000 3,200 INDUSTRIAL: EASTERN ECONOMIC CORRIDOR ha ha Yield 5.5% 6% 5% 5.5% 17

VIETNAM The country attracted total registered foreign direct investment of approximately USD300 billion in 2018. It is a popular destination for Japanese, Singaporean, and other property investors. The country has become a key manufacturing hub for electronics, clothing, footwear and furniture products. The industrial sector is poised for strong growth in the next couple of years, as Vietnam is increasingly seen by global businesses as an attractive destination for their industrial operations. Colliers expect to see more merger and acquisition deals in industrial parks across Vietnam, by foreign investors, and more foreign businesses taking advantage of sale and leaseback structuring. Thus, it is an asset class to look out for. In the major cities, the office and retail sectors enjoy low vacancy levels, and with yields in the order of 5.5 to 8.5%, also attractive.

VIETNAM COUNTRY PROFILE 331,210 sq km Area 97.13 million Population 2.58 people Average Household Size 34.24% Urban Proportion USD2,343.12 GDP/capita 76.81% Labour Force Participation Rate 7.1% GDP Growth USD223.9 billion Gross Domestic Product (GDP) 30.5 years Average Age of Population Ha Noi Capital Ho Chi Minh City Economic Centre HAI PHONG HA NOI Noi Bai International Airport Lach Huyen Port Hai Phong Port Cat Bi International Airport Vung Ang Port DA NANG Da Nang International Airport Da Nang Port Quy Nhon Port HO CHI MINH CITY Tan Son International Airport Cam Ranh International Airport Phu Quoc International Airport CAN THO Cai Mep Port Cat Lai Port Vung Tau Port Legend Capital Major City Economic Centre Major Airport Major Port 19

VIETNAM PROPERTY OWNERSHIP In accordance with the Land Law (2013), all land used by households and individuals for residential purpose are regarded as land for stable and long-term use. Organisations and individuals can acquire land-use rights (LUR) via a land lease or land allocation, which may require a land-use fee (LUF). The term of a land lease or land allocation cannot exceed 50 years (or 70 years in special circumstances). PROPERTY INVESTMENT LAWS According to the Law on Foreign Investment in Vietnam (2014), investment in real estate shall be made through (a) business cooperation through a business cooperation contract, (b) setting up a joint venture, (c) constitution of a 100% foreign capital company, (d) Opening a subsidiary or a representative office but such entity will not have a legal status. The purpose is to allow investors to integrate and understand the market before making substantial foreign investment in Vietnam. In order for foreigner to invest in Vietnam including real estate, and the following documentations will need to be submitted to the government for approval investment certificate; permission from the Vietnamese Government; valid visa; residency permit and working permit. FOREIGN OWNERSHIP FOR PROPERTY SECTOR TRENDS Vacancy Stock Supply 5.3% 311,000 129,000 OFFICE: HO CHI MINH CITY 24.7% 15,000 1,600 HOTEL: HO CHI MINH CITY rooms 7.5% 1,000,000 202,000 RETAIL: HO CHI MINH CITY 27 million rooms 17.4% 61 million * Yield 8.5% 5.5% 6.0% 10% There are two most common regulations that related to real estate for foreign owners: Housing Law and Law on Real Estate Business (2015) and the Law on Sale and Transfer of Real Properties (2015). Foreigners can buy property by simply having a tourist visa and there is no limit to the amount of properties one can buy (previously only one property). However, foreigners are restricted to acquire a maximum of 30% of the units in a condominium development and cannot own more than 10% of the properties in a landed development. For houses, foreigners cannot own more than 250 of the houses in a given ward. For leasehold assets, the lease term is 50 years with right of renewal. INDUSTRIAL: HA NOI * Expecting 14 additional industrial parks/zones will come in operation. Note: The above data refer to prime assets in in the respective cities and sector; Vacancy means the existing average vacancy rate; Stock means the existing completed stock; Supply means the anticipated supply in the next 3 years. TAXES Corporate Income Tax > > Standard: 20% Value Added Tax (VAT) Land Tax > > Oil and gas industries: 32% to 50% > > Prospecting, exploration, exploitation of mineral resources: 40% to 50% Standard 10%; 0% and 5% rates applicable for certain areas of the economy Progressive tax rates from 0.03% to 0.15% for non-residential property Please note that there is no clear guideline by the government regarding the issuance of property titles to foreigners. 20

Our Specialists in the Region DAVID FAULKNER Managing Director Valuation & Advisory Services Asia +852 2822 0525 David.Faulkner@colliers.com VIETNAM DAVID JACKSON +84 28 3827 5665 David.Jackson@colliers.com PHILIPPINES THERESA TEODORO +63 2 858 9051 Theresa.Teodoro@colliers.com MYANMAR KARLO POBRE +95 (0) 931 491 678 Karlo.Pobre@colliers.com MALAYSIA MELISSA LEE +65 6531 8530 Melissa.Lee@colliers.com THAILAND RATCHAPHUM JONGAKDEE +66 2 656 7000 Ratchaphum.Jongakdee@colliers.com INDONESIA MONICA KOESNOVAGRIL +62 21 3043 6740 Monica.Koesnovagril@colliers.com This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). 2019. All rights reserved.