Vietnam Prperty Market Brief JLL Research 2Q16
Vietnam Prperty Market Brief 2Q16 Market Highlights Page Ecnmy f Vietnam 3 H Chi Minh City (HCMC) Office 5 Stable supply 5 Demand maintains well 5 Rents keep n uptrend 5 Residential 6 Supply abundant 6 Demand strng 6 Prices upward cntinues at a faster pace q--q 6 Retail 7 Supply slightly increases 7 Demand gets a minr bst 7 Rents marginally fall 7 Serviced Apartment 8 Unchanging supply 8 Mderate demand 8 Rents t be imprved 8 Suthern Regin Industrial 9 Supply distributed unevenly 9 Demand remains psitive 9 Rents vary acrss different submarkets 9 Hani Office 1 Supply higher 1 Demand remains stable 1 Rents cntinues upward trend 1 Residential 11 High-level supply 11 Cnsiderable demand 11 Price grwth mre cnsiderable q--q 11 Retail 12 Supply f Shpping Centre is unchanged 12 Demand cntinues t fall 12 Dwntrend in rent cntinues 12 Glssary 13 Cver Picture: A part f Hani City. P a g e 2
Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nv-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Vietnam Prperty Market Brief 2Q16 ECONOMIC HIGHLIGHTS Vietnam s ecnmy grws 5.6% in 2Q16: Vietnam s GDP grwth was 5.6% in 2Q16, resulting a rate f 5.5% in the first half f 216, dwn frm 6.3% in the same perid last year. The cntractin was led by the reductin in the agriculture utput during the perid and the falling glbal il prices. The agr-frestry-fishery sectr slipped.2%, the first time ever the sectr witnessed a dwnturn due t the impacts f the cld spell in the nrth, the prlnged drught and saltwater intrusin in the suth and the mass fish death in the central regin. Relative authrities have been tasked with achieving the target f 6.7% GDP grwth fr this year. Retail sales and internatinal arrivals increase: Vietnam s retail sales and service turnver increased 9.5% y--y in 1H16. Freign arrivals t Vietnam recvered strngly after a year f lukewarm perfrmance, reaching a recrd high number in 2Q16. Vietnam received mre than 4.7 millin freign visitrs in 1H16, an increase f 21.3% cmpared with 1H15. Accrding t the General Statistics Office, the number f Chinese visitrs t Vietnam sared by 47.9% y--y in 1H16. The number f Suth Krean visitrs, the secnd biggest market in 1H16, was up 34% frm 1H15. Other markets that benefit frm a similar visa plicy saw increases f between 6% and 35% in 1H16. Hwever, starting frm 3Q16, the visa-exempt plicy applied fr 5 current Eurpean cuntries will expire, which may result in a lwer number f arrivals frm these cuntries. % Real GDP Grwth (y--y) 1. 8. 6. 4. 2.. 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 1 11 12 13 14 15 16 Quarterly GDP GDP ytd Surce: General Statistics Office, JLL Research Retail Sales vs. Internatinal Arrivals (ytd, y--y) % % 12. 25. 1. 15. 8. 6. 5. 4. -5. 2.. -15. Real Retail Sales Internatinal Arrivals Surce: General Statistics Office, JLL Research FDI flw up significantly: The disbursement f FDI reached USD 7.3 billin in the first six mnths, up 15.1% y--y. The cuntry attracted USD 11.3 billin in FDI during 1H16, a rbust y--y grwth f 15.4%, including USD 7.5 billin frm 1,145 newly registered prjects and USD 3.8 billin frm 535 added FDI prjects. Suth Krea retained its ranking as the biggest freign investr in Vietnam, with USD 3,132 millin in newly registered capital, accunting fr 41.8% f ttal FDI, fllwed by Singapre (USD 1,17 millin), Taiwan (USD 531 millin), Japan (USD 496 millin) and Hng Kng (USD 455 millin). Majr prjects include an investment f USD 1.5 billin frm LG Display (Suth Krea) and the USD 226 millin real estate prject named Midtwn by Cayman Islands. Freign Direct Investment FDI (ytd) USD mil 24, 21, 18, 15, 12, 9, 6, 3, FDI Registered FDI Disbursement Surce: General Statistics Office, JLL Research P a g e 3
Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Vietnam Prperty Market Brief 2Q16 CPI rises in June: Vietnam s CPI in June 216 increased by 2.4% y--y and.5% m--m, which was the third highest m-m grwth since early 215. Amng the 11 grups f prducts and services, the highest increases were seen in transprtatin services and husing & cnstructin materials with grwth rates f 3% and.6% respectively. In additin, increases were als recrded in mst f the ther nine categries, with the exceptin f telecmmunicatin services in which prices drpped by.1%. The CPI f 1H16 saw a slight increase f 1.7% y--y, remaining at a lw level. Vietnam trade surplus USD 1.5 billin: Accrding t the General Statistics Office, the cuntry recrded a trade surplus f USD 1.5 billin in 1H16, accunting fr 1.8% f exprt revenues. In 1H16, Vietnam achieved USD 82.2 billin in exprt revenue and USD 8.7 billin in imprt value, up 5.9% and dwn.5% y--y, respectively. The United States remained Vietnam s largest imprter in 1H16 with USD 17.7 billin, up 12.8% y--y, fllwed by the EU with USD 16.3 billin (up 9.8%) and China with USD 9.2 billin (up 14.3%). Vietnam s imprts frm majr markets saw y--y declines, including frm China (USD 23.3 billin, dwn 2.9%), ASEAN (USD 11.5 billin, dwn 3.4%), Japan (USD 6.8 billin, dwn 6.3%) and the EU (USD 4.6 billin, dwn 6.5%). Number f newly registered enterprises increases: The number f newly registered enterprises reached 54,51 in 1H16 with ttal registered capital f VND 427.8 trillin, an increase f 2.% in the number f enterprises and 51.5% in the registered capital cmpared with 1H15. The average registered capital per newly established enterprise std at VND 7.8 billin, up 26.2% y--y. The number f enterprises that finished the prcedure fr disslving and terminating business activity in 1H16 increased by 17.% t 5,57 enterprises. % 6. 3.. % CPI - Husing & Cnstructin Materials 1. 5.. -5. USD bil 1.5.5 -.5-1.5 Merchandise Trade Balance Actual Levels CPI - Overall y--y Surce: General Statistics Office, JLL Research y--y m--m Surce: General Statistics Office, JLL Research Surce: General Statistics Office, JLL Research m--m % f Merchandise Exprts %.8.6.4.2. -.2 -.4 % 1.5 1..5. -.5-1. -1.5 % 1.. -1. -2. -3. P a g e 4
Expected cmpletin year 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Vietnam Prperty Market Brief 2Q16 HCMC OFFICE Supply and Demand Supply / Demand Indicatr Grade A Grade B Grade C Suburban Ttal Ttal Stck (sqm) 192, 487, 45, 585, 1,714, Occupancy Rate (%) 92.9 97.1 94.7 93.7 94.6 Q--Q Change (bps) 194 153-35 84 55 Stable supply There were n new cmpletins in 2Q16, s ttal stck remained unchanged at 1.7 millin sqm ffice space frm 248 prperties. HCMC ffice supply will witness minr changes in the next quarters f 216. Demand maintains well The vacancy rate f the market was 5.4%, a figure last seen in the peak times in 27-28. Relcatin and new start-up businesses are the main driver f ffice demand during the quarter. Ttal Stck ' sqm 2, 1,5 1, 5 211 212 213 214 215 2Q16 Grade A Grade B Grade C Suburban Asset Perfrmance Key Perfrmance Indicatr Grade A Grade B Grade C Suburban Ttal Average Grss Rent (USD/sqm/mnth) 45.8 31.4 19.2 17. 25.3 Average Net Rent (USD/sqm/mnth) 38. 25.4 16.5 13.3 2.8 Q--Q Change (%).6 1.1.6.4.7 Nte: Q--Q and Y--Y changes are adjusted t remve the effects f supply additins / remvals (i.e. changes are n a like-fr-like basis). Rents keep n uptrend The average net rent cntinued its upward trend frm the previus quarter, with an increase f.7% q--q in 2Q16. Mre landlrds increased asking rents, with 24% f ttal ffice buildings ffering higher quting rentals in 2Q16 versus nly 6% in 1Q16. USD/sqm/mnth 6 4 2 Average Net Rents by Grade Outlk Supply imprves The market will welcme cnsiderable new supply in 217, Saign Centre phase II and Deutsches Haus are expected t attract strng interest frm ptential tenants due t their CBD lcatin. Mapletree Business Centre, a decentralised Grade A building, will be launched in 4Q16 with ttal f arund 28, sqm. Demand imprves Demand frm relcatin and expansin frm the financial and banking sectrs will cntinue in the cming quarters. Gd quality grade ffice buildings have the ability t cmmand higher asking rents. Grade A Grade B Grade C Suburban Supply - Under Cnstructin 216 217 218 5 1 15 ' sqm P a g e 5
218 217 216 Apartments Vietnam Prperty Market Brief 2Q16 HCMC RESIDENTIAL Supply and Demand Supply / Demand Indicatr Apartments Villas / Twnhuses [1] Cmpleted Supply (units) 8, 4,6 Uncmpleted Supply (units) [2] 59, 2, Unsld Inventry (%) [3] 14.1 26.6 [1] Excludes land plt prjects. [2] Excludes planned prjects nt launched fr sale yet. Includes fully sld prjects. [3] The percentage f [2] that remains unsld at quarter-end. Supply abundant Ttal Stck (Cmpleted Supply) - Apartments Apartments: New supply ttalled 8,896 units, dwn 8.5% q--q. Of the ttal, units units priced at mre than USD 2,5 per sqm accunted fr arund 23%. 8, Affrdable Villas /Twnhuses: New supply reached 984 units, with many sub-markets 6, Mid-end 4, seeing new launches f many prduct types with a wide range f prices. Premium 2, Demand strng Luxury Apartments: Sales were 13.1% lwer q--q, at 7,798 units, the high-end 211 212 213 214 215 216 segment cntributed 44.4%, nearly duble in the past year. Villas / Twnhuses: Sales ttalled 721 units, led by District 2 and District 9. Asset Perfrmance Market Segment Nte: Q--Q and Y--Y changes are adjusted t remve effects frm supply additins / remvals (i.e. changes are n a like-fr-like basis). Price uptrend cntinues at a faster pace q--q Average Asking Price by Segment Primary market: Outlk Supply t remain at high levels until year-end Asking Price Primary Market Luxury accunts fr less than 1% f ttal stck Asking Price Secndary Market Q--Q Y--Y Q--Q Y--Y Apartments 2.9% 6.4% 2.% 8.1% Villas / Twnhuses 2.8% 3.7% 4.1% 6.9% Apartments: Prices increased, due t gd sales and cnstructin prgress f many develpments and the entry f upper high-end prjects. Villas / Twnhuses: Prices were higher, with District 2 and District 9 benefiting the mst frm infrastructure imprvements in the areas. Secndary market: Apartments: Overall, prices were higher, with price grwth in sme rural areas imprving. Villas / Twnhuses: Price rises were faster q--q, at 3.8% and 4.7%, respectively, amng cmpleted and under-cnstructin prjects. New supply f Apartments is expected t be 15,-18, units by end- 216, with the Luxury and Premium segments accunting fr 3-4%. The Villa / Twnhuse segment may welcme arund 9-1, new units per quarter in 2H16 cncentrated in the city s eastern areas. Demand t cntinue recent grwth mmentum Sales f Apartments are expected t remain at levels as high as recently, whereas sales f Villas / Twnhuses are likely t mark new recrds. Prices are expected t remain n the uptrend in the cming quarters. All Apartments Affrdable Villas / Twnhuses Mid-end Premium Luxury Average Primary Price Apartments Villas / Twnhuses Apartments Villas / Twnhuses Apartments Villas / Twnhuses 1, 2, 3, 4, Upcming Cmpletins USD/sqm Average Secndary Price 2, 4, units P a g e 6
Expected cmpletin year 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Vietnam Prperty Market Brief 2Q16 HCMC RETAIL Supply and Demand Supply/Demand Shpping Centre Bazaar Supermarket/Hypermarket Cnvenience Stre Ttal Stck (sqm) 77,45 38,85 283, 154,95 Occupancy Rate (%) 91.2 95. N.A N.A Q--Q Change (bps) 36 N.A N.A N.A Supply slightly increases Asset Perfrmance Key Perfrmance Indicatrs Shpping Centre Bazaar CBD Nn-CBD Average Grss Rent (USD/sqm/mnth) 7.4 39.3 145 Q--Q Change (%).. N.A Nte: Q--Q and Y--Y changes are adjusted t remve the effects f supply additins / remvals (i.e. changes are n a like-fr-like basis). Rents marginally fall Average Grss Rents Shpping Centre USD/sqm/mnth An average grss rent f USD 46.2 per sqm per mnth was achieved fr 8 the shpping centre segment, a slight decrease f 23 bps q--q. 6 Despite n mvement in average rent in the CBD sub-market, the Nn- 4 2 CBD sub-market was marginally up q--q, due t higher asking rents at Outlk The launch f Ltte Mart G Vap added 26,651 sqm t the ttal supply, which was ffset by 15, sqm as Parksn Paragn clsed its drs. Cnvenience stres remained an attractive channel fr bth dmestic and freign retailers, as supply reached 154,95 sqm in ttal. Demand gets a minr bst In 2Q16, take-up rate increased by 36 bps t 91.2%. While CBD prjects suffered frm lwer ccupancy q--q (86%), nn-cbd recrded better perfrmance with 92.7% retail space ccupied. Ttal net absrptin std at 26,641 sqm, mstly fueled by new tenants at Ltte Mart G Vap. newer Vincm prperties. Supply t be n the fast track Upcming prjects frm majr retailers (Vingrup, AEON) are expected t add significant amunts f retail space t HCMC market. Saign Centre Phase II is t pen in 3Q16, with apprximately 15, sqm ver 5 flrs ccupied by Japanese retailer Takashimaya. Challenges await in the next quarters Fierce cmpetitin between lcal and freign retailers is t be expected, as large dmestic players (Saign C.p, Vingrup) rapidly expand their distributin chains t cunter freign penetratin. Slightly better perfrmance is expected fr prjects in nn-cbd areas due t lwer rents and decent ftfall. ' sqm 8 6 4 2 Ttal Stck Shpping Centre 211 212 213 214 215 2Q16 Supply Under Cnstructin Shpping Centre 216 217 218 CBD CBD Nn-CBD Nn-CBD 2 4 6 8 1 12 ' sqm P a g e 7
Vietnam Prperty Market Brief 2Q16 HCMC SERVICED APARTMENT Supply and Demand Supply / Demand Indicatr Grade A Grade B Grade C Current Supply (units) 647 2,269 1,374 Occupancy rate (%) 87.5 88.6 83.3 Q--Q change (bps) 18-9 51 Ttal current supply Serviced Apartments Unchanging supply units Limited number f new cmpletins in serviced apartment fr lease in 4, HCMC recently. 3, Grade B supply has been stable at 2,269 units since 1Q14 while Grade A segment remains firm since 3Q15 with 647 units. 2, Mderate demand 1, The verall ccupancy rate in 2Q16 std at 86.9%, up.3% q--q. 21 211 212 213 214 215 2Q16 Other than cmpetitin frm ther serviced apartment prjects, the sectr Grade A Grade B Grade C Asset Perfrmance Nte: Q--Q and Y--Y changes are adjusted t remve effects frm supply additins / remvals. Outlk Perfrmance Indicatr Grade A Grade B Grade C Average rent (USD/sqm/mnth) 3.2 22.6 14.8 Q--Q change (%) 1.1.8 Y--Y change (%) -5.1-3.1 3.2 als face pressure frm the buy-t-let apartment develpments and private huses in recent quarters. Rents t be imprved In 2Q16, verall average rent imprved slightly, increasing t USD 21.9 per sqm per mnth, up.7% q--q. Grade A prperties recrded their first quarter increase in asking rents, up 1.1% q--q. This fllws the fur cnsecutive quarters f declining rents. Abundant supply in 216-18 Apprximately 98 new serviced apartment units frm six develpment prjects are expected by end-218. Amng the future develpments, the Asctt Waterfrnt Saign is expected t launch in 3Q16. Increasingly intense cmpetitin in the cming years Vacancy rates are expected t increase when new cmpletins enter the market. The cmpetitin frm the buy-t-let apartment sectr is likely t reinfrce this frecast. Rents may imprve in shrt term befre leveling ff, mstly due t the large pipeline supply. USD/sqm/mnth 35 3 25 2 15 1 119 Saign Plaza Average Rent by Grade 21 211 212 213 214 215 2Q16 Grade A Grade B Grade C Upcming Cmpletins (units) 161 222 New Pearl Asctt Residence Waterfrnt Saign 195 Saign Centre Phase II 85 2 Berkley Citadines Residences Regency Saign P a g e 8
Vietnam Prperty Market Brief 2Q16 Suthern Regin INDUSTRIAL Supply and Demand Supply/Demand HCMC Dng Nai Binh Dung BR-VT Tay Ninh Binh Phuc Ttal Area (ha) 3,839 9,882 9,885 6,732 4,629 1,177 Ttal Leasable Land Area (ha) 2,542 6,676 6,771 4,241 3,257 768 Occupancy Rate (%) 71% 74% 76% 74% 74% 83% Supply distributed unevenly The number f industrial prjects in the Suthern regin cmprises apprximately 1 industrial parks and prcessing znes, mst f which are lcated in Dng Nai and Binh Dung. Ttal industrial area amunts t 36,144 ha, ut f which 24,255 ha is prepared land fr lease. Demand remains psitive Overall ccupancy rate f the market was recrded at 74%, equivalent t arund 18, ha f prepared land area being ccupied. A majrity f demand (5-6%) came frm manufacturing and prcessing industries, ntably textile, package and steel prducts. Asset Perfrmance Key perfrmance indicatr HCMC Dng Nai Binh Dung BR-VT Tay Ninh Binh Phuc Average Land Rental Fee (USD/sqm/lease term) 115.2 7.8 58.8 52. 42.8 25.8 Average Factry Rental Fee (USD/sqm/mnth) 3.8 3.3 3.5 2.8 2.5 2 8 6 4 2 ' ha Ttal Leasable Area and Occupancy Rate HCMC Dng Nai Binh Dung Ttal leasable area BR-VT Tay Ninh Binh Phuc Occupancy Rate % 85% 8% 75% 7% 65% Rents vary acrss different submarkets Industrial areas in the Suthern regin achieved an average f USD 63.3 per sqm fr a whle lease term (up t 5 years). HCMC tps the market in terms f average net rent at USD 115.2, due t higher land cst and better infrastructure, while industrial parks in surrunding prvinces achieve arund USD 4 7 n average. Factry rental fees average arund USD 3 per sqm per mnth fr the Suthern market, and may reach as high as USD 5 at sme established industrial parks in HCMC, Dng Nai and Binh Dung. Outlk Supply t increase significantly The industrial space market in Suthern regin is expected t welcme mre than 1, ha f land area by the end f 22. Demand t surge in the future Rental fees are expected t be n a slight uptrend in the near future, since demand fr industrial prperties imprves as Vietnam receives mre FDI capital fllwing the annuncement f a number f FTAs. Investments in ec-friendly industries with advanced technlgies are expected t be further incentivized in the Suthern industrial market. 4, 3, 2, 1, Average Land and Factry Rental Fees USD/sqm/lease term 15 1 5 HCMC Future Supply Reginal Master Plan (until 22) ha Dng Nai HCMC Dng Nai Binh Dung Average Land Rental Fee BR-VT Binh Dung Tay Ninh USD/sqm/mnth 4. Binh Phuc Average Factry Rental Fee BR-VT Tay Ninh 3. 2. 1. Binh Phuc P a g e 9
Expected cmpletin year 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Vietnam Prperty Market Brief 2Q16 HANOI OFFICE Supply and Demand Supply / Demand Indicatr Grade A Grade B Grade C Ttal Ttal Stck (sqm) 529, 942, 253, 1,724, Occupancy Rate (%) 82.8 86.1 92.2 86. Q--Q Change (bps) 153-159 55-31 Supply higher Ttal Stck One new Grade B building cmpleted in 2Q16, adding apprximately ' sqm 44,5 sqm f ffice space t the Hani market. 2, Tw Grade C buildings were cnverted int serviced-apartment 1,5 1, prperties. 5 Demand remains stable 21 211 212 213 214 215 216ytd Net absrptin ttaled mre than 33, sqm in 2Q16, mainly driven by Grade A Grade B Grade C the Grade B segment. Relcatin t newer ffice buildings cntributed the largest prprtin in the ttal number f leasing transactins in the Hani market. Asset Perfrmance Key Perfrmance Indicatr Grade A Grade B Grade C Ttal Average Grss Rent (USD/sqm/mnth) 28.6 18.4 13.6 2.8 Average Net Rent (USD/sqm/mnth) 22.8 13.6 9.9 15.9 Q--Q Change (%) 1.7 -.6 1..4 Nte: Q--Q and Y--Y changes are adjusted t remve the effects f supply additins / remvals (i.e. changes are n a like-fr-like basis). Rents cntinue upward trend The average rent imprved slightly up.4% q--q while the market witnessed a duble-digit fall in rent at several Grade B buildings. Apprximately 88% f ttal stck kept rates unchanged q--q althugh a significant increase was recrded in sme buildings. USD/sqm/mnth 3 25 2 15 1 5 Average Net Rents by Grade Outlk Supply increases gradually Mre than 8, sqm f new ffice space is expected t enter the market ver the remaining mnths f 216. Mst f the upcming supply is psitined utside the CBD sub-market. Demand t be psitive Demand fr ffice space frm banking, financing and IT industries are likely t be the main driver in the market. Rents are estimated t increase slightly in the cming quarters in line with the expected psitive demand. Grade A Grade B Grade C Supply - Under Cnstructin 216 217 218 219 5 1 15 2 ' sqm P a g e 1
Vietnam Prperty Market Brief 2Q16 HANOI RESIDENTIAL Supply and Demand Supply / Demand Indicatr Apartments Cmpleted Supply (units) 94, Uncmpleted Supply (units) [1] 56, Unsld Inventry (%) [2] 16.1 [1] Excludes planned prjects nt launched fr sale yet. Includes fully sld prjects. [2] The percentage f [1] that remains unsld at quarter-end. High-level supply New supply in 2Q16 was dwn 16.% q--q but up 29.% y--y t 8,323 largest surces f launches accunting fr mre than 6% f ttal sales. Asset Perfrmance Market Segment Nte: Q--Q and Y--Y changes are adjusted t remve effects frm supply additins / remvals (i.e. changes are n a like-fr-like basis). Outlk units, 85.% f which came frm the Affrdable and Mid-end segments. District-wide, Nam Tu Liem and Hang Mai tpped ther sub-markets, with their cmbined launches respnsible fr nearly 65% f the city s ttal. Cnsiderable demand Take-up ttalled 7,925 units, fairly stable q--q and driven by the lw-end sub-markets with a market share f mre than 9%. Demand remained largely dependent n supply, with the quarter s tw Primary Market units 1, Ttal Stck (Cmpleted Supply) - Apartments Luxury accunts fr less than 3% f ttal stck Secndary Market Q--Q Y--Y Q--Q Y--Y Apartments 2.2% 7.9% 1.3% 5.7% Price grwth mre cnsiderable q--q Primary market Prices grew at a faster pace q--q, with prperties seeing increases f mre than 1% q--q which accunted fr 85.% f ttal primary supply. Fllwing the psitive market sentiment, asking prices at sme cmpleted prjects with a high inventry inched up q--q. Secndary market Prices increased but less than recent quarters. The slwdwn was mstly felt in the Premium and Luxury sub-markets. The price uptrend in the nn-cbd districts was mre nticeable q--q. Large pipeline supply in the cming quarters Nearly 14, new cmpletins are expected between nw and end- 216, primarily driven by the Affrdable and Mid-end segments. New launches may fluctuate slightly arund the level witnessed in 2Q16, with the cntributin f the high-end sub-markets likely t remain mdest. Demand t remain strng The large sales mmentum in recent quarters will cntinue with mst activities in the Affrdable and Mid-end segments until end-216. Prices are expected t remain n the uptrend in the cming quarters. 8, 6, 4, 2, All Apartments Affrdable Mid-end Premium 216 217 218 Luxury 211 212 213 214 215 216 Average Asking Price by Segment Upcming Cmpletins Affrdable Mid-end Premium Luxury 1, 2, 3, 4, Average Primary Price USD/sqm Average Secndary Price 1, 2, 3, 4, units P a g e 11
Expected cmpletin year 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Vietnam Prperty Market Brief 2Q16 HANOI RETAIL Supply and Demand Supply/Demand Shpping Centre Prime Retail Space Supermarket/Hypermarket Cnvenience stre Ttal Stck (sqm) 884, 6, 152, 4, Occupancy Rate (%) 74.7 67. N.A N.A Q--Q Change (bps) -72 33 N.A N.A Supply f Shpping Centre is unchanged Ttal stck f Shpping Centre and Prime Retail Space segment remained stable at arund 89, sqm in 2Q16 as n new prject cmpleted in this quarter. Cnvenience stres, Vinmart+, cntinued t pen stres thrughut Hani city. Demand cntinues t fall Negative absrptin cntinued t recrd in 2Q16 due t the relcatin f fd curt tenants at large shpping centres. In Hani, many retail centres utside the CBD have suffered and are underperfrming. ' sqm 1, Asset Perfrmance Key Perfrmance Indicatrs Shpping Centre Prime Retail Space CBD Nn-CBD Average Grss Rent (USD/sqm/mnth) 18 28.3 48.6 Q--Q Change (%). -1.4. Nte: Q--Q and Y--Y changes are adjusted t remve the effects f supply additins / remvals (i.e. changes are n a like-fr-like basis). Dwntrend in rent cntinues Average rents in the Shpping Centre segment declined slightly by 1.3% q--q t USD 29.5 per sqm per mnth. Meanwhile, rent f prime retail space remained cnsistent with previus quarters. 8 6 4 2 Ttal Stck 211 212 213 214 215 216ytd Shpping Centre Prime Retail space Average Grss Rents Shpping Centre USD/sqm/mnth 15 1 5 Outlk Supply is likely t increase Nearly 43, sqm f retail space, frm the tw prjects in Lng Bien and Dng Da District, are due fr cmpletin by end-216. The market will witness a high cmpetitin amng retailers with increasing penetratin frm freign retailers and their expansin plans t Vietnam in future. Rents t decline Abundant supply will put pressure n existing shpping malls t adjust rents accrding t market cnditins. Weak cnsumer spending within certain sectrs f the market will remain a challenge fr the retail market. CBD Nn-CBD Under Cnstructin Shpping Centre 216 217 218 2 4 6 ' sqm P a g e 12
Vietnam Prperty Market Brief 2Q16 Real Estate Glssary Vietnam Office Market Current supply The ttal amunt f cumulative ffice space (in NFA terms) that has been cmpleted at a given time. Future supply The ttal amunt f ffice space slated fr cmpletin in the future at a given time. Vacant space The ttal amunt f available ffice space that remains t be leased by prperty wner(s) at a given time. This excludes space available fr sub-lease by tenants (i.e. shadw space), space physically empty but already pre-leased r reserved, and space t be available fr lease in the future. Occupied space Current supply less vacant space. Net absrptin refers t the change in ccupied space frm quarter t quarter. Grss flr area (GFA) The ttal amunt f all cvered areas including clumns, walls, cmmn passageways, lift lbbies and tilets. Net flr area (NFA) The amunt f useable flr areas excluding clumns, walls, cmmn passageways, lifts, lbbies and tilets. Net lettable area r net leasable area (NLA) refers t the amunt f NFA that is available fr lease. Net rent The amunt f market rent receivable by landlrds after deducting utgings. Market practices: Net rents may be quted n an NLA r a GFA basis. Outgings The estimated csts set aside by landlrds fr building maintenance that are passed n t tenants in the frm f service charges r management fees. Market practices: Service charges / management fees may r may nt be quted separately frm net rents. Grss rent The ttal achievable rent t be brne by tenants including service charges / management fees. Grss rents equal net rents plus utgings. Market practices: Grss rents may be quted n an NLA r a GFA basis. Capital value The market value r prbable price f a prperty at a given time frm a valuatin pint f view. Yield The percentage return n prperty investment at a given time frm a valuatin pint f view. It is based n current market rents assuming full ccupancy. Grade A A Grade A prperty meets all f a set f criteria regarding its fferings t a typical sphisticated ccupier. These criteria are bradly cncerned with the prperty s verall prfile, lcatin, amenities, management standards and technical specificatins. Grade B A Grade B prperty meets sme f a set f criteria regarding its fferings t a typical sphisticated ccupier. These criteria are bradly cncerned with the prperty s verall prfile, lcatin, amenities, management standards and technical specificatins. Grade C A Grade C prperty meets a set f criteria regarding its fferings t a typical nn-sphisticated ccupier. These criteria are bradly cncerned with the prperty s verall prfile, lcatin, amenities, management standards and technical specificatins. Suburban A Suburban prperty is lcated in a nn-cbd r a nn-traditinal ffice zne, regardless f its ther physical attributes. Cpyright 216 JLL Research P a g e 13
Vietnam Prperty Market Brief 2Q16 Real Estate Glssary Vietnam Residential Market Current supply The ttal amunt f supply available fr sale, either thrugh the primary market r the secndary market, regardless f cnstructin status. Future supply The ttal amunt f supply t be launched fr sale in the future. Cmpleted supply The ttal amunt f supply that has been physically cmpleted and handed ver fr ccupatin. Als knwn as existing supply. Uncmpleted supply The ttal amunt f supply that has nt been physically cmpleted and handed ver fr ccupatin. Includes supply under cnstructin and supply planned fr cnstructin. Als knwn as supply in the pipeline. Primary market That part f the market cmprising first-hand supply available fr sale frm develpers. Secndary market That part f the market cmprising secnd-hand supply available fr resale frm previus buyers. Launches The estimated amunt f new supply (in units) launched fr sale during a perid. Market practices: Many develpers chse t launch their prjects in phases which may r may nt be publicly annunced. Take-up The estimated amunt f supply (in units) sld during a perid. Includes sld units frm new supply in the perid and supply in previus perids. Market practices: Take-up may cmprise units sld via capital cntributins r sale and purchase agreements. Ttal inventry The ttal amunt f uncmpleted supply that has been launched fr sale. Primary asking price The stck-weighted average asking price in the primary market. Secndary asking price The stck-weighted average asking price in the secndary market. Luxury A luxury prperty meets all f a set f criteria regarding its fferings t a typical lcal wealthy husehld. These criteria are bradly cncerned with the prperty s verall prfile, lcatin, facilities, amenities, and management standards. A majrity f luxury prperties are lcated in r near the CBD f the city under review. Premium A premium prperty meets sme f a set f criteria regarding its fferings t a typical lcal wealthy husehld. These criteria are bradly cncerned with the prperty s verall prfile, lcatin, facilities, amenities, and management standards. A majrity f premium prperties are lcated in new urban areas utside the CBD f the city under review. Mid-end A mid-end prperty meets all f a set f criteria regarding its fferings t a typical lcal middle-class husehld. These criteria are bradly cncerned with the prperty s verall prfile, lcatin, facilities, amenities, and management standards. A majrity f midend prperties are lcated within the inner districts f the city under review. Affrdable An affrdable prperty meets sme f a set f criteria regarding its fferings t a typical lcal middle-class husehld. These criteria are bradly cncerned with the prperty s verall prfile, lcatin, facilities, amenities, and management standards. A majrity f affrdable prperties are lcated in the uter districts f the city under review. Cpyright 216 JLL Research P a g e 14
Vietnam Prperty Market Brief 2Q16 Real Estate Glssary Vietnam Retail Market Current supply The ttal amunt f cumulative mdern (as ppsed t traditinal) retail space (in GLA terms) that has been cmpleted at a given time. This includes department stres, shpping centres, prime retail space, supermarket/hypermarket, bazaars and cnvenience stres. Specialty supermarkets such as electrnics r furniture are nt included in ur basket. Future supply The ttal amunt f mdern retail space slated fr cmpletin in the future at a given time. Vacant space The ttal amunt f available mdern retail space that remains t be leased by prperty wner(s) at a given time. This excludes space available fr sub-lease by tenants (i.e. shadw space), space physically empty but already pre-leased r reserved, and space t be available fr lease in the future. Occupied space Current supply less vacant space. Net absrptin refers t the change in ccupied space frm quarter t quarter. Grss leasable area (GLA) The ttal amunt f leasable flrs areas n which rentals and service charges are based, which may include cmmn areas used fr ft traffic. Grss rent The ttal achievable rent t be brne by tenants including service charges / management fees but excluding VAT. Rents are calculated by the average rents f leasable area fr single tenants in department stres, shpping centres and bazaars in HCMC. Market practices: Grss rents in the retail market are usually quted n a NFA basis. Cpyright 216 JLL Research P a g e 15
Vietnam Prperty Market Brief 2Q16 Real Estate Glssary Vietnam Serviced Apartment Market Current supply The ttal amunt f cumulative serviced apartment supply (in terms f number f units) that has been cmpleted at a given time. Future supply The ttal amunt f serviced apartment units scheduled fr cmpletin in the future. Vacant units The ttal number f available serviced apartment units that remain t be leased by prperty wner(s) at a given time. This excludes units physically empty but already pre-leased r reserved, and units t be available fr lease in the future. Occupancy rate Ttal stck less vacant units, divided by ttal stck. Net absrptin refers t the change in ccupied units frm quarter t quarter. Average rent The rent was based n lng-term cntract (3-6 mnths), includes service charges but excludes VAT. Market practices: Rents in the serviced apartment market are usually quted n a net lettable area (NLA) basis. Grade A A Grade A serviced apartment prperty is a prperty that ffers first-class facilities and services with a well-equipped fitness centre and a swimming pl, preferably utdr, excellent lcatin, first class prperty management quality by an internatinal peratr, excellent rm quality and large rm sizes. Grade A serviced apartments are als almst always rated five stars n Agda.cm. One Grade A serviced apartment prperty shuld have at least 4 units. Grade B A Grade B serviced apartment prperty generally has cmparable facilities and services t ther Grade A prperties in the same vicinity, but lacks ne r mre criteria identified abve fr Grade A prperties. One Grade B serviced apartment prperty shuld have at least 15 units. Grade C Grade C serviced apartment prperty usually satisfies the standard/typical facilities, and is lcated at less prminent lcatins than ther Grade A and Grade B prjects. One Grade C serviced apartment prperty shuld have at least 1 units Cpyright 216 JLL Research P a g e 16
Vietnam Prperty Market Brief 2Q16 Real Estate Glssary Vietnam Industrial Market Current supply The ttal area f perating industrial parks and prcessing znes at a given time, including leasable land area, leasable warehuse/ready-built factry area and ther types f area fr supprting facilities. Ttal leasable land area The ttal prepared land area fr lease at a given time. Ttal leasable warehuse/ready-built factry area The ttal area f leasable warehuse/ready-built factry at a given time. Vacant space The ttal amunt f available industrial land area that remains t be leased t tenants at a given time. This excludes space available fr sub-lease by tenants (i.e. shadw space), space physically empty but already pre-leased r reserved, and space t be available fr lease in the future. Occupied space Ttal leasable area less vacant space. Net absrptin refers t the change in ccupied space frm perid t perid. Net rent land area The amunt f market rent applied fr leasable land area that is receivable by landlrds after deducting utgings. Market practices: Net land rental fee is nrmally quted per sqm per lease term (ne lease term apprximately equals 5 years). Net rent - warehuse/ready-built factry The amunt f market rent applied fr leasable warehuse/ready-built factry area that is receivable by landlrds after deducting utgings. Market practices: Net warehuse rental fee may be quted per sqm per mnth. Outgings The estimated csts set aside by landlrds used fr maintenance that are passed n t tenants in the frm f service charges r management fees. Grss rental fee The ttal achievable rent t be brne by tenants including service charges / management fees. Grss rents equal net rents plus utgings. Future supply The ttal area f future industrial parks and prcessing znes accrding t the master plans f prvincial authrities. Cpyright 216 JLL Research P a g e 17
Vietnam Prperty Market Brief 2Q16 Vietnam Prperty Market Brief is a quarterly publicatin prviding market updates fr different real estate sectrs in different cities. It is part f the cmprehensive research package frm JLL Research that cvers Vietnam alng with ther majr cuntries in Asia Pacific: Publicatin Gegraphic Cverage Prduct Cverage Frequency Cntents Availability Vietnam Prperty Market Mnitr Vietnam All Quarterly Real estate headlines & news summary Publicly available Vietnam Prperty Market Brief Vietnam Prperty Market Reprt Asia Pacific Prperty Digest The Office Index The Residential Index Real Estate Intelligence Service Real Estate Daily Real Estate Transparency Index Vietnam cities All Quarterly Stck, vacancy, prices, rents Publicly available Vietnam cities All Quarterly Asia Pacific including Vietnam Asia Pacific including Vietnam Asia Pacific (Vietnam t be included) Asia Pacific including Vietnam Asia Pacific including Vietnam Glbal including Vietnam Investment grade Investment grade Investment grade Investment grade All All Stck, vacancy, prices, rents, prject-level data, maps Subscriptin-based Quarterly Stck, vacancy, prices, rents Publicly available Quarterly Stck-weighted rental value and capital value indices Publicly available Quarterly Capital value index Publicly available Quarterly Daily Every tw years Stck, vacancy, prices, rents, yields, ttal returns, frecasts Real estate headlines & news summary Cuntry transparency scres & rankings Subscriptin-based Subscriptin-based Publicly available Partner With the Best Real Estate Advisr Fr subscriptin details and enquiries, please cntact: Stephen Wyatt Tram Nguyen Cuntry Head Manager, Research & Cnsulting Level 26, Saign Trade Center Level 26, Saign Trade Center 37 Tn Duc Thang, D1, HCMC, Vietnam 37 Tn Duc Thang, D1, HCMC, Vietnam +848 391 3968 ext 44 +848 391 3968 ext 955 stephen.wyatt@ap.jll.cm tram.nguyen@ap.jll.cm The infrmatin in this publicatin has been cmpiled frm varius surces deemed reliable. Hwever, n representatin r warranty is made t the accuracy theref. This publicatin may nt be reprduced in any frm r in any manner, in part r as a whle withut the written permissin f the publisher, JLL Vietnam, Ltd. P a g e 18