hcmc quarterly knowledge report | q3 2016

Accelerating successwww.colliers.com/vietnam

hO chI mINh cITYquarTerlY KNOWleDGe repOrTq3 2016

Table Of cONTeNTs

ecONOmIc OVerVIeW...............................................................................................................

VIETNAM ....................................................................................................................................

HO CHI MINH CITY ......................................................................................................................

HA NOI ........................................................................................................................................

hO chI mINh cITY marKeT OVerVIeW ........................................................................ OFFICE ........................................................................................................................................

RETAIL ........................................................................................................................................

CONDOMINIUM ............................................................................................................................

VILLA & TOWNHOUSE .................................................................................................................

SERVICED APARTMENT ..............................................................................................................

INDUSTRIAL ................................................................................................................................

lIsT Of abbreVIaTIONs ARR: Average Rental Rate GRDP: Gross Regional Domestic Product

CBD: Central Business District IP: Industrial Park

CPI: Consumer Price Index NLA: Net Lettable Area

FTA: Free Trade Agreements TPP: Trans-Pacific Partnership GDP: Gross Domestic Product Q-o-Q: Quarter on Quarter

GFA: Gross Floor Area Y-o-Y: Year on Year

cover page: Vietcombank Tower

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lIsT Of fIGures Figure 1: Vietnam Exports - Imports in 3Q 2016..................................................................................

Figure 2: International Arrivals to Vietnam in 3Q 2016 ......................................................................

Figure 3: FDI Capital of HCMC and Hanoi ..........................................................................................

Figure 4: GDP Growth Rate of HCMC and Hanoi ................................................................................

hO chI mINh cITY marKeT OVerVIeW Figure 5: Office, Market Performance ................................................................................................

Figure 6: Office, Occupancy Rate .......................................................................................................

Figure 7: Retail, Market Performance...................................................................................................

Figure 8: Retail, Total Supply .............................................................................................................

Figure 9: Condominium, Primary Asking Price ...................................................................................

Figure 10: Condominium, New Launches by Segment and Quarter.......................................................

Figure 11: Condominium, Sold Units by Segment and Quarter..............................................................

Figure 12: Villa and Townhouse, Selling Prices by Quarter..................................................................

Figure 13: Villa and Townhouse, Supply by Year .................................................................................

Figure 14: Villa and Townhouse, Primary Stock by District .................................................................

Figure 15: Serviced Apartment, Current Grade A&B Supply ...............................................................

Figure 16: Serviced Apartment, Average Asking Rent by Grade ...........................................................

Figure 17: Industrial, Market Performance by District .........................................................................

Figure 18: Industrial, Supply by District ..............................................................................................

lIsT Of Tables Table 1: Macroeconomic Indicators of HCMC and Hanoi ......................................................................

Table 2: Office, Future Supply ............................................................................................................

Table 3: Significant Office Projects ....................................................................................................

Table 4: Retail, Significant Future Projects under Construction ..........................................................

Table 5: Significant Retail Projects ....................................................................................................

Table 6: Condominium, Significant new Projects launched in Q3 2016 ................................................

Table 7: Villa and Townhouse, Significant new Projects launched in Q3 2016 ......................................

Table 8: Serviced Apartment, Significant Future Projects under construction .....................................

Table 9: Significant Serviced Apartment Projects ...............................................................................

Table 10: Industrial, Future Supply .....................................................................................................

Table 11: Industrial, Market Overview ................................................................................................

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GDpVietnam’s real GDP growth in Q3 2016 came in at 6.4% y-o-y. Although the growth rate was higher than those of previous quarters of 2016, it was still below the 6.53% of the same period last year. The service sector grew by 6.66% while the industrial and construction industry increased by 7.6%. The agriculture- forestry-fishery recorded a modest growth rate of 0.7% y-o-y due to adverse weather conditions, notably the worst drought and saltwater intrusion in almost a century as well as the massive fish death disaster occurring in four coastal central provinces. The recovery after the deceleration in GDP during 1H 2016 was a positive sign, suggesting that the economic activities will perform well in the rest of the year, on the back of strong FDI inflows and export resilience.

cpIDuring the first nine months of 2016, average CPI climbed by 2.07% y-o-y, staying at a low level compared to the government’s inflation target of 5%. An upturn was seen in ten out of eleven major goods and service groups, with the largest increase in education at 7.19%, followed by the transport services at 0.55%. Only the telecommunications group witnessed a drop of 0.07%. Till the end of 2016, there are many factors that would drive up inflation, including the prices of health services, gas, oil and year-end expenditure. Moreover, unforeseen factors like natural disasters, harvest loss and hike in basic salary would also put pressure on CPI.

fDIIn the first three quarters of 2016, the total FDI capital reached USD16.43 billion, down 4.2% y-o-y. However, disbursement from FDI projects climbed to USD11.02 billion, an increase of 12.4% y-o-y. The whole country granted investment licenses to 1,820 new projects with a total registered capital of USD11.16 billion, up 27.1% in the number of projects and 1.1% in capital compared to the same period last year. Of total, 851 already-operating projects raised their capital by more than USD5.2 million. The FDI capital went mainly into the manufacturing and processing sector, accounting for 70.8% of total inflows from newly licensed projects. Real estate industry took 8.8% of the newly registered capital with USD 979.4 million. South Korea is the leading country in the amount of capital invested Vietnam, followed by Singapore and Hong Kong.

reTaIl sales Vietnam’s retail sales of goods and services in the first nine month of 2016 achieved USD116.8 billion, an increase of 9.5% y-o-y. In particular, the retail sales of goods achieved USD88.18 billion, accounting for 76.2% of the total sales, up 9.7% y-o-y. Retail sales of accommodation and catering services reached USD13.3 billion, accounting for 11.5% of the total sales, representing an increase of 8.3% y-o-y. Retail sales of tourism services, comprising 0.9% of the total sales, reached USD 1.07 billion, up 7.5% y-o-y. Retail sales of other services which accounted for 11.4% of the total sales, were estimated at USD13.2 billion, equivalent to 9.3% increase y-o-y.

INTerNaTIONal arrIVals In the first three quarters of 2016, the whole country welcomed more than 7.2 million foreign visitors, up 25.7% y-o-y. Chinese visitors took the lead with more than 1.9 million arrivals, up 57.7% y-o-y, followed by South Korea with more than 1.1 million visitors, up 39.9% compared to the same period last year. The international visitors to Vietnam are forecasted to remarkably grow on the back of visa-exempt policy applied for the five European countries until mid-2017.

TraDe balaNceAs of Q3 2016, the whole country registered a USD2.8 billion trade surplus. Export volume reached USD128.2 billion in the first nine months of 2016, up 6.7% compared to the same period last year. Of total, the domestic economic sector achieved USD37 billion and the FDI sector (including crude oil) gained USD 58.5 billion, up 5% and 6.9% y-o-y respectively. The top export destinations of Vietnam were the United States (USD28.3 billion), Europe (USD24.6 billion) and China (USD14.8 billion). Import turnovers reached USD 125.4 billion, up 1.3% over the same period last year. While the domestic economic sector in import turnovers gained USD51.4 billion, the FDI sector achieved USD51.4 billion, up 1.3% and 0.9% y-o-y respectively. China remained as Vietnam’s largest import market with USD36 billion, down 1.8% y-o-y.

q3 2016 | ecONOmIc OVerVIeW

©2016 Colliers International Research

VIeTNam quarTerlY KNOWleDGe repOrT

q4 2016 forecast

Figure 1: Exports - Imports in Vietnam 3Q 2016

Source: General Statistics Office | Colliers International Research

Figure 2: International arrivals to Vietnam in 3Q 2016


VIeTNam

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Figure 4: GDP Growth Rate of HCMC and Hanoi



Table 1: Marcoeconomic Indicators of HCMC and Hanoi

hcmc hanoi

Q3 2016 Q4 2016F Q3 2016 Q4 2016F

GDP (billion) 32.6 15.4

FDI (million) 49.8 2,351

Retail sales (billion) 23.1 69.4

Export (billion) 22.7 7.9

Import (billion) 27.5 17.9

hO chI mINh cITY

The GRDP in the first nine months of 2016 achieved USD32.6 million, an increase of 7.76% compared to the same period last year. More specifically, the service sector remained the highest growth rate of 7.78%, staying at USD17.1 billion, followed by the industrial and construction sector with a growth rate of 7.77%, equivalent to USD9.72 billion. The agriculture-forestry-fishery sector saw an increase of 5.65% y-o-y, reaching USD245.78 million.In the review period, total newly registered and supplementary FDI achieved USD747.2 million, up 45.84% in the number of projects and equivalent to 31.62% in capital y-o-y. Of the total, there are 123 supplementary projects worth of USD373 million. Japan was recorded as the biggest foreign investor in the city, with USD116.2 million in registered capital, accounting for 15.5%, followed by Singapore (USD98.4 million) and British Virgin Islands.Retail sales of HCMC were up 10.19% y-o-y if price increase was excluded, reaching USD23.1 billion in the first three quarters of 2016. The retail sector had the highest growth rate with an increase of 11.34% y-o-y, reaching USD18.4 billion; while the tourism industry recorded the slowest growth rate of 1.79% y-o-y. The average price index in the first nine months of this year grew 1.38% on an annual basis. An increase was seen in seven out of eleven major goods and service groups, with the largest increase in education, at 4.06%. Export volume reached USD20,842 million, equivalent to an increase of 7.45% y-o-y. The United States remained as the largest export market in the first nine months of 2016 with USD3,977.1 million, accounting for 18,7% of the total export turnover. The largest contribution to export values was observed in garments, agricultural products and computers & electronic devices. Import values were USD27,541 million, up 13% y-o-y. Milk and dairy products, fuel, garment material plastics and iron & steel contributed the most to import values.

haNOI

The GRDP of Hanoi in the review period achieved 15.38USD billion, equivalent to a rise of 7.73% y-o-y. The industrial- construction sector and the service sector had the highest growth rate, up 8.36% and 7.83% y-o-y respectively. On the contrary, the agricul-ture-forestry-fishery sector saw a modest growth rate of 2.16% y-o-y.As of September of this year, FDI inflows of both newly registered and supplementary capital reached USD1.98 billion, up 0.4% compared to the same period last year. The CPI in September climbed to 0.77% m-o-m and 2.07% y-o-y. The education sector had the highest index due to the rise in tuition fees across schools in Hanoi.In the first nine months of 2016, Hanoi’s retail sales of good and services reached USD16.4 billion, up 9.4% compared to the same period last year. In the review period, Hanoi achieved USD7.89 billion in export revenue and USD17.94 billion in import revenue, equivalent a decline of 0.4% and 4.8%, respectively. The whole city recorded a trade deficit of USD9.95 billion in the first three quarters of 2016.Foreign arrivals to the capital city continued to play out well with 2.111 million visitors in the review period, a significant increment of 28.6% y-o-y.

Figure 3: FDI Capital of HCMC and Hanoi


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Figure 6: Office, Occupancy Rate

perfOrmaNceIn Q3 2016, the office market witnessed an improvement in rents across both grades, reaching USD26.2/sqm/month. Average net asking rent of Grade A reached a high rate of USD40.4/sqm/month, up 7.1ppts q-o-q while Grade B experienced a significant rent growth of 7 ppts q-o-q, staying at USD22.5/sqm/month. The rise in rents was mostly due to the stable supply in conjunction with solid demand for office space. The City’s office market continued to enjoy strong performance as steady absorption rates and limited availability of premium properties resulted in a rise in the occupancy rate. Average occupancy of Grade A saw an increase of 1% q-o-q, reaching 96%. Grade B performed better with higher occupancy rate, staying at 96.7%, unchanged from the previous quarter.

supplYThe third quarter of 2016 recorded the withdrawal of 6,000sqm NLA of one Grade B tower while there was no new supply entering the market. HCMC currently has a total of 11 Grade A buildings and 61 Grade B buildings, providing approximately 212,651sqm and 862,784 sqm of net leaseable space to the market respectively.Being well-known as the city’s office hub, District 1 accounted for more than half of the city’s stock, comprising all Grade A supply and nearly 50% of Grade B supply. It is forecasted that premium properties in prime locations will rise significantly as the CBD continues to contribute most of the future supply in coming years. Some notable future projects are under good construction progress and expected to approach completion by 2017, such as Saigon Center (Phase 2) and Deutsches Haus.

DemaNDThanks to favorable macroeconomic conditions, HCMC will remain as a strategic destination for foreign corporations, leading to higher employment levels and boosting demand for office space in coming years. The tertiary service sector is a key driver for office demand as these companies need to show their presence in nicely modern office buildings. As high quality office buildings in prime locations are limited, the demand for premium properties from international service providers is more likely to expand in the future.

OuTlOOKIt is expected that there will be nearly 62,300 sqm of new Grade A and over 102,840 sqm of new Grade B office space coming to the market by the end of 2017. Asking rent for grade A is forecasted to gradually increase owning to continued strong demand and limited supply while those of grade B’s asking rent will keep stable due to more pressure from the new supply in decentralized districts.

q3 2016 | hO chI mINh cITY | OffIce



Table 2: Office, Future Supply

Source: Colliers International Research



Figure 5: Office, Market Performance

project name Grade Nla (sqm) expected completion

HQC Royal Tower B 17,800 Q4 2016

Mapletree Business Center B+ 23,000 Q4 2016

Ha Do Building B 10,840 Q4 2016

SGGP Building B 16,940 Q1 2017

E.Town Central B 35,000 Q3 2017

Saigon Center (phase 2) A 40,000 Q3 2017

Deutsches Haus A 22,300 Q3 2017

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q3 2016 | hO chI mINh cITY | OffIce q3 2016 | hO chI mINh cITY | OffIce



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Table 3: Significant Office Projects

No Name Address Completion Year

NLA (sqm)

Service Charges (*)

Occupancy rate

Average asking rent

(**)1 Saigon Centre 65 Le Loi 1996 11,650 7.6 99% 42.0

2 Saigon Tower 29 Le Duan 1997 13,950 7.5 100% 43.83 Sunwah Tower 115 Nguyen Hue 1997 20,800 6.0 99% 42.04 The Metropolitan 235 Dong Khoi 1997 15,200 6.0 89% 43.85 Diamond Plaza 34 Le Duan 1999 15,936 8.0 95% 41.06 Kumho Asiana Plaza 39 Le Duan 2009 26,000 8.0 89% 44.0

7 Bitexco Financial Tower 45 Ngo Duc Ke 2010 37,710 8.0 98% 39.08 President Place 93 Nguyen Du 2012 8,330 7.0 97% 39.0

9 Times Square 22-36 Nguyen Hue 2012 12,704 7.0 98% 40.010 Le Meridien 3C Ton Duc Thang 2013 9,125 6.0 88% 35.011 Vietcombank Tower 5 Me Linh Square 2015 41,250 7.0 99% 37.0

Grade A 212,655 7.2 96% 40.4

1 VTP-OSIC 8 Nguyen Hue 1993 6,500 6.0 100% 25.02 Yo Co Building 41 Nguyen Thi Minh Khai 1995 5,000 3.0 98% 23.03 Somerset Chancellor Court 21-23 NguyenThi Minh Khai 1996 3,200 5.0 100% 22.0

4 Central Plaza 17 Le Duan 1997 7,405 6.0 92% 24.4

5 Harbour View Tower 35 Nguyen Hue 1997 8,000 5.0 99% 28.06 Saigon Riverside Office 2A-4A Ton Duc Thang 1997 10,000 8.1 99% 27.67 Saigon Trade Center 37 Ton Duc Thang 1997 31,416 5.0 93% 20.0

8 MeLinh Point Tower 2 Ngo Duc Ke 1999 17,600 6.0 99% 42.09 Zen Plaza 54-56 Nguyen Trai 2001 11,037 5.0 94% 25.310 The Landmark 5B Ton Duc Thang 2005 8,000 6.0 96% 28.911 Opera View 161-167 Dong Khoi 2006 3,100 7.0 100% 27.012 City Light 45 Vo Thi Sau 2007 10,000 6.5 97% 25.013 Petro Tower 1-5 Le Duan 2007 13,304 6.5 100% 26.014 The Lancaster 22 – 22 Bis Le Thanh Ton 2007 7,000 5.0 100% 25.015 CJ Building 5 Le Thanh Ton 2008 14,000 6.5 100% 25.016 Continential Tower 81-85 Ham Nghi 2008 15,000 6.0 97% 22.017 Havana Tower 132 Ham Nghi 2008 7,326 6.0 95% 29.3

18 Royal Center 235 Nguyen Van Cu 2008 14,320 6.0 100% 23.019 Sailing Tower 51 Nguyen Thi Minh Khai 2008 16,910 6.0 99% 27.0

20 TMS 172 Hai Ba Trung 2009 4,000 4.0 100% 24.021 A&B Tower 76 Le Lai 2010 17,120 6.0 97% 32.022 Bao Viet Tower 233 Dong Khoi 2010 10,650 5.0 100% 22.023 Green Power Tower 35 Ton Duc Thang 2010 15,600 6.0 100% 25.024 Maritime Bank Tower 192 Nguyen Cong Tru 2010 19,596 5.0 85% 21.025 Saigon Royal 91 Pasteur 2010 5,340 6.0 100% 23.026 Vincom Center 68 -70 -72 Le Thanh Ton 2010 56,600 5.0 88% 30.727 Empress Tower 138 Hai Ba Trung 2012 19,538 6.0 100% 30.028 Lim Tower 9-11 Ton Duc Thang 2013 22,000 6.0 99% 28.029 MB Sunny Tower 259 Tran Hung Dao, Co Giang 2013 13,200 6.0 100% 23.030 Lim Tower 2 Vo Van Tan 2015 8,400 5.5 100% 24.0

Grade B 401,162 5.7 96.0% 26.6

q3 2016 | hO chI mINh cITY | OffIce



saIGON sKYlINe reVIeW- cbD hcmc GraDe a OffIce buIlDINGs

KumhO asIaNa plaZa39 le Duan, District 1

26,000/2,989$ 44.00$ 8.00

DIamOND plaZa saIGON34 le Duan, District 1

15,936/824$ 41.00$ 8.00

le merIDIeN 3c Ton Duc Thang, District 1

9,125/1,111$ 35.00$ 6.00

saIGON TOWer29 le Duan, District 1

13,950/Na$ 44.00$ 7.50

DeuTsches haus3-5 le Van huu, District 1

The meTrOpOlITaN235 Dong Khoi, District 1

15,200/1,655$ 44.00$ 6.00

presIDeNT place93 Nguyen Du, District 1

8,330/288$ 39.00$ 7.00

bITeXcO fINaNcIal TOWer45 Ngo Duc Ke, District 1

37,710/567$ 39.00$ 8.00

VIeTcOmbaNK TOWer5 me linh square, District 1

41,250/424$ 37.00$ 7.00

TImes square saIGON22-36 Nguyen hue, District 1

12,704/300$ 40.00$ 7.00

saIGON ceNTre65 le loi, District 1

11,650/ 101$ 42.00$ 7.50

suNWah TOWer115 Nguyen hue, District 1

20,800/ 113$ 42.00$ 6.00

q3 2016 | hO chI mINh cITY | OffIce q3 2016 | hO chI mINh cITY | reTaIl



Table 4: Retail, Significant Future Projects Under Construction

perfOrmaNceThe third quarter of 2016 recorded stable average asking rents across CBD and non-CBD, staying at USD46/sqm/month. Due to the opening of one remarkable shopping mall, the CBD reported a minor rise in rent, maintaining its high average asking rate of USD126/sqm/month while the non-CBD sub-market saw a nominal decline to USD36/sqm/month.Effective pre-leasing activities at new retail centers and the commitment of one key tenant in an existing CBD shopping mall pushed the overall occupancy rate up by 1 ppt q-o-q, reaching 93%.

supplYIn Q3 2016, two new shopping centers, Saigon Centre (phase 2) in District 1 and Aeon Mall Binh Tan in Binh Tan District entered the market, providing 40,000 sqm NLA and 60,000 sqm NLA to the current stock respectively. Being well-known as one of the major shopping malls in District 1 with the first phase’s completion in 1996, Saigon Centre has recently completed its second phase and 100% of the retail space has been occupied by 400 domestic and foreign brands, including Takashimaya, the anchor tenant from Japan. Another Japanese retailer, AEON, opened its second shopping mall at the International Hi-Tech Healthcare Park in Binh Tri Dong B Ward, Binh Tan District. The mall is home for a large supermarket, restaurants, fashion shops, cinema and a variety of retail stores. The future supply is limited as no new major shopping centers will enter the market in the rest of the year.

DemaNDThe increase in household earning and credit availability in conjunction with the city’s rapidly expanding young population, especially the emerging middle class will fuel retail market growth. With an increasing propensity to consume, these customers are seeking more convenient and modern retail environments, resulting in the growth in demand for Western-style retail experiences. In addition, with the liberalization of retail sector under the conditions of Vietnam’s WTO membership and the recent participation in the Trans-Pacific Partnership, the city is expected to see a significant amount of FDI from international retailers.

OuTlOOKBesides the strong growth of large-scale retail centers, more and more convenience chains are burgeoning in Ho Chi Minh City, aiming to change the shopping behavior of Vietnamese, especially those who are in need of groceries at any given time of the day or night. The most popular chains and convenience stores in Vietnam are Shop & Go, Circle K, Mini Stop and Family Mart. Of total, the number of Family Mart and Mini Stop stores is approximately 130 and this figure is forecasted to increase sharply in the coming time, with Mini Stop’s targeting 800 shops. The convenient store segment is anticipated to become highly competitive with 7-Eleven planning to be inaugurated in Ho Chi Minh City in 2017 and eyeing 1,000 stores within 10 years.

Figure 8: Retail, Total Supply



Figure 7: Retail, Market Performance


project name District Nla (sqm) expected completion

Golden Plaza 6 15,000 Q4 2016

Union Square 1 39,454 Q2 2017

Vincom Center Mall Binh Thanh 59,000 Q1 2018

Su Van Hanh Mall 10 96,152 2018 onward

The Spirit of Saigon 1 35,000 2018 onward

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q3 2016 | hO chI mINh cITY | reTaIl



Table 3: Significant Office Projects

(*) ARR (Average Rental Rate): All rents are stated in net rents per sqm, inclusive service charge but exculding VAT

Table 5: Significant Retail Projects

No Name of Project/Building Address Location Completion Year

NLA (sq m) ARR (*) Occupancy

Rate1 Hotel Continental Sai Gon 132-134 Dong Khoi District 1 2000 200 90 100%2 Caravelle Hotel 19 Lam Son Square District 1 2000 150 220 100%3 New World Hotel 76 Le Lai District 1 2000 1,000 60 100%4 Sheraton Saigon 88 Dong Khoi District 1 2002 750 200 100%5 Opera View Lam Son Square District 1 2006 1,260 200 100%6 The Manor 1 91 Nguyen Huu Canh Binh Thanh 2006 2,000 10-30 100%7 Saigon Pearl 92 Nguyen Huu Canh Binh Thanh 2009 5,000 22 97%8 Rex Arcade 141 Nguyen Hue District 1 2010 2,000 120 100%

9 The Manor 2 91 Nguyen Huu Canh Binh Thanh 2010 2,500 10-30 100%

10 Bitexco Financial Tower 45 Ngo Duc Ke District 1 2011 8,000 50 98%11 The Vista Walk Hanoi Highway District 2 2012 10,000 20 97%

12 President Place 93 Nguyen Du District 1 2012 800 42 98%

13 Times Square 22-36 Nguyen Hue District 1 2012 9,000 300 100%

14 Saigon Airport Plaza 1 Bach Dang Tan Binh 2013 7,623 15 100%

Retail Podium 50,283 87.5 99%

1 Zen Plaza 54-56 Nguyen Trai District 1 2001 6,817 55-60 100%2 Parkson Saigontourist Plaza 35 Le Thanh Ton District 1 2002 17,000 100-150 98%3 Parkson Hung Vuong Plaza 126 Hung Vuong District 5 2007 24,000 80-120 100%4 Kumho Asiana Plaza 35 Le Duan District 1 2009 6,830 60 100%5 Parkson Flemington 184 Le Dai Hanh District 11 2009 26,000 20 99%6 Parkson C.T Plaza 60A Truong Son Tan Binh 2012 12,235 21 100%7 Taka Plaza 102 Nam Ky Khoi Nghia District 1 2011 1,000 70 100%8 Parkson Cantavil Premier Hanoi Highway District 2 2013 17,815 25-30 98%

Department Store 111,697 59.7 99%

1 Diamond Plaza 34 Le Duan District 1 1999 9,000 90 100%2 Saigon Center 35 Nam Ky Khoi Nghia District 1 1996 47,000 55-100 100%3 Superbowl Vietnam TSN 38 Nguyen Hue Tan Binh 2002 5,500 22 96%4 An Dong Plaza 18 An Duong Vuong District 5 2004 18,000 61 95%5 Saigon Square 1 77-89 Nam Ky Khoi Nghia District 1 2006 1,300 167 100%6 Nowzone 235 Nguyen Van Cu District 1 2008 9,000 60 99%7 Lotte Mart Saigon South 469 Nguyen Huu Tho District 7 2008 24,000 50 100%8 Vincom Center B 72 Le Thanh Ton District 1 2010 45,000 150 100%9 Maximark 3/2 Extention 3/2 Street District 10 2010 25,000 35 90%10 Lotte Mart Phu Tho Le Dai Hanh District 11 2010 24,500 13 99%11 Crescent Mall Nguyen Van Linh District 7 2011 45,000 25 100%12 Satra Pham Hung Pham Hung District 8 2011 11,528 14 100%13 Union Square Dong Khoi District 1 2012 38,000 90-97 New opening

Shopping Centre 302,828 67.4 99%

q3 2016 | hO chI mINh cITY | reTaIl


Accelerating success

q3 2016 | hO chI mINh cITY | cONDOmINIum



Table 3: Significant Office ProjectsperfOrmaNceIn Q3 2016, sales momentum continued to be positive with nearly 7,700 successful transactions, an increase of 33% compared to the previous quarter. Mid-end segment dominated transactions with nearly 4,300 sold units, followed by the high-end with 2,300 sold units, accounting for 55.8% and 29.8% of total sales volume, respectively. The affordable segment and luxury recorded modestly with 900 and 200 sold units, a drop of 50% and 66% on quarterly basis. The price on primary market remained relatively static across all segments, with the exception of the mid-end, registering the most considerable growth of 6% q-o-q. The improvement in mid-end price was mainly due to a surge in demand for this segment in the review quarter.

supplYIn Q3 2016, the city’s condominium market welcomed more than 7,400 units coming on stream, making a drop of approximately 15.6% q-o-q. Mid-end segment continued to dominate new launches with more than 5,800 units, followed by the high-end with 1,600 units, constituting 77% and 23% of the total newly launched supply. No new supply in affordable and luxury segment entered the market in the review period. It is expected that more than 7,000 units across all segments will be launched in Q4 2016. Strong sales momentum in conjunction with improved market sentiment will continue to support future supply.

DemaNDBeing the economic center of the South of Vietnam, Ho Chi Minh City is the destination not only for workers and students from various regions of the country but also for foreigners from all over the world. The city‘s current population is more than 8 million people which is equivalent to 8.1% of the whole country’s population, making it the most densely populated area in Vietnam. It is forcasted that this figure will reach 10 million by 2020 and approximately 8% of these will seek to buy houses. According to a recent report by Ho Chi Minh City Institution for Development Studies, the demand for affordable properties will reach 80,000 households in the next five years, indicating that the demand for this segment will outstrip future supply. Moreover, stronger economic fundamentals as well as regulatory changes will stimulate demand and construction activities for all segments in the coming years.

OuTlOOKRecently, many developers have chosen the river view to be an additional value and unique feature of their projects to attract more potential buyers, especially affluent people. With the construction of Ben Thanh - Suoi Tien metro route and modern bridges in the Eastern part, the landscape of the city is changing with various apartment projects along the river.The easing of foreign ownership has lured more potential foreign home buyers, especially in the high-end segment. It is expected that the number of foreign sales will be rising in the medium and long term when the government releases further guidelines to resolve foreign buyers’ concerns on the complexity of foreign ownership, the transfer of money in and out of the country or financing issues, etc.

Figure 9: Condominium, Primary Asking Price


Figure 11: Condominium, Sold Units by Segment and Quarter


Figure 10: Condominium, New launches by Segment and Quarter


0

2,000

4,000

6,000

8,000

10,000

12,000


2012 2013 2014 2015 2016

units

Luxury High-end Mid-end Affordable

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7000


2012 2013 2014 2015 2016

units


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2008 2009 2010 2011 2012 2013 2014 2015 2016YTD

USD

/sqm






Table 6: Condominium, Significant new projects launched in Q3 2016

No Name of Project/Building Developer Location Completion Year

Number of units

Asking Price (US$/sqm)

1 Waterina Maeda District 4 2017 86 2,500 2 Dragon Hill 2 Phuc Long Corp. District 7 2017 450 1,000 3 Diamond Lotus Riverside Phuc Khang District 8 2017 30 950 4 The Pegasuite Phuong Viet District 8 2018 1,049 900 5 Millennium Thao Dien Investment District 4 2018 260 2,600 6 Elite Park Geleximco Binh Thanh 2018 208 1,400 7 Parkview Vinhomes Central Park VinGroup Binh Thanh 2018 546 2,000 8 Moonlight Garden Hung Thinh Thu Duc 2019 689 1,000 9 Richmond City Hung Thinh Binh Thanh 2019 880 1,100

10 Aqua Luxury Sabeco HP District 4 2019 1,440 1,150

11 Feliz En Vista CapitaLand District 2 2019 960 1,200 12 Carillion 5 Sacomreal Tan Phu 2017 221 940 13 Ha Do Centrosa Ha Do Group District 10 2019 748 1,700

New launches in Q3 2016 7,481

* Excluding all kinds of tax, promotions and management feeThe information is updated as at the end of Q3 2016



q3 2016 | hO chI mINh cITY | VIlla & TOWNhOuse



perfOrmaNceIn the review quarter, sales momentum remained strong with a high average sold rate of 78% on the back of well-established infrastructure and improved economic climate of the city. District 7 led successful transactions thanks to its large land availability and peaceful atmosphere away from the noise and chaos of the city center. By type of property, townhouses dominated sales activities, accounting for 70% of total transactions. Primary asking price maintained the upward trend, indicating continued improvements in the market sentiment. District 2 witnessed strongest price acceleration, up approximately 2% q-o-q due to its effective newly-launched projects. By contrast, asking price remained stable on the secondary market.

supplYThe third quarter welcomed six new projects across various districts in the city, adding approximately 561 dwellings to the primary market, equivalent to a rise of 26% q-o-q. It is observed that infrastructure has significant impacts on new launches as well as decisions of homebuyers and investors. District 7 dominated newly launched supply with two notable projects, including Lavila and Jamona Golden Silk, providing 238 and 119 luxury units, respectively. , These two projects are both located within an eco-friendly environment and well-connected to the CBD via Thu Thiem bridge. . The Eastern part of the city has been capturing much attention of developers thanks to its improved infrastructure and a long-term vision of urban planning.

DemaNDIt is clear that buyers of the landed property market tend to choose projects with convenient transport network. The city’s infrastructure has been well-developed in order to attract people to new urban areas. With a variety of recently completed infrastructure projects such as Saigon River Tunnel, Vo Van Kiet highway, Pham Van Dong highway, Long Thanh – Dau Giay highway and under-construction projects such as Metro Line 1 and Ring Road No.3, the travel time between the CBD and new urban areas is shorten, thereby spurring demand for this market segment. In addition, it is forcasted that the mortgage market will prosper in coming years, growing by approximately USD3 billion per year and the majority of total lending is for real estate loans. With a favorable lending rate,, it is anticipated that the demand for landed property will keep growing.

OuTlOOKIt is expected that the sale transactions in rest of the year will maintain upward trend on the back of improved confidence from both developers and buyers. Sale price is forecasted to increase moderately as more infrastructure projects are being completed. Developers have focused on developing supporting facilities and amenities as well as adopting effective marketing strategies in the hope of attracting more buyers.

Figure 12: Villa and Townhouse, Selling Prices by Quarter


Figure 14: Villa and Townhouse, Primary Stock by District


Figure 13: Villa&Townhouse, Supply by Year


0

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Q12013

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sq m

District 7 District 9 District 2 Others

0

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016YTD

units

Existing supply New supply

District 237%

District 9 21%

Nha Be8%

District 126%

District 76%

Thu Duc5%

Binh Chanh4%

Binh Tan4%

Go Vap3%

Others6%





Table 7: Villa and Townhouse, Significant new projects launched in Q3 2016

No Name of Project/Building Developer Location Completion Year

Number of units

Asking Price (US$/sqm)

1 Senturia Vuon Lai Tien Phuoc Group District 12 2017 30 1,400 2 The Victoria Vinhomes Golden River VinGroup District 1 2017 12 20,000 3 Lavila Kien A District 7 2018 238 1,000 4 The Pegasuite PVinvest District 8 2018 69 1,000 5 Palm Residence Keppel Land District 9 2019 135 1,500 6 Jamona Golden Silk Sacomreal District 7 2019 119 2,500

New launches in Q3 2016 561



q3 2016 | hO chI mINh cITY | serVIceD aparTmeNT



perfOrmaNceThe third quarter of 2016 saw a slight rise in asking rents across both grades, reaching 33 USD/sqm/month, equivalent to an increase of 2.6% on quarterly basis. Grade A’s average asking rent was up by 4.6% q-o-q, achieving USD38.7/sqm/month; while Grade B’ rent remained stable compared to the previous quarter, staying at 27.5USD/sqm/month.The city’s serviced apartment market remained its strong performance with relatively high occupancy rate, at 92% due to limited new supply in HCMC in recent years. More specifically, Grade A’s average occupancy rate climbed by 0.2 ppts, achieving 93.2%; while Grade B also recorded an improved performance with an increase of 2 ppts in occupancy rate, staying at 90.2%.

supplYThe current stock provides total nearly 3,500 units with 1,000 units in Grade A and nearly 2,500 units in Grade B. The review quarter recorded no new supply, resulting in high rental prices and occupancy rates. Accounting for more than half of the city’s stock with the majority of Grade A, the CBD is the prime location for serviced apartments thanks to convenient transportation connection and close proximity to office clusters. . The stock is expected to sharply grow by 2018 with some notable projects such as Oakwood Residence, Ascott Warterfront, Saigon Center (phase 2), Saigon South Complex, providing nearly 1,300 new serviced apartments.

DemaNDServiced apartments are now increasingly becoming a preferred accommodation option as they provide a home-like environment for business and leisure visitors. On the back of improved economic growth and expected benefits from Trans-Pacific Partnership agreement, there will be an increasing mobile workforce, resulting in growing demand for this sector of hospitality industry. In addition, leisure travelers, especially those with children, tend to prefer serviced apartments to conventional hotels due to their spacious accommodation and provided amenities. Those guests create growing needs for serviced apartments in coming years.

OuTlOOKActive operators in the market vary from international hospitality brands such as Ascott, Sedona, IHG, to private landlords who are looking to offer competitive rates for tenants. Rents for serviced apartments are expected to be softened as the supply is increasing and operators are focusing more on cost-effective accommodation options to develop competitive strength. To meet occupiers’ demands, it is suggested that serviced apartments should be positioned in prime locations, close to transport links and business and shopping districts.

project name District Total units

expected completion

Oakwood Residence 3 68 Q4 2016

Ascott Waterfront 1 222 Q4 2016

Saigon South Complex 7 480 Q4 2017

Saigon Center (phase 2) 1 200 Q3 2017

Berkley Serviced Residence 2 85 Q4 2017

Citadines Regency Saigon 1 85 Q4 2017

Lavenue Crown 1 186 Q4 2018

Table 8: Serviced apartment, Significant Future Projects under construction


Figure 15: Serviced Apartment, Current Grade A&B Supply


Figure 16: Serviced Apartment, Average Asking Rent by Grade


0

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2014 2015 Q3 2016

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2013 2014 2015 2016

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sqm

/mon

thGrade A Grade B





Table 9: Significant Serviced Apartment Projects

No. Project Name Address Location Completion Year

Total Room

Average Occupancy

ARR(*) (**)

1 The Landmark 5B Ton Duc Thang District 1 1995 66 95.0% 26.02 Sedona Suites 65 Le Loi District 1 1996 89 98.0% 34.0

3 Somerset Chancellor Court 21-23 Nguyen Thi Minh Khai District 1 1996 172 90.0% 32.0

4 Nguyen Du Park Villas 111 Nguyen Du District 1 2004 41 95.0% 17.05 The Lancaster 22-22 Bis Le Thanh Ton District 1 2007 55 73.0% 37.06 Intercontinental Asian Saigon 39 Le Duan District 1 2009 260 90.0% 36.0

Grade A 683 90.5% 32.7

1 Norfork Mansion 17-21 Ly Tu Trong District 1 1998 126 85.0% 34.02 Saigon Sky Garden 20 Le Thanh Ton District 1 1998 154 85.0% 26.03 Somerset HCM 8A Nguyen Binh Khiem District 1 1998 165 94.0% 26.04 Diamond Plaza 34 Le Duan District 1 1999 42 88.0% 25.05 Garden View Court 101 Nguyen Du District 1 2000 76 95.0% 23.06 Ben Thanh Luxury 172-174 Ky Con District 1 2010 88 91.0% 18.0

7 Lafayette De SaiGon 8 Phung Khac Khoan District 1 2010 18 89.0% 28.0

8 Vincom Center 45A Ly Tu Trong District 1 2010 60 34.0% 26.0

9 Nikko Saigon 235 Nguyen Van Cu District 1 2011 54 100.0% 34.0

10 Saigon City Residence 8A/3D2 Thai Van Lung District 1 2011 17 84.0% 23.0

11 Spring Court 1Bis Phung Khac Khoan District 1 2011 14 86.0% 17.0

Grade B 814 85.9% 26.4

(*) US/sqm/month(**) ARR (Average Rental Rate): All rents are stated in gross rents per sqm, not including VAT and serviced charge





q3 2016 | hO chI mINh cITY | INDusTrIal



perfOrmaNceWith the average remaining Land Use Right term of 35.8 years, the asking rent soared to USD138/sqm/term, up 15% q-o-q and two times higher than that of neighbouring provinces, including Long An, Binh Duong, Dong Nai. Rent growth was mainly due to increasing demand from the manufacturing sector. District 7 remained its highest asking rent of USD10/sqm/year, whilst Cu Chi District was reported to have the lowest rent t of only 2USD/sqm/year. Overall market performance was slightly better, with the estimated average vacancy rate of 30%, down 2 ppts compared to the previous quarter. Le Minh Xuan is the seventh IP that was fully occupied. For a minimum leasable area from 1,000-5,000sqm, ready-built factories charge USD2.5-USD4.0/sqm/month (excluding VAT and service charge).

supplYCurrently, there are 19 IPs operating in Ho Chi Minh City, covering a total land area of over 3,900 ha. The leasable area is nearly 2,800 ha, accounting for approximately 71% of the total land area. With a new IP launched recently, Binh Chanh District is the largest supplier, accounting for 26% of the market share. The industrial area is forecasted to have an additional 2,600 ha by 2030, coming from 10 new IPs, up approximately 66% compared to the existing supply. However, the majority of these new projects is still in the stage of clearance and compensation which therefore will prolong the process of launching new IPs. Some IPs are under construction and expected to coming on the market in the near future, such as Le Minh Xuan (phase 2 and 3), Vinh Loc I (phase 2 and 3), Vinh Loc III, Phong Phu in Binh Chanh, Tay Bac Cu Chi (phase 2) in Cu Chi, Hiep Phuoc (phase 2) in Nha Be.

DemaNDThe recently approved free trade agreements (FTAs) and the ratification of Trans-Pacific Partnership (TPP) would provide a major boost to industrial properties. Foreign investors would increase investment and move their manufacturing activities to Vietnam to benefit from the advantages in production and business initiated from FTAs and TPP commitments. Furthermore, manufacturers will also consider switching from non-TPP nations to Vietnam to enjoy extra low-tariffs. As a result, the demand for industrial space is expected to rise in the near future. Higher demand and limited supply will drive up rents for industrial land in coming years.

OuTlOOKThere is a fact that the development of previous industrial zones in Ho Chi Minh City did not take into consideration the high speed of urbanization, and thus contributing to the bad traffic situation of the City. Demand for transportation facilities between factories/enterprises in the IPs and ports/airports is forecasted to increase in conjunction with the rise in demand for IPs. Therefore, the City government is now planning a number of new transportation projects to improve the city’s infrastructure, making Ho Chi Minh City’s industrial market more attractive to international firms.



Figure 17: Industrial, Market Performance by District


Figure 18: Industrial, Supply by District



Table 10: Industrial, Future Supply

Industrial park Name District Gfa (ha)

Le Minh Xuan Industrial Park - phase 2 Binh Chanh 338

Le Minh Xuan Industrial Park - phase 3 Binh Chanh 242

Vinh Loc I - phase 2 Binh Chanh 56

Vinh Loc I - phase 3 Binh Chanh 200

Vinh Loc Industrial Park III Binh Chanh 210.3

Phong Phu Industrial Park Binh Chanh 148.4

Tay Bac Cu Chi Industrial Park - phase 2 Cu Chi 173

Hiep Phuoc Industrial Park - phase 2 Nha Be 597

0%

10%

20%

30%

40%

50%

60%

0

50

100

150

200

250

300

District 9 District12

Cu Chi BinhChanh

Nha Be District 7 Tan Phu District 2 Thu Duc

USD

/sqm

/ter

m

Average asking rent Vacancy rate

Binh Chanh26%

Thu Duc16%

Nha Be11%

Cu Chi21%

Others26%




Table 3: Significant Office ProjectsTable 11: HCMC Industrial Market Overview

No Name of Industrial Park Location Distance to CBD (km)

Total Area(ha)

Total leasable area (ha)

Asking Rent (US$/sqm/

term)Occupancy LUR Term

1 Tan Thuan Export Processing Zone District 7 6.4 300 204 260 81% 20412 Tan Binh Industrial Park(P1+2) Tan Phu 11 129 100 235 100% 20473 Saigon Hi-tech Park P1 District 9 15 300 300 180 100% 20524 Vinh Loc Industrial Park Binh Chanh 15 203 131 250 98% 20475 Binh Chieu Industrial Park Thu Duc 16 27 27 150 100% 20466 Tan Thoi Hiep District 12 16 28 20 100 100% 20497 Linh Trung 2 Export Processing Zone Thu Duc 17 62 44 60 100% 20508 Tan Tao Industrial Park 1 Binh Chanh 17 161 97 240 97% 20479 Tan Tao Industrial Park 2 Binh Chanh 17 183 116 240 78% 205010 Linh Trung 1 Export Processing Zone Thu Duc 18 62 46 60 100% 204211 Le Minh Xuan Industrial Park Binh Chanh 20 100 66 120 100% 204712 Hiep Phuoc Industrial Park 1 Nha Be 21 311 224 125 93% 204813 Cat Lai Industrial Park (Cluster II) District 2 21 137 87 90 100% 206114 Hiep Phuoc Industrial Park 2 Nha Be 22 597 345 125 10% 205815 An Ha Industrial Park Binh Chanh 23 124 124 69 23% 205816 Dong Nam Industrial Park Cu Chi 30 343 287 63 69% 205817 Tay Bac Cu Chi Industrial Park Cu Chi 36.5 208 150 90 99% 204718 Tan Phu Trung Industrial Park Cu Chi 37 543 359 80 30% 2054

19 Automotive-Mechanical (Hoa Phu) Industrial park Cu Chi 40 99 67 56 83% 2057

Total 3,916 2,794 138 70%



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