ho chi minh city q4 2012 report
DESCRIPTION
Ho Chi Minh City Q4 2012 at a glanceTRANSCRIPT
Presented by:
CB Richard Ellis (Vietnam) Co., Ltd.
Tuesday, January 3, 2012
Market Insights from CBRE
HCMC Quarterly Report Q4/2012 Review and 2013 Outlook
Dung Duong
Senior Manager
2 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
CPI ended at 6.8%, better than target of 8%, thanks to the tightening policy.
Government’s success in keeping price pressure down opens the door for monetary easing
• Base rate unchanged while rediscounting and refinancing rate are cut 1% further.
• Deposit interest rate cap decreased by 1% to 8% in an attempt to lower lending costs by
reducing banks’ financing costs
Trade balance posted a first year of surplus in the last 20 years.
Many economic indicators saw an y-o-y growth of 2% to 18.3% except for FDI realisation.
VIETNAM ECONOMY 2 0 1 2 B R I G H T S I D E
-10
-5
0
5
10
15
20
FDI
realisation
ODA
disbursement
Export Import Retail Sales
and Services
Overseas
Remittance
Int'l Arrivals
Y-o-y Growth (%) in 2012
Source: General Statistics Office
3 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
GDP reached only 5.03%, lower than target of 5.5%.
FDI disbursement drop by 5% y-o-y unavoidable in the midst of gloomy economy, both
locally and internationally.
Bad debts reached VND250 trillion, equal to 8.83 % of total debt (source: SBV) as a result of
too high credit growth in 2010.
VNIndex saw a downward trend from May to Nov but moved out of the trend in Dec as
investors regained confidence on risky assets thanks to releases of better-than-expected CPI,
trade balance, interest rates cut and sealed M&A deals between Vietnam’s largest enterprises
and strategic foreign investors.
VIETNAM ECONOMY 2 0 1 2 C O N C E R N I N G
4 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Grand opening of An Phu Plaza Launched date: 22st Nov, 2012
Developer: An Phu Corporation
Offered office space: 10,905 sm GFA
At the press time, 50% of office space
has been leased out.
HCMC OFFICE MARKET Q 4 M A J O R E V E N T S
Lim Tower is one of few projects
that is fast approaching toward completion At the press time, about 60% total office space has been committed
The building is estimated to complete in Q2/2013
An Phu Plaza, District 3
Lim Tower, District 1
5 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
As stock has been
absorbed
gradually, average
asking rent in both
Grade A and B
markets went up
slightly.
The market-wide
asking rent rose to
US$21.2 psm per
month, an increase
of 1.5% q-o-q.
HCMC OFFICE MARKET Q 4 H E A D L I N E S
0
50,000
100,000
150,000
200,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2011 2012
$18
$20
$22
$24
$26
Net Vacant Space (
sm
)
Avera
ge A
skin
g R
eent U
S$ p
sm
per
month
Vacant Space Asking Rent
Vacant Space and Average Asking Rent – Grade A & B
Average Asking Rent
6 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Rent increased softly
• Market continued to show the signs of bottoming as expected in the previous quarter. On
average, the asking rent across both Grade A and Grade B increased nearly 2%
• Mature Grade A buildings held firm rents while younger ones started to increase their asking
rent as their vacant space becoming limited.
• Grade B asking rent continued its soft upward trend in Q4; however at a slower increasing
pace (by 0.8% q-o-q, much lower than the recorded number of 1.4% q-o-q in Q3), due to new
supply in the review quarter.
Vacancy reduced gradually
• Average vacancy rate for both Grade A and B slide to 12.7 % in Q4, a drop of 0.6 percentage
points q-o-q.
Demand came from new entrants, company expansion and relocation
• Pharmaceutical, legal, and oils & gas still enjoyed wealthy budget and played a major role in
driving demand for new office spaces.
• Tendency of integrating offices in different locations into one location (as one anchor tenant) in
order to save cost.
HCMC OFFICE MARKET Q 4 R E V I E W
7 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
HCMC OFFICE MARKET 2 0 1 3 – F U T U R E S U P P L Y
President Place– D1
Grade A
Area: 9,100 sm NLA
Empress Tower– D1
Grade B
Area: 19,537sm NLA
Le Meridien – D1
Grade A
Area: 9,125 sm NLA
Lim Tower– D1
Grade A
Area: 22,000 sm NLA
Times Square– D1
Grade A
Area: 12,704 sm NLA
Target Handover
Q1/2013 Q2/2013
8 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Given new launches of Empress Tower, President Place and Times Square,
average asking rent in either Grade A or Grade B segment will not be able to
maintain their upward trend in next few quarters
2013 is still the year of tenants
New supply mostly comes from delayed projects which construction has ben
renewed rather than from newly invested projects.
The market will not experience any significant movement in average rental rate as
what happened in the period 2008 -2010.
Pharmaceutical, education, legal and oil & gas continue to be the most active
groups of tenant in the market.
To retain the tenant lists, most landlords will provide higher incentives level rather
than lower their rental rate.
More tenant-benefits will be considered including longer fit-out period, free/reduce
parking fee and more flexible leasing terms and conditions, discount for upfront
payment, etc.
HCMC OFFICE MARKET O U T L O O K
9 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
HCMC RESIDENTIAL FOR SALE Q 4 / 2 0 1 2 M A J O R E V E N T S
October 2012 – Hoang Anh Thanh Binh
apartment developed by Hoang Anh Gia Lai
launched in District 7.
December 2012
– Star Hill
(Phase 2)
launched in Phu
My Hung NUA.
October 2012 – My Phu 3 villa in Phu
My Hung NUA officially launched.
10 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
NEW LAUNCH: kept decreasing
• Q4 /2012: 18.5% q-o-q; 16.1% y-o-y to 893 units;
• 2012: 72.8% y-o-y to 3,441 units;
• Mid-end segment: 57.8% of new launches in Q4;
• Others launches from already launched projects:
Leman CT Plaza, Sunrise City, Investco Babylon, Au
Co Tower , Harmona, 27 Truong Chinh, Ehome 3;
Stagnant market discouraged new developments;
Developers ‘refreshed’ projects by nominating trading
floors for launching/ marketing;
NEW COMPLETION:
• Q4/2012: 9.0% q-o-q; 14.1% y-o-y to 2,718 units;
• Mid-end segment made up the majority 56.7%;
Slow construction progress owing to lack of capital;
• 2012: 17.2% y-o-y to 9,508 units;
Results of completion delays in previous years;
Managed to complete to attract buyers.
HCMC RESIDENTIAL MARKET C O N D O M I N I U M S U P P L Y
Condominium Launch by Year
Q4 2012
Source: CBRE
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Condominium Completed by Year
Q3 2012
Q4 2012
Q3 2012
Source: CBRE
0
2,000
4,000
6,000
8,000
10,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
11 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
PRICES: Decreased across all segments
but NOT DIRECTLY as Q3:
• Price reductions through promotion, giving voucher,
overseas holidays, gold, lending rate support,
discount on upfront payment ;
MARKET SENTIMENT
• Concerned about partial construction, pushing
developers to continue construction;
• Pushing for best pricing causes developers and
secondary bulk buyers to slash prices;
• Most transactions at mid-end and affordable
segments true end-users;
• In the upper market: Most transactions at ‘branded’
property – good quality, from well-known developers: – Star Hill (P1): over 70%;
– Star Hill (P2): ~60% out of units launched;
• Currently, HCMC has ~28,000 unsold units
HCMC RESIDENTIAL MARKET C O N D O M I N I U M P R I C E
Condominium Asking Price Change
(q-o-q change)
Source: CBRE
-10%
-7%
-4%
-1%
2%
5%
2009 2010 2011 2012
Luxury High-end Mid-end Affordable
Unsold Units
Source: CBRE
0
5,000
10,000
15,000
20,000
25,000
30,000
2009 2010 2011 2012
12 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
“Branded” property remained a bright spot:
• Projects developed by well-known developer
and located in prime location still attracted
buyers;
• My Phu 3 launched by Phu My Hung Corp. in
early Q4 2012 and sold rate reported over 70%;
CT Group introduced its golf villas at the CT Sphinx
project in Cu Chi District;
Eastern districts (District 9 and Thu Duc)
continued to be silent;
• A price reduction of 50%-60% q-o-q reported at
a villa project in Thu Duc District;
No new completion reported;
Challenges ahead,
esp. those at less attractive location;
HCMC RESIDENTIAL MARKET L A N D E D P R O P E R T Y – Q 4 R E V I E W
Villa & Townhouse Supply by Year
Source: CBRE
0
200
400
600
800
1000
2004 2005 2006 2007 2008 2009 2010 2011 2012
Launched Completed
Source: CBRE
District 7
District 9
District 2
Thu Duc District
Others
Villa & Townhouse Completion by District
13 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Unlikely to have significant turnaround in 2013 despite the Government’s efforts to rescue the
property market;
Finance to continue being developers / investors’ major challenges;
Price discounts with conditions to be continuing;
Delayed completions and transferring projects expected to continue throughout the year;
Expected major condominium launches in 2013:
More competition from developments in neighboring provinces (Binh Duong, Long An) in the
landed property.
HCMC RESIDENTIAL MARKET 2 0 1 3 O U T L O O K
Delta River Tower The Prince Residence Metro Apartment Ehome 3 (Phase 2)
District 1 Phu Nhuan District District 2 Binh Tan District
~182 luxury units ~233 high-end units 104 affordable units ~150 affordable units
14 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
HCMC SERVICED APARTMENTS Q 4 M A J O R E V E N T S
September 2012 – An Phu Plaza
(54 Grade B units) opened on Ly
Chinh Thang Str., D.3 and its sole
agent, CBRE, held the 1st Tenant’s
Night event in early December.
November 2012 – Q Residence
(60 Grade C units) opened on
Pasteur Street, D.3.
Fraser Hospitality came to HCMC and introduced
its new hotel residence brand - Capri by Fraser
@ District 7, HCMC (175 Grade B units), which is
ready to move in within January 2013.
October 2012 – The Ascott Limited won a contract to
manage the new Somerset Vista Ho Chi Minh City
(100 Grade B units) and Vista Residences (168 units).
15 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Long regarded as
‘over-priced’, recent
sharp decline
(-9.3% q-o-q and -
14.5% y-o-y) in
Grade A asking
rents secured a
gain of 4.6
percentage points
q-o-q in its
occupancy.
HCMC SERVICED APARTMENTS Q 4 H E A D L I N E
Average Asking Rents (US$/sm/month)
Source: CBRE
00%
10%
20%
30%
40%
50%
60%
$20
$30
$40
$50
2007 2008 2009 2010 2011 2012
Grade A Vacancy Grade B Vacancy
Grade A Rents Grade B Rents
Average Asking Rent (US$/sm/month)
16 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
SUPPLY:
• Q4 welcomed two new serviced apartment projects:
• To keep established serviced recidences competitive,
landlords become more flexible with: – 10%-15% discount on asking rents and;
– Free car parking, daily breakfast or higher utility allowance.
ASKING RENTS:
• Though Grade B rent increased by 1.0% q-o-q after
continuously sliding for three quarters, it must be cautious
to say it’s the market’s bottom as Grade A rents saw a
sharp decline of 9.3% q-o-q.
• In line with the perception that ‘serviced apartments are
over-priced in HCMC’, Grade A rents are revising
downwards for 5 quarters in a row;
HCMC SERVICED APARTMENTS Q 4 R E V I E W
An Phu Plaza, District 3 Q Residence, District 3
Grade B, 54 units Grade C, 60 units
Operating by CBRE Vietnam Operating by Cushman & Wakefield
Avg. Asking Rent (US$/sm/month)
Source: CBRE
$20
$25
$30
$35
$40
2007 2008 2009 2010 2011 2012
Grade A Rents Grade B Rents
17 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
VACANCY:
With consecutive decrease of Grade A rents, its vacancy
continued witnessing a larger decrease of 4.6 ppt q-o-q,
currently at 10.6%.
Grade B vacancy reported high (over 23%), due to the
continued new supply throughout 2012 and the fierce
competition from the buy-to-let substitutes.
DEMAND:
Tenants’ strategies seen in 2012 – Manufacturing
companies and international schools have been seen:
• Intergrating their expat staff into one serviced residence;
• Buying buy-to-let apartments in bulk for their expat staff
instead of separate housing packages;
HCMC SERVICED APARTMENTS Q 4 R E V I E W
Vacancy Rate (%)
Source: CBRE
0%
20%
40%
60%
2007 2008 2009 2010 2011 2012
Grade A Vacancy Grade B Vacancy
18 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Budget
HCMC SERVICED APARTMENTS G U E S S P R O F I L I N G , C B R E 2 0 1 2 E N Q U I R I E S
Sizing
Stay Length Accommodation
41.1%
$1k-2k 50.0%
60-100sm
79.6%
6mth-1yr
56.2%
Asian
58.9%
Serv. Apt.
19 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Projects kept delaying their grand opening and 2013 will see most-awaited launches, including:
2012 witnessed major ground-breaking ceremonies, with expected completion beyond 2014:
TREND OF NEW SUPPLY:
From the traditional core (the CBD) to the decentralised area (District 2 and District 7)
with an emerging expat community;
Will place more pressure on the current high vacancy;
International players (Fraser Hospitality, The Ascott Limited, Sedona Hotels International, Ritz
Carlton, Mapletree, etc.) will bring in world-class experience for a better-shaped market;
HCMC SERVICED APARTMENTS 2 0 1 3 O U T L O O K
Saigon Centre, Phase 2 The One Ho Chi Minh City Saigon South Place Complex
District 1, 200+ Grade A units District 1 District 7
Developed by Keppel Land
To be operated by Sedona Suites
Developed by Bitexco;
with its hotel to be operated
Developed by Mapletree and SCID. Its
retail, SC VivoCity Shopping Mall, broke
by Ritz Carlton ground in March 2012 and will generate
demand and foot falls for next phases
Capri by Fraser @ District 7, HCMC Somerset Vista Ho Chi Minh City Times Square
District 7, 175 Grade B units District 2, 100 Grade B units District 1, 78 Grade A units
Operating by Fraser Hospitality Operating by The Ascott Limited Developed by Times Square JSC
20 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Opening of new economic zones
and industrial parks are halted. The
existing IPs are under pressure to
review its land usage and tenants’
implementation.
To attract more tenants, developers
at less favourable locations have
been forced to decrease rent
significantly.
Land rental rate in key industrial
parks remain steady or down slightly
compare to 1H2012.
Demand derived from expansion of
F&B, FMCG, and Electronics firms
such as Pepsi, P&G, Samsung and
Nestle.
VIETNAM INDUSTRIAL AND LOGISTIC 2 0 1 2 R E V I E W
$0
$200
$400
$600
$800
Q1/2007 Q1/2009 Q1/2011 Q4/2011 Q4/2012
Lowest Highest
SKER – Historical Land Rates, Key Industrial Parks
$0
$100
$200
$300
Q1/2007 Q1/2009 Q1/2011 Q3/2012
Lowest Highest
NKER – Historical Land Rates, Key Industrial Parks
21 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
Both international and local logistic service providers
are in expansion across the country (Schenker, DHL,
Kerry,… vs Tan Cang Saigon, Vinafco,…)
Third tier provinces such as Long An, Bac Giang,
Hung Yen,…continue attract traditional sectors like
garments, footware.
Electronics, F&B , and FMCG concentrate in second
tier cities such as Binh Duong, Dong Nai,…
First tier cities such as HCMC, Hanoi and Danang
capture majority share of the emerging industries
including R&D, labs, software development and
Business Processing Outsourcing.
VIETNAM INDUSTRIAL AND LOGISTIC 2 0 1 3 O U T L O O K
22 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
HCMC RETAIL Q 4 / 2 0 1 2 M A J O R E V E N T S
Pandora City
Opened November 2012;
Operating at 80% committed
occupancy;
Located in Tan Phu District The project
is unique in the surrounding area.
Vincom Center A
Opened on 10 Oct 2012;
Currently operates at 95% committed
occupancy
SC Vivo City
Ground breaking March 2012
Estimate GFA: 72,000 sqm
Estimate NLA : 46,800 sqm
Number of Floors: 1 basement & 5
levels
Estimate Completion: 1H 2014
PowerBowl 388
23 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
CBD shopping
centre’s average
asking rents
increased due to
Vincom Center
A’s participation .
HCMC RETAIL Q 4 H E A D L I N E S
0
5
10
15
20
25
0
20
40
60
80
100
120
140
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2010 2011 2012
Vacancy r
ate
(%
)
Renta
l ra
te (
USD
/sm
/m
onth
)
Rental rate Vacancy rate
CBD Shopping centre
* All rents are quoted on NLA, exclusive of VAT and service charges
Source: CBRE
24 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
New supplies from Vincom Center A (District 1) and Pandora City (Tan Phu District) providing
78,000 sm retail GFA.
Taking advantage of prime location, Vincom Center A has asking rents of the ground and first
floor (USD135/sm/month ) higher than the average of CBD shopping centre
(USD122.7/sm/month), leading to an increase of 2.6% q-o-q in CBD shopping centre’s rental
rates. This rent is with a doubt to sustain in coming quarters. The non-CBD shopping centre’s
rents increased slightly 0.8% q-o-q.
Non-CBD department store’s rent increased 2.9% q-o-q thanks to the increase in Parkson
Hung Vuong, which has just changed layout and tenant mix last quarter. The deparment store
is now more refresh with new branded retailers namely Mango, Mo&Co, DFML, JS. From and
the new foodcourt in the sixth floor. CBD department store’s rent stayed stable during the
quarter.
Vacancy rate in department stores increased substantially in the review quarter, an increase of
5.5% q-o-q to 7.5% due to Parkson Flemington is struggling to attract tenants. Despite increase
in total supply, vacancy rate in shopping centres has stayed unchanged q-o-q, which is an
evidence to support retail demand with good location and careful project positioning.
In the fourth quarter of 2012, the market saw 57,719 sm GFA of space leased, almost 4 times
larger as compared to that of last quarter.
HCMC RETAIL Q 4 R E V I E W
25 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
More luxury retailers to enter the market as they expand across borders
New entrance: Takashimaya, Aeon, NTUC Fair Price, SC Vivo City, and Payless
Continued international-style retailing: fast-food chains set to expand
Subway has announced the plan to open 10 shops in 2013,
Burger King has had five stores by the end of 2012,
Lotteria and KFC both strive to have 200 shops in the next years,
Mc Donald, Starbucks and 7 - Eleven plan to enter Vietnam in 2013.
HCMC RETAIL
DEMAND
26 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
HCMC RETAIL
2013 OUTLOOK
F&B, daily necessities ,FMCG
and entertainment will continue
driving the market.
Vincom Center A: a strong
evidence to support the need
for prime retail space in District
1, HCMC;
With a good location, proper
tenant mix and layout, the
market can still absorb new
supply.
Source: TNS, The Changing Reality of Retail, Nov-2012
Monthly Household Expenditure
27 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | JANUARY 2013
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© 2012 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CB Richard Ellis (Vietnam) Co., Ltd. We obtained some of the information above from sources we believe to be reliable. However, we have not verified the accuracy of the information which we obtained from other sources and make no guarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us for example only, and they may not represent current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis.
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