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HOW TO DEVELOP SUCCESSFUL REAL ESTATE
PROJECTS IN THE MEKONG REGION? THAILAND, CAMBODIA, MYANMAR, LAOS & VIETNAM Presented by: Marc Townsend, Managing Director, CBRE Vietnam
May 15, 2014
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1. Risk profile
2. Foreign ownership restrictions
3. Licensing and zoning
4. Land prices, comparables, FARs and Accommodation Value
5. Land clearance and vacant possession
6. Funding
7. Construction costs
8. Pre-commitment
9. Pre sales and the secondary market
10. Yield
EMERGING MARKETS
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2013
Myanmar
Land area: 677 thou sq.km
Population: 61.8 M e
GDP per capita: US$869
Thailand
Land area: 513 thou sq.km
Population: 69.5 M
GDP per capita: US$5,674
People’s Republic of China
Land area: 9,597 thou sq.km
Population: 1,354 M
GDP per capita: US$6,726** (*) GMS only covers two provinces
of China: Yunnan and Guangxi
Laos
Land area: 237 thou sq.km
Population: 6.7 M
GDP per capita: US$1,476
Vietnam
Land area: 331 thou sq.km
Population: 89.7 M
GDP per capita: US$1,960*
Cambodia
Land area: 181 thou sq.km
Population: 15.3 M e
GDP per capita: US$1,036
THE GREATER MEKONG SUBREGION (GMS)
***Vietnamese General Statistics Office
EAST SEA
** National Bureau Statistics of China
Population is 15.3 M, land area 181 sq.m,
GDP per capita US$944)
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GDP PER CAPITA
Thailand, $8,024
Vietnam, $2,843
Cambodia, $1,573
Myanmar, $1,344
Laos, $2,218
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
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11
20
12
20
13
F
20
14
F
20
15
F
20
16
F
20
17
F
20
18
F
GD
P p
er
ca
pit
a (U
S$
/pe
rso
n)
Thailand Vietnam Cambodia Myanmar Laos
2018 forecast
Notes: Pearl River Delta’s GDP as per 2010
Source: IMF, CIA Factsheet
159
225
260
288
466
846
917
1,116
China 7,298
New Zealand
Philippines
Singapore
Malaysia
Taiwan
#7 Greater Mekong Cluster 541
Indonesia
Pearl River Delta
Korea, Rep.
Australia1,487
India1,827
Japan 5,867
Greater Mekong
Non-Asian or Asian sub-region
Asian countries
159
225
260
288
466
846
917
1,116
China 7,298
New Zealand
Philippines
Singapore
Malaysia
Taiwan
#7 Greater Mekong Cluster 541
Indonesia
Pearl River Delta
Korea, Rep.
Australia1,487
India1,827
Japan 5,867
Greater Mekong
Non-Asian or Asian sub-region
Asian countries
GMS economies have experienced strong growth over the
last 10 years, ranking as Asia’s 7th largest. This growth is
projected to continue at ~6% pa, with a young working
population of over 235 million…
2011 GDP (USDbn)
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…with the familiar themes of Demographics and Urbanisation
provide continued support for growth in the region
GROWTH DRIVER: DEMOGRAPHICS & URBANISATION
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
2000 05 10 15 20 25 30 35 40 45 50
Cambodia Indonesia Laos
Thailand Vietnam** Support Ratios = Effective Worker/Effective Consumer Effective labor/ consumer is weighted sum of pop using labor, income, age profile. Demographic Dividend is generated when the support ratio is on an upward trend
% in urban areas
Support Ratios Urbanisation Rates
0.6
0.65
0.7
0.75
0.8
0.85
0.9
0.95
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
China
VietnamLaos
Thailand
Japan
Cambodia
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Switching from China to G3 (US, EU and Japan)
GROWTH DRIVER
GMS stands to benefit
from a cyclical upswing
in US and Japan.
Greater Mekong – Exposure to G3 and China* Greater Mekong – GDP Correlation Coefficients
(10 year correlations 2002 versus 2012)
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GROWTH DRIVER: TOURIST ARRIVALS
*Estimate Source: Thailand Department of Tourism, Statistic and Tourism Information Department of Cambodia, Vietnam National Administration of Tourism, Lao National Tourism Administration,
Ministry of Hotel and Tourism
City Top-tier
hotel keys
Bangkok 7,581
HCMC 954
Hanoi 3,065
Phnom Penh 3,935
Yangon 962
* Downtown only
Tourist Arrivals (million persons)
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OUTLOOK ON CONSUMER SPENDING
Source: Wolfensohn Center for Development at Brookings
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PUBLIC TRANSPORT
Bangkok HCMC
Yangon Phnom Penh
Vientiane
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ROAD NETWORK
1992
GMS CONNECTIVITY
Source: ADB
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ROAD NETWORK
2015
GMS CONNECTIVITY
Source: ADB
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FOREIGN BUYER RESTRICTIONS
THAILAND VIETNAM CAMBODIA MYANMAR LAOS
Foreign Companies can
buy freehold land if
sponsored by the country's
investment boards
Yes – usually
only for
industrial
No No No
Yes – for
state-
owned land
Maximum Lease Term 30
50
(Exception
70)
50 (+50) 50 (+10+10) 30 - 75
Foreigner can own a
condominium Yes Yes* Yes No N/A
Foreign Ownership Limit of
a Condominium Building 49% No 70% No N/A
National registered
companies with majority
national ownership can
buy land
Yes Land Use
Right Yes
Lease/
Concession N/A
* Subject to Restrictions
Source: CBRE Research
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BCI NUMBER
Projects Under
Construction HCMC Hanoi Da Nang
2013 Q1 2014 2013 Q1 2014 2013 Q1 2014
Office 111 134 124 143 11 20
Retail 48 60 48 56 1 3
Hospitality and SA 18 20 11 14 8 16
Resi 123 149 116 128 17 17
Total 2013 300 363 299 341 37 56
All Future Projects
(2014-2025 HCMC Hanoi Da Nang
2013 Q1 2014 2013 Q1 2014 2013 Q1 2014
Office 208 193 434 381 63 68
Retail 95 92 236 207 33 35
Hospitality and SA 35 30 54 49 31 36
Resi 308 269 473 426 159 141
Total 2013 646 584 1197 1063 286 280
Source:BCI Vietnam
Retreived on May 5, 2014
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RCA TRANSACTIONS – 2013
VIETNAM
THAILAND
CAMBODIA
LAOS
MYANMAR (Burma)
Source: RCA
0
deals
15
deals
2
deals
40
deals
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HAVE WE REACHED THE PEAK?
*GMS includes Bangkok, HCMC, Hanoi, Phnom Penh and Myanmar
Source: CBRE Research
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REGIONAL COMPARISON Real Estate Market
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CONDOMINIUM DOWNTOWN
Source: CBRE Research
Accumulated Downtown Condominium Supply vs. Take-up, Q1/2014
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OFFICE SUPPLY AND DEMAND
• Total supply: 40,443 sm
• Vacancy rate: 95%
Bangkok Phnom Penh
HCMC Hanoi
Source: CBRE Research
Yangon
0
50,000
100,000
150,000
200,000
250,000
2006 2007 2008 2009 2010 2011 2012 2013
Off
ice
Su
pp
ly (
sm
)
Take up (sm) Vacancy space (sm)Occupied space (sm)
0
50,000
100,000
150,000
200,000
250,000
2006 2007 2008 2009 2010 2011 2012 2013
Off
ice
Su
pp
ly (
sm
)
Take up (sm) Vacancy space (sm)Vacant space (sm)
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OFFICE ASKING RENTS
*Phnom Penh: before 2011 calculated on Grade C buildings, 2012-2013 on Grade B buildings and 2014 on the first real Grade A building.
Source: CBRE Research
Sunwah Tower, HCMC
Sakura Tower, Yangon
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Moderate rental growth expected
OFFICE OUTLOOK
Source: CBRE Research (As of Feb 2014)
Leaders Laggards
Myanmar
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BANGKOK OFFICE MARKET
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BANGKOK OFFICE MARKET
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BANGKOK OFFICE MARKET
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BANGKOK OFFICE MARKET
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BANGKOK OFFICE RENT
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RETAIL SUPPLY (DOWNTOWN)
Starbucks: 4 existing+1 upcoming McDonald’s: 1 existing+1 upcoming
Source: CBRE Research
Downtown Retail Supply Downtown Retail Occupancy (%)
Ho Chi Minh City’s Recent Retail Openings Monthly household income, 2013
Source: TNS VietCylce/TNS Cambodia Life/TNS Myanmar Life
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RETAIL RENTS
Source: CBRE Research
Siam Paragon, Bangkok
Vincom Center A (Eden A), HCMC
*Net rents on the ground floor and first floor locations only, excluding VAT and service charge.
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TOP-TIER HOTEL
*Citywide
Source: CBRE Research
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SERVICED APARTMENT
Source: CBRE Research
Take up and Vacancy of Downtown Grade A Serviced Apartment Units
Bangkok Hanoi
Phnom Penh
HCMC
Downtown Grade A Serviced Apartment Rents (US$/sm/month)
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CHANGE & OPPORTUNITY
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REGIONAL COMPARISON Country Advantages Disadvantages
MY
AN
MA
R
Shortages in all sectors
Strong demand in some sectors especially
hotel, office and residential.
Early bird with strong local relationships
catches the worm
Difficult political environment at least
up until elections in 2015
Difficult to obtain visa
Poor infrastructure (road, telecom, etc)
High office/hotel rents/rates
TH
AIL
AN
D
Mature market and has a levelled supply
demand mix in most sectors
Strong GDP per capita.
Good public transportation
Leasehold land (foreign ownership)
Faces political uncertainty and prone
to climate change
CA
MB
OD
IA
Flexible joint venture opportunities
Anti-corruption laws
Investor friendly
Cheap labor and land cost
Low population growth
Poor infrastructure
Lack of Transparency
VIE
TN
AM
Large and growing population
Interest rates under control
M & A opportunities
Political stability
In 2015, all restrictions to foreign F&B
retailers will be removed complying with
WTO obligations
Difficult JV laws
High land prices
Investor unfriendly (tax, residence,
transparency etc)
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For more information regarding this presentation please contact: MARC TOWNSEND Managing Director T +84 8 3824 6125
F +84 8 3823 8418
Email: [email protected]
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© 2014 CBRE (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CBRE (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 CBRE clients, and cannot be reproduced without prior written permission of CBRE.
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