Residential Property Market: Real Buyers look for Real Value

Presented by Mr. Thai Nguyen NguyenAssociate Director, Residential Project Marketing

16th April 2009

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Stock Market Rising - 30 Day Trend

Graph from VNDirect

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1. Fewer local white-collar lay-offs

2. Stock Market picking up… cautiously

3. Vietnam does not have pension/provident fund – only Cash, Gold & Land

4. Little debt with savings in hand

5. Prices coming off in both primary and secondary markets

6. Job hopping is back as expatriates are replaced

7. Real buyers have cash

Overview of 30 Day Trends

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New wave of construction at Residential Condo Sites

The Everich, The Flemington, Lu Gia, Xi Grand Court Districts 10 & 11

Splendor Go Vap

The Manor, Saigon PearlBinh Thanh

H2, Orient District 4

Riverside Residences, Sunrise City, Sky Garden 3, An Vien

District 7

The Vista, Estella, Blooming Park, Xi Riverview Palace, An Khang, Petro Vietnam Landmark, HA Riverview, River Garden, Preche

District 2

Ben Thanh Tower, M&C Tower, Golden Hill, Saigon Mansion

Districts 1 & 3

ProjectsDistrict

Construction Activity Begins to Move in HCMC

Total Number of Units (Overall) = 10,779

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M&C Tower

Ben Thanh Tower

Saigon Mansion

Golden Hill

District 1 & 3 – HCMC Center

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District 2 – the HOT spot

The Vista

Estella

Hoang Anh Riverview

River Garden

XI Riverview Palace

Preche

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District 11 – Park Life in the City

The Flemington

The EverichLu Gia

XI Grand Court

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Sky Garden 3 Sunrise City

Riverside Residence

District 7 – Saigon South

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Projects are Selling - New Launches/Re-launches Q1 2009

PHU HOANG ANH-HAGL Saigon South

SKY CITY TOWERS (HN)

More on the way….

ECOLAKES MY PHUOC (BD)

BECAMEX CITY CENTER (BD)

RIVERSIDE RESIDENCES-PMH D7

HOANG ANH RIVERVIEW D2

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Hanoi is moving too…

Keangnam, My Dinh Apartment Towers, Intracom, Hoang Quoc Viet Residentials

Tu Liem

Nguyen Trai - Thanh Xuan ComplexThanh Xuan

Golden WestlakeTay Ho

Telin CondoLong Bien

Lilama Complex, Song Da, Nguyen Tam TrinhHoang Mai

Tricon TowerHoai Duc

201 Minh Khai, Le Dai Hanh ComplexHai Ba Trung

NCG Residentials, Hattoco ComplexHa Dong

Thanh Cong 2, Mipec Tower, Kim Lien CondoDong Da

Thang Long Int'l Village Complex, N05, N04Cau Giay

Hanoi City Complex, Doi Can CondoBa Dinh

ProjectsDistrict

Total Number of Units (Overall) = 13,220

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Primary Market – the market in which buyers have the first opportunity to purchase a newly issued residential unit directly from the developer’s sales team or its agent

Secondary Market – the market where a buyer purchases a residential unit from another buyer rather than the issuing organization (developer) typically done by a broker, an agent, and FSBO, utilizing information from the internet (real estate websites)

Deals

Price & Terms

Financial Support

Developer Commitment

People are Buying – Primary & Secondary…

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What are real buyers looking for?

Deals

Discounted price from the peaks of Jan 2008

More promotion

Price & Terms

Original or affordable price

Difference between the primary and secondary market prices

Better payment terms – longer and more flexible

Financial Support

Loan support from Developers and Banks

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What are real buyers looking for?Reliable Developers who Care

Customers must have faith and belief in the Developer when buying

A commitment from Developers for the on-time completion and handover

Flexible and comfortable designs – affordable sizes

Better service from the Developers – support resale transactions

Completed foundations at the time of sales with monthly updates on construction – a show of consistent on-site activity

Clearly defined fees such as service, management, parking, etc.

Track record

Show-flats on-site and a well-trained Marketing Team

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The Market - how big is it?

• Total Completed Units (2008) = 19,578•First time buyers•Up Graders•Investors•Viet Kieu•Foreigners based in Vietnam

Assume 5% Buyers385,000373,500362,500352,000

HCMC Average Growth Rate 3.1% pa7.77.477.25

2012F2011F2010F2009FEstimated Population Growth

7.04

All Planned Projects24,50022,00021,00016,500Status2012F2011F2010F2009F

Estimated Future Supply of Completed Condominiums pa

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Market begins to separate into 2 different segments• Group 1 High-end Buyers (emotional/social benefits)

Concerned with: brand / image, design, material, car park, retail & recreation area, capital value, liquidity, amenities

• Group 2 Price Sensitive Buyers (functional benefits)Concerned with: asking price, unit size (as it relates to overall price of unit as well as function), basic facilities, living areas, and finance package

Common Concerns: timing – delivery vs. payment, payment terms, loan issues, ownership delivery, resale conditions & support

Current Buyer Profile

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Developers - How to reduce the risks?Widen the Sales Profile• Create demand during the foundation/piling stage• Branding – spend early, save later• More use of Marketing Companies• Greater allocation of marketing budget

Build to the Market• Listen to the market• Control the construction progress

Price Right• Flexible payment and loan support

Time Your SaleExpand your Distribution NetworksUse the Data• Analytics• Database Managers

Think out of the box• Sell off one tower• Convert one block to Serviced Apartments (or Hotel)

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How to widen the sales profile?

On-site Webcam to show live site

activity

Web Profiling analytics by age,

address, education, car ownership, etc…

TV / Cinema / Radio Ads &

Editorials

Mobile Phone Marketing

Social NetworksOnline - Facebook,

My Space, LinkedIn, Blogs

Typical FormsSignage, Brochures,

Showroom/Units

Web AdvertisingLinking to other sites, ads on main engines Yahoo, Google, etc.

Payment Terms & Overall Price

PromotionsOffer a car to buyers

on certain units

Marketing to First Time Buyers & Up-Graders

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Developers - What to Build?Affordable sizes – High-End Buyers particular to leasabilitywhile Price-Sensitive Buyers sensitive to overall sales price• Real buyers can’t afford 200 sm even if it is only at US$ 1,300 • Suggested sizing from 50 to 130 sm.

Small is beautiful

Ask the buyers; market surveys & Focus groups

Villas (lot sizes) & Condos – the Mix

End of ‘high end’

Facilities and amenities

SoHo (live-work units)

Ease of leasing

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Developers - What Price to Sell At?

Cost Analysis Approach – critical in this market

Analyze land prices, contractor quotes, low-interest loans (bank partners) and suitable margins

Consider discounts

1st Benchmarking other developments

2nd Cost Analysis Approach

Final = Adjust for Market Factors

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First, before the guys next to you

Competition analysis

Timing, Terms, Price

Sales strategy – best / worst case scenarios

Plan

What are you selling?• Low, middle, high• Emotional appeals• Timing of marketing / branding efforts

Developers – When to start Selling?

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Sales Distribution Network

Brokers vs. Agents• An Agent is employed by a Developer directly and is

therefore directly accountable to the Developer and the Buyer (an extension of the Developer)

• A Broker sells products from anyone to anyone –accountable only to himself – mass market

Models of Distribution

Brokers and Agents offer greater benefits to both end buyer and Developers

The Developer community has not learned the benefits of Brokers & Agents

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Web Analytics

On-line Data gives you real numbersInteraction with potential buyersInteractive numbers over millions of page viewsOn-line marketing / Digital marketing (‘soft’ copies – e.flyers) On-line real estate advertising expected to account for 1/3 of the entire marketing budget by 2010Real-time, statistical view into real estate market for each district and many developmentsThousands of new listings added each month to the databaseIn Vietnam, on one site alone, over 2,000 property searches a dayDemographic data which has not previously been available

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This heat graph shows the individual listings and the color shows the number of views. Lighter blue is fewer views, darker purple represents more views.

Web Analytical Data – Heat Graph

Apartments for Sale: Jan – Dec 2008

Heat Graph provided by MetVuong.com

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Other important things to consider

Property management – in house or outsource

Usable area within the units – hallways, corridors, angles

Parking – ratio of spaces per units, buy / lease

Owners management committee – make up and responsibility

Resale market – ease of secondary sales

Security, cleaning, lifts, energy usage

Green issues

Reasonable management fees

Infrastructure and flooding

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Current status of major infrastructure developments in HCMC

District 2 (Cat Lai port area)District 7 (Phu My Hung)

Phu My bridge – to be completed early September 2009

Khanh Hoi bridge connecting District 1 & 4 Calmette bridgeDistrict 1

District 4

Ben Nghe Canal

Located next to M&C Site

Completed in late January 2009 Completed late January 2009

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Current status of major infrastructure developments in HCMC

Thu Thiem area

District 2Thu Thiem tunnel

District 1

East – West Highway

East - West highway to be completed Q1 ‘10

Calmette bridge

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Market Analysis

Why Q1 2009 re/launches were successful?

Developers need to rethink their approach to buyers

Real Demand exists – Real Buyers are out there

Act now, or risk the future? Office market example

Branding and Marketing are much more important than ever before

Vietnamese use the internet to collect Real Estate information

Professional advice can affect your bottom-line • Research, Marketing, Agents/Brokers

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National and City Economic Overview

Office

Retail

Hotel

Residential for Sale

Investment

Serviced Apartments

Construction Costs

Quarterly Reports for Ho Chi Minh City and Hanoi

quarterlyreports@cbrevietnam.com

Available for each city, in English or Vietnamese

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Over 300 markets in more than 50 countries

Thank You

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