215 MARKET INSIGHTS OFFICE SECTOR In 215, Vietnam has benefited from stability in the macroeconomic Gross Domestic Product (GDP) in 215 increased 7.1% year on year (y-o-y), bringing the overall GDP growth rate in 215 to 6.68% which is the highest growth rate since 28. The Consumer Price Index (CPI) increased nominally at.2% y-o-y in 215 which resulted in a.63% increment over the whole year. Total retail sales and consumer services in the last three months of 215 The last quarter of 215 saw improvement in rents across all grades, reaching USD28/sqm/mth. Average net asking rents of increased 1.5% q-o-q to US36/sqm/mth as landlords adjusted rentals to take advantage of limited prime office space and positive macro-economic outlook. did not experience significant rent growth, staying at USD2/sqm/mth. The market remains tight with average occupancy rate of 95.7%. s occupancy rate was up 1.3% q-o-q to 96.3% thanks to strong leasing activities at new office buildings. s occupancy nominally went up to 95.2% as landlords tried to fill up vacant space before the year end. While CBD supply pipeline remained unchanged, non-cbd stock added 3, NLA from the opening of Pearl Plaza. The city currently has 11 and 57 office buildings, providing approximately 1,331,347 sqm GFA. In 216, will take the lead in new supply with nearly 77,sqm NLA from 4 projects. No projects will come online until 217 when Saigon Centre (phase 2) and Deutsches Haus are due for completion providing an additional 65,859 sqm NLA. Demand for office space in Ho Chi Minh City will be strengthen by the economic recovery, controlled inflation and interest rates, rapidly improving infrastructure and a more supportive legal framework. In addition, recent free trade agreements such as the Trans-Pacific Partnership are anticipated to enlarge the number of multinational corporations and small and medium sized enterprises, which may in turn trigger a healthy rise in office demand. In terms of tenant profile, finance, banking and service sectors are large space occupiers in most office buildings and is likely to expand more in the coming years. In anticipation of the future metro system, new clusters of residential projects have arisen along the lines. It is expected that condominium supply in District 2 and District 9 will surge by 58% and 2% in 217 respectively. In addition, selling prices and transaction numbers are expected to surge once the metro line are come into operation. Since the recovery of the market, developers have shifted their interest to high-end segment. The city has an abundant supply of high-end apartments but is in shortage of mid-end and affordable products. As medium and low-income people have the largest housing demand, developers should focus more on this market segment. Figure 1: Average asking rents US$/sqm/month Figure 2: Average occupancy rate % 12 1 8 6 4 2 6 5 4 3 2 1 Table 1: Future Supply F 211 212 213 214 215 216 Building name District Grade F 211 212 213 214 215 216 NLA (sqm) Completion year Hai Quan Tower 1 B 3, 216 Royal Tower 7 B 21,852 216 Saigon Giai Phong 3 B 16,392 216 The Waterfront Saigon 1 B 8,822 216 Saigon Center Phase 2 1 A 35,859 217 Deutsches Haus 1 A 3, 217 Maple Tree Business Center 7 B 24,154 217 216 Colliers International Research Colliers International is a global leader in commercial real estate services, with over 16,3 professionals operating out of more than 52 offices
215 MARKET INSIGHTS RETAIL SECTOR In 215, Vietnam has benefited from stability in the macroeconomic Gross Domestic Product (GDP) in 215 increased 7.1% year on year (y-o-y), bringing the overall GDP growth rate in 215 to 6.68% which is the highest growth rate since 28. The Consumer Price Index (CPI) increased nominally at.2% y-o-y in 215 which resulted in a.63% increment over the whole year. inflows into the manufacturing sector and production of export goods. Total retail sales and consumer services in the last three months of 215 As of 215, the average net asking rent across all retail segments is stable at USD59/sqm/mth. Rents in non CBD area remained unchanged at USD36/sqm/mth at despite new stock entering the market. Average occupancy rate maintained its high level at 92%, up 2ppts q-o-q. Most of retail developments in the city center have been fully occupied thanks to their prime location. Thao Dien Megamall and Pearl Plaza, two new shopping centers on the outskirts of Ho Chi Minh City also recorded impressive occupancy rate of 95% and 9% respectively due to their great efforts in securing pre-committed tenants. Three new shopping centers in suburban area have come online in the review quarter, adding a total of 15, GFA to the current stock. Vincom Thao Dien Mega Mall in District 2 and Pearl Plaza in Binh Thanh District are developed to take advantage of the future metro line no.1. Being one-stop-shop destinations for customers, both of them are believed to achieve a good business performance. Meanwhile, the Korean retail chain Emart has been established to meet the growing population and fast rising retail demand in Go Vap Distict. The EU Vietnam Free Trade Agreement, the TPP and AEC integration will all profoundly attract more foreign participation in Vietnam s retail market. In addition, the introduction of metro lines is expected to improve the ability of the population to access retail activities. Hence, new retail developments at the extremities of the metro line are attracting huge interest. Retail supply will be ample through 22 when over a million square meters of new supply will be added to the market. Figure 1: Average Asking Rent USD/sqm/month Figure 2: Occupancy Rate sq m 18 16 14 12 1 8 6 4 2 6, 4, 2, -2, F 211 212 213 214 215 216 Net Absorption 211 212 213 214 215 Figure 3: Supply by District Others 14% CBD NON-CBD Occupancy Rate 1 95 9 85 8 % It is forcasted that the middle and affluent class in Vietnam with income from USD714 and above a month will triple in size until 22. This group is considered as key potential customers for both local and international retailers. Locally, Ho Chi Minh City retail market is very promising with total retail sales in 215 reaching more than USD3 billion, up 1.5% y-o-y. The growing number of international arrivals to the city also assists the local retail market, which in turn will trigger more space demand. Phu Nhuan 6% District 7 7% Tan Binh 1% District 3 12% District 1 51% 216 Colliers International Research Colliers International is a global leader in commercial real estate services, with over 16,3 professionals operating out of more than 52 offices
215 MARKET INSIGHTS CONDOMINIUM SECTOR In 215, Vietnam has benefited from stability in the macroeconomic Gross Domestic Product (GDP) in 215 increased 7.1% year on year (y-o-y), bringing the overall GDP growth rate in 215 to 6.68% which is the highest growth rate since 28. The Consumer Price Index (CPI) increased nominally at.2% y-o-y in 215 which resulted in a.63% increment over the whole year. Foreign Direct Investment (FDI) of newly registered and supplementary capital rose 12.5% from a year ago to USD22.67 billion, with strong inflows into the manufacturing sector and production of export goods. Total retail sales and consumer services in the last three months of 215 were estimated at USD148 billion, up 9.8% compared to the same period High absorption rates were reported in projects with strategic locations and developed by prestigious developers. More than 8, apartments were sold in 215, an increase 2% q-o-q. The year 215 has witnessed the recovery of the property market, supporting by marcoeconomic stability, ongoing construction of metro lines and upgraded transport infrastructure. There was a remarkable rise in the average sale price as the high-end segment took high proportion in the supply pipeline. While the primary price across all segments increased 4.4% y-o-y, that of high-end properties surged 8.3%, reaching USD2,3/sqm on average. Besides, sale price of new and under construction projects grow stronger than those of completed ones. To catch up with the recovery of the real estate market, a large number of property products were marketed in the year 215. 8 new launches were recorded, providing approximately 41, units and the high-end segment continued to dominate new supply. Notable projects in the review quarter are the Nassim in District 2, City Garden Phase 2-Promenade in Binh Thanh District, Charmington La Pointe in District 1, etc. Taking advantage the strategic position as a gateway to the city and southern provinces, the eastern area of Ho Chi Minh City has attracted huge interest from developers and homebuyers. Significant investment in infrastructure, housing, and commercial projects has been generated in the area, accounting for 47% of total new supply in this quarter. Demand for housing in Ho Chi Minh City remains high. The city s population is growing fast when more migrants from other parts of the country are coming here for work. As home loans with low interest rates can be accessible, young people with stable income can afford to buy a condominium. Since the relaxation of regulations on foreign property ownership, there has been notable interest from overseas. However, to make more foreign transactions happen, the market needs clearer legal guidelines from the government. In anticipation of the future metro system, new clusters of residential projects have arisen along the lines. It is expected that condominium supply in District 2 and District 9 will surge by 58% and 2% in 217 respectively. In addition, selling prices and transaction numbers are expected to surge once the metro line are come into operation. Since the recovery of the market, developers have shifted their interest to high-end segment. The city has an abundant supply of high-end apartments but is in shortage of mid-end and affordable products. As medium and low income people have the largest housing demand, developers should focus more on this market segment. Figure 1: Sale Price in 215 (USD/sq m) Figure 2: Net Absorption rate by segment 25% 2% 15% 1% 5% % Figure 3: Sold Units units 18-23 32% 4 35 3 25 2 15 1 5 >23 1% 13-18 <1 18% 1% 1-13 26272829 21 211 212 213 214 215 3% Luxury High-end Mid-end Affordable 211 212 213 214 215 Colliers International is a global leader in commercial real estate services, with over 16,3 professionals operating out of more than 52 offices 216 Colliers International Research
215 MARKET INSIGHTS VILLA/TOWNHOUSE SECTOR In 215, Vietnam has benefited from stability in the macroeconomic Gross Domestic Product (GDP) in 215 increased 7.1% year on year (y-o-y), bringing the overall GDP growth rate in 215 to 6.68% which is the highest growth rate since 28. The Consumer Price Index (CPI) increased nominally at.2% y-o-y in 215 which resulted in a.63% increment over the whole year. Total retail sales and consumer services in the last three months of 215 The villa and townhouse segment performed well in 215 thanks to improved buyer confidence. The transaction volume increased with a growth rate of 5% q-o-q and 76% y-o-y. District 9 and District 7 had the strongest performance, accounting for approximately 41% and 29% of sales respectively. Taking advantage of the economic recovery and rising market sentiment, new launched projects increased their primary average asking price to USD3,-3,6/sqm. As supply on the secondary market is limited, prices appreciated 5%-6% compared those on the primary market. Five new villa and townhouse projects entered the market in 215, providing approximately 1,15 dwellings to the primary market. The existing supply pipeline comprises approximately 8,3 villas and townhouses from 56 projects. Decentralised districts, especially District 2 and District 9 took a large proportion of the market share thanks to their large land bank, completed infrastructure and improving connectivity to the city center. More landed property projects will enter the east and south area of the city. Price growth will continue on both primary and secondary markets as more investors will be interested in this segment. Projects with completed internal facilities, strategic locations, affordable selling prices and developer reliability will be attractive to purchasers. Figure 1: Historical Performance USD/sq m Figure 2: Supply by Year 1 8 6 4 2 5 4 3 2 1 dwellings 12 Figure 3: Current Supply by District 8 District 7 District 9 District 2 Others 213 214 215 Existing supply New supply 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216F No. of townhouses No. of villas As personal wealth and living standard increase in recent years, Vietnamese people will save more and look to invest. Besides condominiums, landed property has become one of the favourite investment channels in 215. There have been an increasing number of investors attracting to this market segment due to its easy-to-resell feature and high capital gain. Buy-to-let is a popular trend, accounting for 5-7% of total transactions while end-users only took a small proportion in buyer profile. dwellings 6 4 2 Dist. 9 Dist. 2 Go Vap Nha Be Dist. 7 Binh Thanh Thu Duc Dist. 12 Binh Tan Binh Chanh 216 Colliers International Research Colliers International is a global leader in commercial real estate services, with over 16,3 professionals operating out of more than 52 offices
215 MARKET INSIGHTS SERVICED APARTMENT SECTOR In 215, Vietnam has benefited from stability in the macroeconomic Gross Domestic Product (GDP) in 215 increased 7.1% year on year (y-o-y), bringing the overall GDP growth rate in 215 to 6.68% which is the highest growth rate since 28. The Consumer Price Index (CPI) increased nominally at.2% y-o-y in 215 which resulted in a.63% increment over the whole year. Total retail sales and consumer services in the last three months of 215 The average net asking rent was softened in 215 as and s recorded a nominal drop of 1.2% and 3.8% q-o-q respectively. In the CBD, the average rental rate was US$3,52/ unit/mth for a typical 2-bedroom unit in a popular area with sizes ranging from 8 sqm to 14 sqm. Occupancy improved on the back of short-term stays during Christmas and New Year holiday. and occupancy increased 1% and 3.6% q-o-q. In the next three years, the market will have 12 projects providing 2,2 units. Due to limited new supply in the city core in the short term, rents and occupancy rates of existing projects will experience positive correction. Demand continues to be strong from expatriates and MNCs. Figure 1: Average Asking Rent by Grade USD/sq m/month Figure 2: Occupancy Rate by Grade % 4 3 2 1 1 95 9 85 212 213 214 215 8 In 215, the market added 89 units from The Reverie Residence and 52 units from Diamond Island Luxury Residence. Another project will enter the market in the second half of 216. The Ascot Waterfront Saigon developed by Canh Hung Hai Thanh Corporation is coming to its final completion, proving 222 serviced apartments. Grade B stock will be ample in 216 with expected completion from four projects which are Saigon Plaza, C.T Plaza, Viettel Tower and New Pearl. Demand for serviced apartments in Ho Chi Minh City will be boosted after the government promoted an effective environment for trade and investment relations. The advent of the ASEAN Economic Community (AEC) on 31 Dec 215 and the conclusions of Trans Pacific Partnership (TPP) and other trade agreements in 215 are expected to bring in more FDI, foreign investors and business travelers to Ho Chi Minh City. 75 7 212 213 214 215 Table 1: Significant future projects under construction Project name District Grade Total units Expected Completion Ascott Waterfront Saigon 1 A 222 2H 216 Saigon Plaza 1 B 119 3Q 216 Saigon South Place 7 A 48 4Q 216 Saigon Center Phase 2 1 A 216 217 216 Colliers International Research Colliers International is a global leader in commercial real estate services, with over 16,3 professionals operating out of more than 52 offices
215 MARKET INSIGHTS INDUSTRIAL SECTOR In 215, Vietnam has benefited from stability in the macroeconomic Gross Domestic Product (GDP) in 215 increased 7.1% year on year (y-o-y), bringing the overall GDP growth rate in 215 to 6.68% which is the highest growth rate since 28. The Consumer Price Index (CPI) increased nominally at.2% y-o-y in 215 which resulted in a.63% increment over the whole year. Total retail sales and consumer services in the last three months of 215 By 23, there will be 12 more industrial parks in HCMC which would increase the total number of IPs to 3. The total industrial area is projected to be 3,ha. Prices and occupancy rate are expected to increase steadily. There is a shortage of skilled and English capable workers in IPs in Ho Chi Minh city. Figure 1: Market Performance USD/sq m/month 3 25 2 15 1 5 Average Asking Rent Occupancy Rate 12% 1% 8% 6% 4% 2% The occupancy and rent rates are stable. Gross asking rent ranges from USD6- USD286/sqm/term with an average rate is at USD12/sqm/ term. The remaining Land Use Right year terms range from 26-43 years. Average occupancy rate is 67.2%. Rental rate of ready built factory ranges from USDD4- USD8/ month for a whole 3sqm-45sqm factories, or USD88- USD25/ month for 5sqm-12sqm factories. Binh Tan Dist. 7 Binh Chanh Thu Duc Nha Be Dist. 2 Cu Chi Dist. 9 Dist. 12 Tan Binh Figure 2: Supply by District Nha Be 8% Others 13% Dist. 9 22% % Southern Economic Zone include HCM city and surrounding provinces such as Long An, Dong Nai, Ba Ria Vung Tau, Binh Duong. Tay Ninh. The economic zone has 16 active IPs with total leasable areas of 33,5ha. Ho Chi Minh city and Hanoi are two cities which comprise the highest number of IPs in Vietnam. Ho Chi Minh City has 3,92ha industrial area which are allocated in 18 IPs. No new supply was delivered during the last quarter of 215. The leasable area is estimated to be about 67% of the total industrial land area, which is equivalent to 2,637ha. There is a shortage of ready- built factories which are bigger than 2sqm. From a real estate point of view, companies from non- TPP member nations - such as China, Korea, India - would relocate their operations and factories to Vietnam in order to gain tax exemptions for their products. Foreign investments, especially from the U.S and Japan, will also flow into Vietnam more heavily to take advantage of Vietnam s labour force and domestic market. These factors positively contribute to the demand for industrial land, factory, warehouse and offices. Investors and developers aim to focus on clear lands and areas locating near traffic hubs like ports, airports, metro systems. Dist. 7 8% Binh Tan 1% Binh Chanh 16% Table 1: Future Supply Cu Chi 23% Industrial Park Name District Launched Year GFA (ha) Phuoc Hiep Industrial Park Cu Chi 215 2 Bau Dung Industrial Park Cu Chi 215 122 Vinh Loc 3 Industrial Park Binh Chanh 216 21 Le Minh Xuan 2 Industrial Park Binh Chanh 217 338 Linh Trung 3 Export Processing Zone Binh Chanh 217 25 Xuan Thoi Thuong Industrial Park Hoc Mon 219 38 216 Colliers International Research Colliers International is a global leader in commercial real estate services, with over 16,3 professionals operating out of more than 52 offices