Market Insights from CBRE’s

Hanoi Quarterly Report

Presented by:

Richard Leech Thanh Tran

Executive Director Senior Manager
CBRE RESEARCH & CONSULTANCY CB Richard Ellis (Vietnam) Co., Ltd.
January 6, 2011
 VIETNAM ECONOMIC OVERVIEW
„ HIGHLIGHTS
ƒ GDP surpassed US$100 billion for the first time in 2010; annual GDP growth in 2010 reached 6.78%
ƒ In Q4 GDP growth rate increased by 7.34% y-o-y, and has increased steadily quarter by quarter
ƒ GDP per capita reached approximately US$1,160; Vietnam has improved its status from a low-income to
a middle-income country
ƒ FDI projects in 2010, 969 new projects, over US$17.2 billion in registered capital
ƒ Imports US$84 billion in 2010, up 20% from 2009 exports US$76.1 billion, up 25.5% y-o-y
ƒ Price of gold increased by nearly 35% over the year
ƒ Price of US$ increased 10% in 2010
ƒ CPI increased 11.75%
ƒ At the end of 2010, the lending rate increased sharply to 20-22% per year and then fell to 16-17% while
the deposit rate capped at 14%

*Figures sourced from GSO

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HANOI ECONOMIC OVERVIEW
ƒ Q4 GDP growth : 11.5% y-o-y
ƒ Significantly exceeded the national average GDP (approx. 7.34%)
ƒ 2010 GDP growth at 11% also exceeds national average (7.68%)
ƒ FDI in 2010 alone: US$180.2 million, 225 projects
ƒ Tourism: 1.23 million international
arrivals in 2010, up 20% from 2009
ƒ Retail sales goods and services rose
31.2% y-o-y

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HANOI INFRASTRUCTURE
„Hoa Lac – Hoa Binh
highway was approved to
build, that will improve
operation efficiency of
Thang Long Boulevard,
reduce the congestion on
National Road 6.
„National Road 6 (Ha
Dong – Xuan Mai section)
is preparing to expand and
renovate
„Progress of Extended
National Road 5 has
shown good clearance and
construction progress

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 HANOI
INFRASTRUCTURE
„ Progress on Ring Roads
ƒ Ring Road 1: Dong Mac – Nguyen
Khoai is prioritized to be cleared in
2011 and completed in 2012
ƒ Ring Road 2: Vincom offers to build
Vinh Tuy – Nga Tu So Sky Road
ƒ Ring Road 3: Pham Hung road will be
expanded. Sky Highway is under
construction from Khuat Duy Tien to
Linh Dam
ƒ Ring Road 4: Detailed master plan is
proposed

„ Obstacles of Cat Linh – Ha Dong

railway project are removed.
Expected completion in 2015
„ Long Bien – Bat Trang road was
finished construction, increase traffic
flow between Hanoi and Hung Yen

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CONDOMINIUM FOR SALE
„HIGHLIGHTS
Le Van Luong Cleve Mulberry Lane Canal Park
Residential
ƒ Q4/2010 new supply was 50% higher than Q3
ƒ Good secondary price increase in all market segments, against the stable price trend in Q1-Q3
ƒ Market demand continues to favor low & mid-end products, while most high-end & luxury products
continue to experience slow sales
302 Cau Giay
ƒ Developers’ reactions to changing market conditions: The Pride
ƒ Developers have been more aware of Decree 71 and Circular 16 and their implications
ƒ New high-end projects adopt a wait and see attitude. More pre-sales strategies are employed to
study market sentiment and gauge demand
ƒ Launched high-end projects continue offering incentives to boost sales and diversify their sales
techniques
ƒ More developers, including foreign ones, express interests in affordable products
ƒ Interest rates increased markedly, reducing funds available for property market
ƒ Poor performance of stock market, large fluctuations of gold price and VND/USD exchange rate, making
property market a safe investment channel

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CONDOMINIUM FOR SALE

Ciputra L Royal City Le Van Luong Residentials

M A RK ET S N AP SHO T , Q 4 2 0 1 0

C O N D OM IN IU M S LUX UR Y H IG H - EN D M ID - EN D L O W - EN D T O TA L

To ta l s up p ly (un its) 2 ,1 8 6 1 4 ,7 7 4 4 7 ,8 6 4 1 2 ,4 0 3 7 7 ,2 2 7

Ne w su pp l y (u ni ts) 0 841 1 ,8 6 8 132 2 ,8 4 1

Av era g e se co n d a ry as kin g p r ic e (U S $ p sm)
3 ,2 3 4 1 ,9 7 8 1 ,4 5 5 1 ,0 9 0 1 ,9 3 9
exc lu siv e o f 1 0 % V AT

% c ha n g e in se co n d ar y a ski n g p r ic e (q - o- q ) 4 .4 % 4 .4 % 8 .7 % 1 1 .2 % 6 .1%

% c ha n g e in se co n d ar y a ski n g p r ic e (y- o - y) 5 .5 % 8 .0 % 1 1 .8 % 2 0 .7 % 9 .3%

Current classification of condominium was heavily based on price with consideration of location, quality, brand…
- E.g by price: luxury (>$2.500 psm), high-end (US$1,400-$2,500) mid-end (US$800-$1,500) low-end (<$800 psm)

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CONDOMINIUM FOR SALE
„NEW SUPPLY
ƒ New supply in Q4: 2,850 units, ~ 50% higher than Q3
ƒ Q4 is usually the peak time for launching projects since demand is
high
ƒ Developers, after a waiting period following Decree 71 and
Circular 16, have been more well prepared to launch their projects
ƒ By district:
ƒ Ha Dong (Le Van Luong Residentials, Hanoi Times Towers) comes
back to holding top market share after being inactive in Q3.
ƒ Cau Giay (Green Park Tower) maintains an important residential
market
ƒ By contract type:
ƒ Half projects are under capital contribution contract, which is
subject to 20% limit
ƒ This anticipates large new launch in 2011 when these projects
complete foundation and can release remaining 80% to the market

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CONDOMINIUM FOR SALE
„ SECONDARY PRICES
ƒ Q4: Price increase in all segments, against stable price trend in first 3 Qs
ƒ Highest growth in Low-end and Mid-end: 11% & 9% resp
ƒ Luxury & High-end: 4.5% each
ƒ Mostly due to operational and newly handed-over projects
ƒ Certain high-end projects experienced price reduction
ƒ Reasons for general price increase:
ƒ Many projects were handed over to buyers in Q4. Price increase at those
projects can be up to 20%
ƒ Q4 is usually the most active period in the year: people want to settle
down before the year end
„ DEMAND
ƒ Demand for low & mid-end products continues to dominate. Sales rate can be
up to 100%
ƒ Le Van Luong Residentials: 836 units, sold out within 1-2 days after
launch. Majority is small 50-60 sm units, priced at VND 1-1.5 billion each
ƒ Demand for high-end quality products is also good (Royal City & Ciputra)
ƒ These 2 developers have established success in operational projects
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LANDED HOUSES – MARKET BRIEFS
„HIGHLIGHTS Cleve Mulberry Lane Canal Park

ƒ All districts of Hanoi observed price appreciation throughout 2010. In Q4 alone, prices of landed
houses in Hanoi grew at 12-15% on average across all districts q-o-q

ƒ Strongest increases observed in: 302 Cau Giay The Pride

ƒ New urban areas in Long Bien – Gia Lam District (~25% on average q-o-q)

ƒ New urban areas in the west such as Ha Dong District (~18% on average q-o-q)

ƒ Certain projects saw price appreciation q-o-q as high as 30%++ (Van Phu NUA and Van Khe NUA)

ƒ Given such growth rate, landed property was a profitable and safe channel of investment in 2010,
compared to other popular channels such as currency/gold trading and securities market

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OFFICE

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OFFICE
„HIGHLIGHTS
„ Two projects opened in Q4
ƒ In the CBD: Sentinel Place
(Grade A) 7,000 sm NLA
ƒ In the West: Lilama 10
Tower (Grade B) 12,700 sm
NLA Sentinel Place Lilama 10

„ Rents stabilized in both Grade A & B

ƒ Buildings with recent renovation see strong increase in asking
rents (Central Building, Vincom)
ƒ Asking rents decrease in most other buildings

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OFFICE
„VACANCY
ƒ Grade A: dropped from ~25% to ~18% q-o-q, leases in Charm Vit
Tower and BIDV Tower
ƒ With out BIDV Tower & Charm Vit Tower, vacancy of Grade A remain stable
about 3% in last two years.

ƒ Grade B: stable with 15% (last quarter: 16%)

„NET ABSORPTION
ƒ Net absorption was over 32,600 sm in Grade A & B.

GRADE A 58% GRADE B 42%

32,600 sm is the most space taken up since 2007

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OFFICE
„FUTURE SUPPLY
ƒ Quantity: In the Midtown & Western submarkets, supply will continue
to rise
ƒ Crown Complex (Q1 2011)
ƒ Keangnam Hanoi Landmark Tower (Q4 2011)
ƒ Quality: In the CBD, renovation activities are being done (Vincom City
Towers, Central Building)

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OFFICE
„ DEMAND ƒMajor Industries
ƒTenant movement ƒ Banks: Shinhan Bank, HSBC, First Bank
ƒ Enquiries for large spaces are ƒ Insurance: Korea Life Insurance, Ace Life Insurance
stronger ƒ Education: Concordia Int’l School Hanoi
ƒ Î Expansion to the West ƒ Technology: FPT, S-Telecom
ƒEnquiries
ƒ Most interests in area under 250 sm
ƒ More enquiries for area from 500 sm and
above

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 RETAIL

MARKET SNAPSHOT, Q4 2010

S HOPPING
RETAIL LOBBIES
DEPARTMENT STORE CENTRES
Total supply (NLA, sm) 11,000 97,171 10,310
New supply (NLA, sm) 0 0 0
Vacancy rate (%) 0.00% 13.62% 8.73%
Average asking rents (US$ psm per month)
CBD - $54.52 $65.64
% change (y-o-y) - 0.04% 14.58%
% change (q-o-q) - 0.00% 0.00%
Non-CBD $54.00 $34.00 $19.00
% change (y-o-y) 0.00% 12.53% 5.56%
% change (q-o-q) 0.00% -5.81% 0.00%

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RETAIL
„HIGHLIGHTS
ƒ Strong retail sales in 2010: y-o-y growth exceeded 30%
ƒ No new stock, total supply remained at 118,480 sm, ×14% y-o-y
ƒ Major announcements and progress:
– Hang Da Galleria finished leasing long term & began to lease for
short term. Scheduled to open in April 2011
– Pico Mall was 70% pre-leased, planned to open in March 2011
– Vincom City Tower is under strong renovation process
ƒ Brands continued exposure:
– Fashion : Aldo, Dr. Martens, Guciano, Chopard
– F&B : KFC, BBQ Chicken, SumoBBQ
– Electronic marts : Pico Plaza, E-Best, Huong Anh
– Cinema : Platinum Cinema (The Garden)
ƒ Average vacancy rate increased slightly due to tenants’ movement in Grand
Plaza
ƒ Average rental rate: US$45.58 psm per month; Non-CBD: US$36.60 psm
per month, Ø 3.8% q-o-q (Grand Plaza: down 18% q-o-q: supporting policy
applied for tenants)
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 RETAIL
„OUTLOOK
ƒ Market gets more familiar with shopping centres Xuan Thuy Tower Bac Ha Plaza
ƒ Shophouses still popular in CBD area

ƒ Shopping centres in the West need to adopt long

term vision and more aggressive marketing and
leasing strategy

ƒ With continued growth in demand and heavy

residential development, sizeable shopping
centres will become a more prevalent retail
format in the future

ƒ F&B brands and electronic retailer chains

expected to continue aggressive expansion
plans. Besides, fast fashion may emerge as a Hang Da Galleria – Hoan Kiem District
new trend in the near future

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SERVICED APARTMENTS
MARKET SNAPSHOT, Q4 2010
International operator Self-managed Total
Total Supply (units) 685 1,436 2,121
New Supply (units) 0 231 231
Vacancy Rate (%) 6% 23% 15%
Vacancy Rate (%), excl. Grand Plaza 6% 12% 7%
Average asking rents (US$ psm per month, excluding service
$41.35 $27.86 $31.15
charge and VAT) as at Q4/2010
% change (q-o-q) 0.3% 5.2% 2.8%
% change (y-o-y) 4.2% 7.2% 4.9%

Note: Supply only accounts for projects of 30 units or above.

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SERVICED APARTMENTS
„HIGHLIGHTS
„Grand Plaza Serviced Residence - 180 units opened in Q4
„Vacancy rate generally decreased in Q4
ƒ 7% on average excl. Grand Plaza (down from 9% in Q3/2010)
ƒ 6% in internationally operated projects (down from 12% in Q3/2010)
ƒ Including Grand Plaza however, vacancy rate is at 15%
„Average asking rents: US$31.15 psm per month - little change
„Substitute markets, i.e. buy-to-let apartments in large projects,
emerged
„Number of inquiries increased in 2010
„Tenants’ top concerns include: location, facilities, communities

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SERVICED APARTMENTS
„OUTLOOK
ƒ New Supply in 2011:
– Early in 2011: Crown Complex - 135 units and Hoa
Binh Green Apartments - 40 units expected to start
operation in Q1/2011 (original opening scheduled
for Q4/2010)
– Later in 2011: Significant supply expected to open
includes Keangnam Hanoi Landmark Tower - 378
units and Elegant Tay Ho - 100 units

ƒ Increasing competition from substitute markets

ƒ Market rents expected to trend down due to

Sedona Suites Serviced Apartment increasing supply from the Western area, but
rents will likely remain unchanged in the CBD,
Tay Ho and Ba Dinh in the short term

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HOTELS
MARKET SNAPSHOT, Q4 2010
5-STAR 4-STAR 3-STAR TOTAL
Total stock at the end of Q4 2010 (rooms) 3,130 1,510 1,978 6,618
New supply (rooms) 0 106 0 106
Average Room Rate (US$/night) $126.22 $67.57 $38.55 $77.45
% change (y-o-y) 0.98% -9.97% -6.88% -3.77%
% change (q-o-q) 6.31% -1.03% 0.78% 3.15%
Average Occupancy Rate (%) 68.24% 64.55% 63.79% 65.53%
% change (y-o-y) 5.76% 10.13% 2.31% 6.07%
% change (q-o-q) 10.24% 4.70% 2.40% 5.78%
Revenue per Available Room (US$/night) $85.50 $43.13 $24.46 $51.03
% change (y-o-y) 9.28% 5.51% -3.21% 6.03%
% change (q-o-q) 25.11% 6.09% 4.29% 15.58%

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HOTELS
„HIGHLIGHTS
ƒ New hotel: Silk Path (106 rooms, 4-star);
ƒ Grand Plaza Hanoi (300 rooms) officially ranked 5-star
ƒ Sofitel Legend Metropole Hanoi voted as Top 4 city hotels in the world by
Ciga Aficionado Magazine, following earlier award: Top 10 Best Leisure
Hotels & Resorts in Asia by Smart Travel Asia
ƒ Tourist arrivals to Hanoi in 2010:
– International: 1.23 million, × 20% y-o-y. Hanoi contributed 24% int’l
arrivals throughout Vietnam in 2010
– Domestic: 7.39 million, × 10% y-o-y
ƒ Average occupancy rate & RevPAR increased q-o-q and y-o-y across the
board. Sofitel Plaza Hanoi & Sheraton Hanoi saw the largest increases of over
20% y-o-y
ƒ Average room rate (ARR):
– 5-star: slightly increased y-o-y. Hanoi Horison & Sofitel Plaza Hanoi
experienced the sharpest rises in ARR (19% & 16%, respectively)
– 4-star & 3-star submarkets decreased y-o-y across the board

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HOTELS
„OUTLOOK Silk Path Hotel – Hoan Kiem District
ƒ Large new supply in 2011: 184 rooms in CBD, over 1,000 rooms
in the west
– Hotel de l’Opera Hanoi (CBD, 107 rooms)
– Oriental Pearl (CBD, 87 rooms)
– Crowne Plaza West Hanoi
– Grand Plaza Hanoi
– Keangnam Hanoi Landmark Tower
ƒ Grand Plaza Hanoi is the first test case for the many high-end
hotels planned around Pham Hung
ƒ Hotels will move into more defined niches: business travelers
booking out west and tourists focusing on Hoan Kiem
ƒ New and existing international hoteliers are competing
aggressively for new projects in strong locations
ƒ Unbranded hotels will face stronger competition
ƒ Success at many 5-star hotels will depend on their ability to
attract MICE & business travelers: conference facilities, corporate
rates, and access to businesses

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 For further information and
order details, please contact….
quarterlyreports@cbrevietnam.com

THANK YOU!!!

© 2009 CB Richard Ellis, We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation
about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. We include projections,
opinions, assumptions or estimates for example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct your own investigation
of the property and transaction.

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