Professional Documents
Culture Documents
Q4/2008
developers has not resumed on a significant scale.
Demand
Irrespective of current market conditions, demand for housing is strong in Ha Noi. Supply is limited and mainly exists in the secondary market with sales prices out of range for the majority of purchasers. Yet demand for medium-end and affordable housing in Ha Noi will certainly be a feature of the market for the medium to long term. Despite lower lending rates in Q4 2008, few individuals were able to obtain mortgages, which may also be reflective of a potential pool of homebuyers waiting for the residential market to bottom out in Ha Noi. Hence, transactions are still down as purchasers have few financing options. The credit environment in 2008 has also curbed speculation, which influenced the dramatic residential price rises of 2007. Apartments sold and prices, 2001 Q4 2008
Units 1 0,000 2,200 8,000 6,000 4,000 2,000 0 01 02 03 04 05 06 07 08 1 ,700 1 ,200 700 200 US$ / sq m
US$ / sq m 5,000 4,000 3,000 2,000 1 ,000 0 Standard units Standard units with better lo catio n & quality High - end units
Outlook
Despite difficult domestic economic conditions foreseen in the short term, the fundamentals for residential property demand in Ha Noi should persist. Limited supply in the apartment for sale sector will not likely be adequately addressed over the medium-term, owing to the present market downturn and tight credit conditions. Delay and cancellation in implementing projects may happen accordingly, and supply forecasts will likely require downward revision. The majority of apartment supply in the future will likely be medium-end products in Ha Nois suburbs and New Urban Areas. Primary and secondary asking prices for good quality projects in the city centre will probably increase, mainly due to the shortage of supply in this area. Noteworthy high-end projects include Mipec Tower and Indochina Plaza Hanoi, both of which are expected to launch on the primary market in 2009.
Projects on the primary market in Q4 2008 include Golden West Lake, Keangnam Hanoi Landmark Tower, Ngoc Khanh Plaza, Vincom Parkplace and Pacific Place. Most of these projects target the high-end segment, with prices ranging from US$260,000 to US$350,000 per unit (inclusive of VAT). Successful transactions in Q4 2008, however, were few. Among both the primary and secondary markets in Q4 2008, the highest asking price was around US$4,500 per sq m and the lowest sales price was about US$560 per sq m. Prices generally remained high in central districts, such as Hoan Kiem, Ba Dinh, and Dong Da. Outer district project prices have been much more volatile in the second half of 2008. Both domestic and international economic conditions in late 2008 have dampened investment levels in the local property market. Despite several State Bank of Viet Nam interest rate reductions in Q4 2008, lending to
Vincent Giuge
Branch Director
This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills. Savills Vietnam Limited. 2007
Offices
Ha Noi, Viet Nam
Supply
There are about 57 Grade A and B office buildings in Ha Noi. The release of one Grade A and nine new Grade B buildings in 2008 brought the total stock of office buildings to approximately 390,000 sq m, representing a 17% year-on-year growth rate. Top Grade A monthly rents have now reached US$65 per sq m. Performance of Grade A and B office buildings in Q4 2008
Grade No. of Buildings 12 45 57 Stock (sq m) 105,000 284,000 389,000 Occupancy (%) 99 93 94 Rent (*) (US$/sq m/ month) 52 31 37
Q4/2008
quarter-on-quarter in 2008 and remained particularly sluggish in the fourth quarter. Most demand is for space less than 150 sq m, perhaps a reflection of the predominance of SMEs and start-up foreign firms in Ha Noi. With flexible short term and small space leasing options, business centers have also continued to solidify their position in the office market. A cost-cutting trend is now apparent among office tenants in Ha Noi. Many large companies that previously considered expansions are now holding back or downsizing their plans. Other companies have opted to relocate out of the CBD after their leases expired, shifting to more affordable locations in outer districts. Seven of ten buildings entering the market this year were situated outside of the expensive CBD, and five among those have been at least 90% occupied.
(*) Estimated average achievable rent and inclusion of service charge, exclusive of VAT, on net area. Average rent figure takes into account existing occupiers. New and reviewed leases will be much higher.
Outlook
By the end of 2009, over 175,000 sq m of office space is scheduled for completion. Of this amount, nearly 95,000 sq m will be provided in secondary districts. Overall, approximately 1.5 million sq m of additional office space is projected to enter the market in the future.
Supply forecast sq m 2,400,000
Q4 2008 ended a volatile year with occupancy falling by 1% and aggregate rents sliding by about US$1.6 per square metre. On a year-on-year basis, however, aggregate rents increased by nearly US$2 per sq m, yet overall occupancy is down by about 2 percent. Office market history
600 500 400 300 200 100 0 96 97 98 99 00 01 Leased area 02 03 04 Vacancy 05 06 07 Average rent 08 Thousand sq m USD/ sq m/ mth 60 50 40 30 20 10 0
2,000,000 1,600,000 1,200,000 800,000 400,000 0 2008 2009 2010 2011 2012 Onw ard Current supply Source: Savills Research and Consultancy New supply
Demand
The downturn in both the domestic economy and global markets has had a discernible impact on demand for office space. Office tenants are probably more price conscious in 2008. The number of leasing inquiries for office space actually began to decrease
Future office demand from the corporate sector will probably slow as many companies enter a period of retrenchment, primarily owing to a negative global outlook. The office market will experience volatility in the next one to three years, and rents will likely continue to soften. Given that the market is still at the early stages of development, economic uncertainty and potential feasibility issues for projects presently under construction will in all likelihood negatively impact the growth trajectory of Ha Nois office sector.
Vincent Giuge
Branch Director
This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills. Savills Vietnam Limited. 2007
Retail
Ha Noi, Viet Nam
Supply
In Q4 2008, many modern retail hubs continue to be developed around the CBD. Suburban retail development is expanding to meet the increase in residential development outside of Ha Noi. The additional supply of about 50,000 sq m of retail space brought Ha Nois total supply in 2008 to approximately 345,000 sq m, representing a year-on-year increase of 17 percent. The Central Business District (CBD) is still the best area for shopping in Ha Noi, owing to its prime location. Average achievable rents in major retail areas remained static this quarter, but the next year or two should demonstrate Viet Nams potential for retail, as predicted by the countrys #1 ranking in the AT Kearney Global Retail Development Index published in Q2 2008. Market share, Q4 2008
5% 5% 21% Supermarkets & Convenience Stores Electronics Mart 9% Wholesale Markets & Hypermarkets Shopping Centre Retail Podium Retail Banking 35%
Q4/2008
40% of Ha Nois total retail area, while retail banking and retail podium captures less than ten percent.
Demand
High inflation and economic volatility during 2008 have stunted Ha Nois consumption boom seen in recent years. Savvy retailers may thus be waiting out the current downturn before entering or expanding in the Viet Nam market. Based on current projections, however, retail supply will likely lag behind demand for several years.
Outlook
From January 2009, international retailers will be able to enter the market on a level playing field with domestic retailers, according to Viet Nams WTO accession commitments, implying a new level of competition, demand, and quality over the medium-term. Ha Noi should see approximately 100,000 sq m of new retail development by the end of 2009. Around 700,000 sq m will be added to the current stock by the end of 2011. Future supply
1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2008 2009 2010 2011 Onw ard Existing Stock Future Stock sq m
25%
In terms of area, shopping centres increased notably due to the appearance of six newcomers in 2008 including Syrena, Hapro Department Store, Ha Thanh Plaza, Parkson, Artex Building and Kinh Do Tower. Most shopping centres performed well in 2008. Seven out of ten shopping centres which Savills surveyed have been fully occupied. Rents still ranged from US$30-US$120 per sq m per month. Supermarkets and convenience stores are scattered throughout Ha Noi and floor space varies from 30 to 5,000 sq m. However, large scale supermarkets of 1,000 sq m upwards are mainly clustered in inner districts such as Hoan Kiem, Cau Giay, Dong Da, Ba Dinh, and Hai Ba Trung. A retail podium typically includes luxury street-front shops located in the podium of the building, such as Pacific Place, Sofitel Metropole and Opera Business Centre. Rents vary greatly in this segment, from US$30 to US$150 per sq m, depending on building grade and location. Tenants are typically luxury fashion brands. The total supply of wholesale centres and hypermarkets contributed by Metro Thang Long, Metro Hoang Mai, Melinh Plaza and Big C comprises
CBD rents will likely be the most resilient in the Ha Noi retail sector over the next 1-2 years. However, with a new wave of upcoming mega projects under development, some investors and retailers may begin diversifying their locations rather than continuing to pay higher rents for prime areas in the CBD. Whether this trend appears is not assured, as retail centres in still-developing outer districts will not likely be as competitive as more central properties. About seventeen major shopping centre developments with a total area of more than 80,000 sq m are under construction in Ha Noi, and are expected to be released by the end of 2009. Additionally, international chains such as Lotte Mart, Tesco, Carrefour, and Wal-Mart are finalising plans to enter the market.
Vincent Giuge
Branch Director
This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills. Savills Vietnam Limited. 2007
Hotels
Ha Noi, Viet Nam
Supply
There are 15 four and five-star hotels in Ha Noi, accounting for over 1.4 million room nights yearly. The aggregate number of hotel rooms in Ha Noi is over 3,800. The average room rate at five-star hotels is now over US$155 per night. Hotel performance in Q4 2008
Rating No. of Hotels 9 6 15 No. of Rooms 2,829 981 3,810 Average Room Rate (US$)* 159.7 96.4 143.4 Average Occupancy Rate 62.5% 74.5% 65.6% RevPAR** (US$) 99.8 71.8 94.0
Q4/2008
downturn, as international business trips and vacation travel plans are curbed. It is expected that the hospitality industry in Ha Noi will continue to feel the negative impact of the global downturn.
Outlook
The Ha Noi Administration of Tourism (HAT) targets two million foreign visitors to Ha Noi in 2010, implying a requirement of approximately 24,000 hotel rooms, 6,800 of which will need to be of four or five-star quality. Future supply, central districts
# o f ro o ms 6,000 US$ 1 80
5,000
1 60
(*) Estimated average room rates are exclusive of 5% service charge and 10% VAT. (**) RevPAR: Revenue per Available Room.
4,000
1 40
3,000
1 20
1 00
High building materials costs, as well as a tight credit policy in 2008 have had a negative impact on the capacity of many developers to implement projects, causing delays and even cancellations in some cases. Savills estimates a total of 2,000 new four and five-star rooms will enter the market by 2010, but nearly half of these will be in Tu Liem District in Ha Nois western suburbs. Demand in Ha Nois hospitality industry will likely remain modest as long as economic conditions and business sentiment are unfavorable. Future supply, outer districts and suburbs
# o f ro o ms 6,000 5,000 4,000 3,000 2,000 %
Despite softening occupancy levels and room rates over the first three quarters of 2008, both indicators showed some recovery at the beginning of the traditional Q4 high season. Room rates rose by 5% and occupancy increased by 8% quarter-on-quarter. Yet this quarter-on-quarter performance is modest in comparison to 2007, when room rates rose by 35 percent.
60 50 40 30 20 1 0 0
Demand
Demand growth has slowed in 2008, perhaps in part owing to slowing global economic conditions. In comparison to 2007, the number of international visitors to Viet Nam in 2008 increased by a mere 0.6 percent. This number was much lower than the governments target of 12-17 percent growth. Again, this sluggish growth probably reflects the global
Occupancy %
Vincent Giuge
Branch Director
This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole o r any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills. Savills Vietnam Limited. 2007
Serviced Apartments
Ha Noi, Viet Nam
Supply
Ha Noi has about 41 typical serviced apartment buildings with more than five units that are professionally managed, ranging from Grade A to C, available for lease across the city. This includes 2,094 international and local serviced apartment units. Nearly half of them are two-bedroom units. Top Grade A rents in Q4 2008 touched US$47 per sq m per month, excluding VAT.
Grade No. of Buildings Supply (units) Occupancy by Unit (%) Average Achievable Rent (*) (US$/sq m/mth) 35.1 22.5 17.8 27.9
Q4/2008
Demand
Demand remained stable for existing Grade A serviced apartments for lease, especially those located in Ha Nois CBD and the West Lake area. Given that Ha Nois approximately 12,500 expatriate residents are the typical target market for this sector, high investment levels in 2008 were an encouraging sign. Yet the worsening global economic picture in Q4 2008 does not bode well for market entries and foreign-invested sector over the short- to medium-term.
Outlook
By 2009, serviced apartment supply is expected to increase by approximately 5 percent. Due to the recent global downturn, most property markets in Viet Nam are experiencing volatility in Q4 2008. Additionally, rents are already high across all grades and may ease in the coming year. Savills forecasts that occupancy in 2009 may also decrease, settling to a range of 80%-90%, taking into account future supply forecasts. By 2011, supply should increase by another 35%, which will likely add further downward pressure on rents. Overall average achievable rents will probably experience sluggish growth over the next one to three years, as rates are already considered to be high and new supply will slow take up rates. However, the CBD market should be fairly static in terms of supply, leading to expectations that quality projects in central Ha Noi will continue to attract premium rents. Total stock and new supply, 2009 onward
A B C Total/Average
11 17 13 41
86 93 89 89
(*) Estimated average achievable rent and service charge, exclusive of VAT, on net area.
800
400
20
0 Q4/96 Q4/97 Q4/98 Q4/99 Q4/00 Q4/01 Q4/02 Vacant Units Q4/03 Q4/04 Q4/05 Q4/06 Q4/08
1 0
Leased Units
A verage Rent
In Q4 2008, supply increased by 1% against Q3 2008 and by 24.7% y-o-y. This y-o-y increase of stock was brought about by a total of more than 400 new units from some noteworthy buildings entering the market, including Somerset Hoa Binh, Fraser Suites, Hanoi Flower Maison IV, Skyline Tower, The Thien Thai, Swan Lake, and Lakefront Residence. Average rent by sq m in Q4 2008 decreased by about 1.8% against Q3 2008 but rose by 9% y-o-y. The overall average occupancy rate in Q4 2008 was unchanged in comparison to Q3 2008, at around 88%-89%, down by 3% y-o-y.
1 ,000 500 0 2009 201 0 Existing Supply So urce: Savills Research & Co nsultancy 201 1 New Supply Onward
Vincent Giuge
Branch Director
This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills. Savills Vietnam Limited. 2007
Demand
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Demand
Future Outlook