CBRE presentation.pdf

Fearless Forecast 

“Do not let a good crisis go to waste” 

January 2012 

Presented by: 

Marc Townsend 

Managing Director 

CB Richard Ellis (Vietnam) Co., Ltd.

HCMC 2011… Changes 

Times Square Saigon M&C Tower 

Taken on January 2, 2011 

Eden A 


CBRE Vietnam | Page 2 CBRE Vietnam Fearless Forecast 2012



Vietcombank Tower VietinBank BIDV Tower 



Saigon Centre 

(phase 2) 



Ben Thanh Towers 



Office Tenants 

• Multiple choices and softening rents 

Hospitality 

2011 MOST Fearless Forecasts 

• Ritz Carlton, St. Regis, Mandarin Oriental, Shangri-La and Four 

Seasons to enter market within the next 5 years 

Retail 

• Refurbished retail areas appear (Saigon Square #3) – 

Shipyards moving towards development 

• Growth of mini-malls due to lack of land (< 3,000 sm) 

• Larger retail areas coming up outside of traditional areas – 

District 5 (Tan Da Shopping Center), and Binh Duong 

(Becamex New City) 

CBRE Vietnam | Page 5 CBRE Vietnam Fearless Forcast 2012

Investors 

2011 MOST Fearless Forecasts 

• Property investment remains dangerous for your health 

• Change in asset class as gold dips and people moved in other directions 

Developers 

• Marketing spend TRIPLES as developers search for new ways to sell / lease 

their units 

• Increased use of technology in property – building management systems, CRM 

systems 

• Local companies seek capital through IPO’s and more sophisticated financial 

structures 

• Some residential developers will convert units for sale to units for lease due to 

unsold units in completed buildings, or instituting rental pools (guarantees) 

• Demand for data centres grows due to the continuing movement online, as our 

businesses become more immediate with wi-fi, smart phones and iPads. 

Developers prepared to deliver with the requirements needed to support these 

trends will profit. 


GDP 

Growth Rate (y-o-y) 

Lending Rate 12% 

Inflation 

(Average, y-o-y) 

2011 Vietnam Economic Overview 

2008 2009 2010 2011 e 2012 f 

6.2% 5.3% 6.8% 5.9 1 6.3 3 

12.75% 

Down from 21% 

in Q3 

16%-17.0% 

(Late 2010) 

22.9% 6.9% 1 9.2% 

(Dec‘10: 11.8%) 

22% - 25% 2 N/A 

18.58% 1 12.1% 3 

Exports US$62.7 bil US$57.1 bil US$71.6 bil US$96.3 bil US$105.4 5 

Imports US$80.7 bil US$69.9 bil US$84.0 bil US$105.8 bil US$113.3 5 

Gold Price 

(per Tael) 

US$/VND 

(Commercial banks) 

US$/VND 

(Unofficial market) 

VND17.8 mil 

(Dec. 31, 2008, up 

7.2% y-o-y) 

17,400 

(Dec. 31, 2008) 

17,510 

(Dec. 31, 2008) 

VND26.7 mil 

(Dec. 31, 2009, 

up 50% y-o-y) 

18,497 

(Dec. 31, 2009) 

19,470 

(Dec. 31, 2009) 

Committed FDI US$71.7 bil US$22.6 bil 1 

VND36.1 mil 

(Dec. 31, 2010, up 

35.2% y-o-y) 

19,500 

(Dec. 31, 2010) 

Devalued by 5.4% 

vs. Dec. 2009 

21,010 

(Dec. 31, 2010) 

US$18.6 bil 

(US$6.8 bil real 

estate) 

VND41.8mil 4 

(Dec. 30,2011. up 

15.8% y-o-y) 

21,036 

(Dec.31, 2011) 

Devalued by 7.9% 

vs Dec. 2010) 

21,275 

(Dec. 31, 2011) 

US$14.7 bil 1 

(US$845.6 mil real 

estate) 

Source: Historical data by GSO, 1 GSO , 2 SBV, 3 IMF, 4 SJC, 5 World Bank, 6 Ministry of Investment, 7 Oxford Economics 

CBRE Vietnam | Page 7 CBRE Vietnam Fearless Forecast 2012 

N/A 

21,735 7 

N/A 

US$15 - 16 bil 6 

Implemented FDI US$11.7 bil US$10 bil US$11 bil US$11 bil 1 N/A

GDP 

Growth Rate 

Consumer Price 

Index 

Gold Price 

( per gram in 

US$ equivalent) 

2011 Regional Economic Comparison 

Hong Kong Thailand Singapore China Malaysia Vietnam Indonesia 

4.9% 1.6% 5.0% 9.0% 4.9% 5.9% 6.3% 

5.3% 3.9% 5.0% 5.6% 3.2% 18.6% 5.4% 

US$51.80 US$50.50 US$52.18 US$51.88 US$52.17 

US$53.00 

2.2% higher 

than regional 

average 

Source: Oxford Economics, Vietnamese General Statistics Office, World Bank, Goldprice.org, goldpricethai.com, pecunix.com 

US$52.72 

Trade Balance -$55.4 bn $27 bn $48.3 bn $111.9 bn $47.1 bn -$9.5 bn $38.2 bn 

FDI (net inflow 

in current US$, 

2010) 

$68.9 bn $6.3 bn $38.6 bn $185.1 bn $9.5 bn 

$8.0 bn 

(Source: World 

Bank) 

$13.3 bn 


With demand from the eurozone and US 

expected to remain weak for some time, 

emerging East Asia should continue to work 

toward increasing intraregional trade and 

financial integration, and expanding links 

with other emerging economies. 

2012 

- ADB, Asia Economic Monitor, December 2011 - 

GDP 

(% y-o-y) 

Vietnam 5.8 11.5 

Hong Kong 3.5 3.6 

Thailand 4.5 2.9 

Singapore 3.3 2.8 

China 8.1 3.5 

Malaysia 4.9 2.8 

Indonesia 6.2 5.0 

CPI 

(% y-o-y) 

10% 

8% 

6% 

4% 

2% 

0% 

-2% 

-4% 

-6% 

-8% 

2000 Q1 

A look ahead to 2012 

Source: Oxford Economics. Note: GDP growth for Vietnam in 2012, The World Bank, IMF and ADB range between 6.1% – 6.5%. 

2001 Q1 

2002 Q1 


2003 Q1 

2004 Q1 

2005 Q1 

2006 Q1 

World Western Europe Asia-Pacific United States 

2007 Q1 

2008 Q1 

2009 Q1 

2010 Q1 

2011 Q1 

2012 Q1 

2013 Q1

1.7% 

Implemented FDI 

9.3% 

COMMITTED FDI, 2010 

24.9% 

27.3% 

36.8% 

Real estate 

2011 Economic Overview – FDI 

Processing Manufacturing Industry 

Construction 

Hotels and restaurants 

Others 

COMMITTED FDI, 2011 


34.3% 

2.9% 

8.5% 

5.8% 

48.5% 

Real estate 

Processing Manufacturing Industry 

Construction 

Hotels and restaurants 

Others 

Source: Ministry of Planning & Investment

Index 

2011 Vietnam Stock Market 

At the beginning of 2011, some expected a rise. Going into 2012, 

some are wondering where the bottom is. 

VN Index drops 27.5%, real estate companies fell by approx. 45% 

Little support from those holding gold. 

550 

500 

450 

400 

350 

300 

4-Jan 1-Feb 1-Mar 29-Mar 26-Apr 24-May 21-Jun 19-Jul 16-Aug 13-Sep 11-Oct 8-Nov 6-Dec 

Trading value VNIndex 

Source: FPT Securities 

CBRE Vietnam | Page 11 CBRE Vietnam Fearless Forcast 2012 

2,000 

1,800 

1,600 

1,400 

1,200 

1,000 

800 

600 

400 

200 

0 

Trading Value (Billions VND)

Millions 

2011 International Arrivals 

2011: 6 million international arrivals to Vietnam (19.1% y-o-y) and 

3.5 million to HCMC (13% y-o-y) 

7 

6 

5 

4 

3 

2 

1 

0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Source: General Statistics Offices; bistrochic.net 

Vietnam HCMC 

Tourism arrivals by country 2011 

China 1,416,804 

South Korea 536,408 

Japan 481,519 

US 439,872 

Cambodia 423,440 

Taiwan 361,051 

Australia 289,762 

Malaysia 233,132 

France 211,444 

Thailand 181,820 

Others 1,438,779 


Nguyen Van Linh – the 

automobile hub, further 

growth expected; 

Kia New Morning 

VND357,000,000 

(US$17,000); 

Entry Level Mercedes 

VND1,500,000,000 

(US$70,000); 

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

Car Sales (unit) 

$120000.0 

$100000.0 

$80000.0 

$60000.0 

$40000.0 

$20000.0 

79% 

Mekong (Fiat, 

Ssangyong, PMC) 

Car Sales 

Car Sales by Manufacturer in Vietnam 


$.0 

82% 

VMC (BMW, 

Mazda, Kia) 

7% 

CAR SALES IN VIETNAM 

2007 2008 2009 2010 11M/2011 

2% 

GM Daewoo VinaStar 

(Mitsubishi) 

34% 34% 

Mercedes-Benz 

Vietnam 

22% 

Visuco (Suzuki) Toyota

New in 2011: 

• Pricing in Dong 

2011 Government Decrees 

– Decree 95/2011/ND-CP states that VND must be used for quotation or advertising of goods 

and services, etc. 

• Relating to Apartment Service Fees 

– Decision No. 4520/QĐ-UBND provides that the statutory Apartment Service Fee Rates shall be 

applied only when the parties has not yet agreed on the Apartment Service Fee in advance 

• Non-Agricultural Use Tax 

– Decree No. 53/2011/ND-CP 

– Pilot program for NALU Tax, Prior to enforcement of Decree No. 53 on January 01, 2012, The 

Ministry of Finance is unrolling a pilot program to collect non-agricultural land-use tax in certain local 

areas of Hà Nội, Cần Thơ cities and the Bắc Ninh province. 

– The pilot stage will focus on identifying taxation areas as well as connecting and exploiting the 

databases of local agencies on tax and natural resources. 

• Requirement for Environmental Impact Statement 

– Decree No. 29/2011/ ND-CP dated April 18, 2011 is the first guidance on the assessment on 

environmental impact 

– Proscribes many requirements and procedures to that are required for specific development projects 


Of the 20 Golden sites: 

• 2 completed 

• 2 under development 

• 16 sites awaiting action 

The Original Golden Sites 


Roadways 

• T3 – Thu Thiem Tunnel 

• The ten year Nhieu Loc - Thi Nghe Canal Road 

widening project is completed 

Infrastructure 2011 Milestones 

• On August 24, the first Bus Rapid Transport (BRT) 

route in the city opened from Ben Thanh Market, to 

Mien Tay Bus Station. 

Metro lines 

• The expected cost of Metro Line 1 has almost doubled, 

with progress in compensation. 

• Tramway Line No. 1 is being restructured into a Bus 

Rapid Transit (BRT) system at reduced cost. 

Air 

• Da Nang’s new airport terminal opens! 

• Prime Minister Dung officially approved Long Thanh 

International Airport’s master plan. 

• The airport has an area of 5,000 hectares with 

investment capital of US$6.7 billion for the first phase. 

• Vietjet Air, a new private airline, started operation. (1 

Airbus, 2 on order). 

Nhieu Loc - Thi Nghe 

Canal Road 

Source: www.info.vn 

Da Nang New Terminal 

Source: Tuoi Tre 


Roads: 

• Construction of the four main roads in the Thu 

Thiem new urban area will start in July, 2012 

Completion is expected 2015. 

Bridge: 

• Saigon Bridge No. 2, with four lanes, will start 

constructed in April, 2012, and will take 22 

months to be completed. 

Bus system: 

• In 2012, the city will focus on improving the bus 

system and services, implementing solutions to 

improve the backbone of the city’s 

transportation. 

2012 Infrastructure 

East – West Highway 


All Future Projects HCMC Hanoi Da Nang Can Tho 

Nha Trang 

(Khanh Hoa) 

Vung 

Tau 

Hai 

Phong 

Office 267 245 43 22 16 35 13 

Retail 86 33 18 7 4 11 5 

Hospitality 

and SA 

44 53 28 12 37 19 6 

Residential 311 268 134 10 22 32 9 

Projects Under 

Construction 

HCMC Hanoi Da Nang Can Tho 

Nha Trang 

(Khanh Hoa) 

Vung 

Tau 

Hai 

Phong 

Office 166 88 15 15 6 19 7 

Retail 42 24 6 6 3 1 3 

Hospitality 

and SA 

25 32 17 5 10 8 2 

Resi 142 104 19 3 5 14 5 

Source: www.bciasia.com; CBRE Vietnam 

According to BCI Asia… 


Grade A Rents (US$ psm) 

$60 

$50 

$40 

$30 

$20 

$30 

$25 

$20 

$15 

$10 

$30 

$25 

$20 

$15 

$10 

2009 2010 2011 

Grade B Rents (US$ psm) 

2009 2010 2011 

Grade C Rents (US$ psm) 

2009 2010 2011 

Office - Rents 

Rents 3 year 1 year 1 quarter 

Grade A -55.0% -8.3% -5.8% 

Grade B -44.0% -7.5% -1.5% 

Grade C -41.5% -8.5% -3.0% 


Vacancy 3 year 1 year 1 quarter 

Grade A 23.4 pt -14.6 pt -6.1 pt 

Grade B 14.4 pt 3.3 pt -0.7 pt 

Grade C -2.6 pt -1.9 pt -0.1 pt 

Office - Vacancy 


40% 

30% 

20% 

10% 

0% 

20% 

15% 

10% 

5% 

0% 

20% 

15% 

10% 

5% 

0% 

Grade A Vacancy 

2009 2010 2011 

Grade B Vacancy 

2009 2010 2011 

Grade C Vacancy 

2009 2010 2011

Luxury Condominium (US$ psm) 

$4,500 

$4,400 

$4,300 

$4,200 

$4,100 

$4,000 

$1,020 

$990 

$960 

$930 

$900 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2009 2010 2011 

Mid-end Condominium (US$ psm) 

3 Year Residential Price Movement 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2009 2010 2011 

Secondary Asking Price (US$/sm) 

$6,000 

$4,000 

$2,000 

$0 

Luxury High-end 

Mid-end Affordable 

2007 2008 2009 2010 2011 


$730 

$710 

$690 

$670 

$650 

$1,950 

$1,920 

$1,890 

$1,860 

$1,830 

$1,800 

High-end Condominium (US$ psm) 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2009 2010 2011 

Affordable Condominium (US$ psm) 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2009 2010 2011

Some are waking up with their head 

in their hands 

100% 

Unsold Units by Segment 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

9,000 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

Take-up vs. Hangover 

Take-Up Rate (%) 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2009 2010 2011 

Luxury High-end Mid-end Affordable 

Unsold Units Accumulated (Units) 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2009 2010 2011 

Luxury High-end Mid-end Affordable Total 


20,000 

18,000 

16,000 

14,000 

12,000 

10,000 

8,000 

6,000 

4,000 

2,000 

0 

Total Unsold Units

2012 

Death, 

Discount or 

Opportunity 

? 

Dong Devaluation 

(9.3%) 

Property sector, the most attractive 

investment channel, but more 

cautious to invest in 1-3 years 

(survey by Grant Thornton Vietnam) 

Q1 

5,078 launches 

2,229 sales 

Discount Headlines 

Doc. 8844 /NHNN-CSTT: Remove 4 

real estate groups out of the non- 

productive outtsatnding loan category 

The Residential Nightmare 

More strictly control on 

dolarisation price list in 

VND 


846 sales 

Q4 

Goldora Villa 

sold to ICC 

Q2 


1,390 sales 

The Ascott signed 

Diamond Island (D.2) 

864 launches 

1,867 sales 

Q3 

US$6,000/unit 

in Binh Duong 

Resolution 11 

Int’l banks stopped 

mortgage lending 

More incentives to 

stimulate sales 


The past 18 months has seen shopping centre 

rentals create a buzz; 

2012, we expect department store rentals to come 

back to the forefront: 

• Lack of quality space in the CBD; 

• Still a softening on rents 

2012, shopping centre rentals in the CBD to remain 

soft; 

• Saigon Centre phase 2, the CBD retail hub on the 

horizon; 

• First new supply in CBD with department store; 

Non-CBD Asking Rents (US$/sm/month) 

$100 

$80 

$60 

$40 

$20 

$0 

Source: CBRE Vietnam 

Department Store Shopping Centre 

2008 2009 2010 2011 

CBRE Vietnam 

CBRE Vietnam 

Retail 

Department Store vs. Shopping Centre 

CBD Asking Rents (US$/sm/month) 

Source: CBRE Vietnam 

1st quality shopping centre outside the CBD – 

Crescent Mall; 

However, rentals still softening as retailers have 

multiple options and established SHOPHOUSE 

location remain popular; 

CBRE Vietnam | Page 24 Fearless Forcast 2012 

$140 

$120 

$100 

$80 

$60 

$40 

$20 

$0 

Department Store Shopping Centre 

2008 2009 2010 2011

Occupancy and RevPAR both 

showing signs of growth in 2011. 

Coastal markets such as Phu Quoc, 

Nha Trang and Da Nang showed a higher 

RevPAR growth rate than HCMC: 

60 

55 

50 

45 

40 

35 

30 

25 

20 

Hotels 2012 

RevPAR (US$/room/night) 

2009 2010 2011F 

HCMC Da Nang Phu Quoc Nha Trang 

Phu Quoc continues to lead the coastal 

market with 20% y-o-y increase in 

RevPAR, expected to be an attractive 

destination for investors in 2012. 

The operation of new Da Nang International 

Airport terminal in December,2011 

facilitates more direct international 

flights to Da Nang from locations such 

as Seoul and Kuala Lumpur. 


Da Nang Hotels/Resorts/2 nd Home 2012 

2011 y-o-y increase in visitors was 34%, of which international visitors 

increased 44% y-o-y 

The Hyatt Regency came online in Q4 with 200 five-star rooms, 2012 

expects InterContinental, Le Meridien, Melia and Pullman to enter DN 

In 2012, the DN hospitality market will target Russian tourists with direct 

Russia – Da Nang flights in consideration 

Da Nang market continues to perform with 60% of the 40 villas launched 

at The Point sold within three months 

No construction expected in 2012 without pre-sales 

Projects away from the coast see action too – WTC leasing (anchors 

already signed) and Azura to complete Q2 


Demand derived from 3 sources: 

• Professional expatriates – main source 

– Both from Asia and the West 

– Hanoi: employees in the Embassies 

• Returning Overseas Vietnamese 

• Wealthy Vietnamese ← a new and growing trend 

“Vietnam will be the 11th most common 

destination of companies sending staff on 

international assignments up to 2013. Therefore, 

this is likely to ensure that the demand for 

accommodation from companies sending staff into 

Vietnam is likely to remain strong in the next three 

years”. 

--- Trends in Managing Mobility 

Survey 2010, ECA International 

H1/2011 work permits issued 

to foreigners in HCMC: 

• Achieved 85.1% of entire 2009 

• Down 16.5% against H1/2010 

Serviced Apartments 2011 

Proportion of Housing Budget (US$/month) 

$0 -$1200 $1200 - $2500 $2500 - $3500 $3500+ 

Q4/2010 10.0% 40.0% 40.0% 10.0% 

Q1/2011 17.9% 41.5% 29.2% 11.3% 

Q2/2011 20.5% 48.2% 24.1% 7.2% 

Q3/2011 11.7% 52.1% 26.6% 9.6% 

Source: CBRE Residential Leasing 

Proportion of Requested Area (sm) 

0% 

Q1/2011 Q2/2011 Q3/2011 Q4/2011 

Source: CBRE Residential Leasing 


100% 

80% 

60% 

40% 

20% 

0 -60 60 -100 100 -160 160+ 

TOP DEMAND!

• Logistics component becomes a must in 

industrial park zoning. 

• Logistics to grow as Asian regional trade 

buoys economy through Eurozone crisis 

and slower US growth. 

• Japanese investment KEY. Both from 

Japan directly, and from Japanese 

companies relocating out of Thailand. 

• Potential growth areas: 

• Food & Beverage for South Vietnam 

• Electronics for North Vietnam. 

• Ready Built Factory rental rates come 

down as more supply than ever before. 

• With the increasing profile of industrial in 

Vietnam, more investors seek wholesale 

purchases of operating IPs. 

ILS 2012 Forecast 


The Rise of Investment - The Institutional Deal 

Pacific Place, Hanoi 

Q4 2010 – Reported 12% 

Saigon Tower, HCMC 

Q4 2011 – Reported 8.5% 

And a notable variance in yield 

CentrePoint, HCMC 

Q2 2011 – Reported 10.6 – 11.3% 

At least three 

more 

institutional 

deals to come 

in 2012 


On December 31, 2012… 

1. Nguyen Trai still the retail king! 

CBRE’s 10 Most Fearless Forecasts 

2. Square office buildings back in fashion! The best tenant deals will have happened 

in the first half of 2012. 

3. Any residential project that hasn’t broken ground will gravitate to the affordable 

(new middle class, less than 21,000,000VND psm) segment. 

4. Luxury residential in the CBD WILL sell. 

5. Golf – Boom or Bust?!? 

6. Revenue from cleared sites skyrockets as they are converted into drive-in movie 

theatres and Circle K. 

7. Burger King opens at Da Nang airport and Sushi Bar opens in Phu Quoc as 

overseas visitors increase a further 20%. 

8. In the short-term the new Pudong is not Thu Thiem, it is District 4. 

9. Gold price declines with new supply from Vietnam’s two gold medals at the 

London Olympics 2012. 

10. Registered FDI into real estate triples in 2012 as Vietnam sees 20 new foreign 

investors. 

11. Jack Dorsey to spend Christmas 2012 in Vietnam, @Townsend_Marc to have 

50,000 followers 


2012: Gold Supply in Vietnam Increases 

The magic from Trinh Duc’s performance in the 

Rugby World Cup is overshadowed by: 

• Quy Phuc is expected to win the gold in 100 m 

freestyle 

• Anh Tuan is expected to win the gold in

CBRE Vietnam - HCMC & Hanoi Quarterly Reports 

The most insightful real estate publication in Vietnam! 

Plan your future with two quarter and eight quarter forward looking analysis. 

THANK YOU 

Contact for free sample: 

quarterlyreports@cbrevietnam.com 

© 2012 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CB Richard Ellis (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 CB Richard Ellis clients, and cannot be 

reproduced without prior written permission of CB Richard Ellis.

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