Market Insights from CBRE's Hanoi Quarterly Report Q2/2012

cbrevietnam.com

Market Insights from CBRE's Hanoi Quarterly Report Q2/2012

Market Insights from CBRE’sHanoi Quarterly Report Q2/2012Presented by:Richard Leech – Executive DirectorCB Richard Ellis (Vietnam) Co., Ltd.Thursday, June 28, 2012


AGENDAECONOMIC OVERVIEWINFRASTRUCTURECONDOMINIUM FOR SALELANDED PROPERTY (in NUAs)OFFICERETAILSERVICED APARTMENT3-5 STAR HOTEL2 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


CPI (% y-o-y) / Interest rates (%)VIETNAM ECONOMIC OVERVIEWCPI (% m-o-m)Q2/2012 PERFORMANCE252015105Inflation surgedMonetary controlson interest ratesMonetary controls took effect0Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-120403030202010100CPI, VN (% y-o-y)CPI, VN (% m-o-m)Refinancing rate (%)Rediscounting rate (%)Q1/2012 5M/2012GDP (% y-o-y) 4% 4.3% (esti. H1/2012)CPI (% y-o-y, e-o-p) 14.1% 8.3%Exchange rate (e-o-p) 20,828 20,828Export (US$ Bn) 24.52 (23.6% y-o-y) 42.9 (24.1% y-o-y)Import (US$ Bn) 24.77 (6.9% y-o-y) 43.5 (6.6% y-o-y)FDI Implemented (US$ Bn) 2.5 (0.8% y-o-y) 4.5 (0.2% y-o-y)International Arrivals (million arrivals) 1.9 (24.5% y-o-y) 2.9 (17.5 % y-o-y)Retail & Services Turnover (trillion dong) 569.7 (21.8% y-o-y) 952.2 (20.8% y-o-y)Source: General Statistics Office3 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


VNIndexVIETNAM ECONOMIC OVERVIEWTrading Value (Billions VND)VNIndexCPI (% y-o-y)INFLATIONPetroleum Price AdjustmentsTime A95 A92 Chg Pct. Chg29-Mar-12 23,400 22,900 2,100 10.10%20-Apr-12 24,300 23,800 900 3.93%9-May-12 23,800 23,300 (500) -2.10%23-May-12 23,200 22,700 (600) -2.58%7-Jun-12 22,400 21,900 (800) -3.52%Stock Index and Inflation• Inflation continuing to trend down & crucially is nowin single digit territory (6.9% y-o-y in June).• Petroleum prices adjusted 3 times downward inMay/June (8%), reducing supply chain pressures• Dampened demand coupled with dropping petroleumprices supporting inflation controls .• Gold prices soften• in interest rates & inflation• in trading value on the stock market5503,000700.00255002,500600.00204502,0001,500500.00154001,000400.0010350500300.005300Trading value VNIndex 2011 VNIndex 1H/20120200.000Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12VNIndexCPI4 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


SBV Interest Rates (%)VIETNAM ECONOMIC OVERVIEWMONETARY CONTROLS1614121086420Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12Base rateRefinancing rateRediscounting rate• Deposit cap rate adjusted 3 times from 13% in March (12% in April, 11% in May) to 9%in June (for terms of less than a year).• Removal of the cap rate for terms of over a year, in an attempt to ensure banks haveenough long term capital.• The deposit rate for 12-month term is currently observed to range from 10% - 12% atcommercial banks.• Low inflation rate should keep real rate positive => continue attract capital inflows• Vietnam’s BoP as well as the dong will still be supported• More stable USD/VND exchange rate, strict controls on USD/gold trading remain.5 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


VIETNAM ECONOMIC OVERVIEWBUSINESS ENVIRONMENTVietnam Trade Deficit (US$ Billions)2010 2011 201250Jan Mar May Jul Sep Nov-5-10-15Source: Vietnamese General Statistics OfficeVietnam Trade Deficit Index, Jan 10=100ExportsImports• Imports growth finds a new bottom (6.6% y-o-y)• Dampening demand slowing imports;• Exports growing; 24.1% y-o-y;• Accumulated Trade deficit in first five months 90% y-o-y• S&P revised the outlook on Vietnam tostable from negative & affirmed the “BB-”long term” & “B” short term sovereign creditratings;2502001501005002010 2011 2012Source: Vietnamese General Statistics Office6 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


HANOI ECONOMIC OVERVIEWReal GDP (y-o-y % change)12%10%8%6%4%2%0%2009 2010 2011 2012Source: Hanoi Statistics OfficeCPI (% m-o-m change)4%3%2%1%0%2010-1%2011 2012Source: Hanoi Statistics Office• Negative CPI growth in April & June ‘12: 0.03% &0.17% m-o-m (10-year record low); May: 0.16%• Group of ‘Housing - Construction Material’ 1.86% inJune ‘12• GDP growth in H1/2012: 7.6% y-o-y (Q1/12: 7.4%)• Industry & Construction sector 8.1%• Service sector 8.5%• International trade of H1/2012 activities:• Export turnover 7.2% y-o-y• Import turnover 8.6% y-o-y• Mainly from the groups supporting industrial manufacture(material, fuel & equipments)• FDI of the first half year of $450mil, 49.5% y-o-y• Newly registered projects had capital under US$1million & did not involve intensive land use.HIGHLIGHT7 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


Nam HongOverpass16 km][ Opened overpassesNorth Linh Dam -Thanh Xuan Elevated Highway][ Under-construction overpasses][ Proposed overpasses20 km to Cau Gie –Ninh Binh HighwayGamuda NUA8 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


North Linh Dam - Thanh Xuan Elevated Highway3.3 km; to open on 30 Jun 2012INFRASTRUCTURECau Gie – Ninh Binh Highway56 km, to open on 30 Jun 2012Nhat Tan Bridge8.9 km, to open in 20149 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


INFRASTRUCTURELang Ha - Thai Ha Overpass189 m, opened on 26 Apr 2012Metro Line No. 2A: Cat Linh - Ha Dong13.5 km, to open in 2015• OverpassesHIGHLIGHTS• 2 opened: Lang Ha-Thai Ha & Thai Ha-Chua Boc• 3 start construction: Nguyen Chi Thanh-Tran DuyHung (Q1/13) & Le Van Luong-Lang Ha (Q4/12);Nam Hong• 8 proposed: Chua Boc-Pham Ngoc Thach, Dai CoViet-Tran Khat Chan, Bach Mai-Le Thanh Nghi,Nguyen Chi Thanh-Kim Ma, etc• Bus Rapid Transit: Lang Ha-Giang Vo (17.4 km) &Giai Phong (10.9km) to start construction in July2012 & to be completed in 2013• Metro Line No. 2A (Cat Linh - Ha Dong):construction at good progress (completed by 2015)• Monorail is proposed by MOT• Approval to build parking lots• Underground: In Co Tan park & Trung Hoa-NhanChinh relocation area (construction starts in 2013)• Above-ground: In Thong Nhat park (3,000 sm &1,509 sm)10 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


CONDOMINIUM FOR SALEMARKET SNAPSHOT, Q2/2012CONDOMINIUM LUXURY HIGH-END MID-END LOW-END TOTALTotal launch supply (units) 2,460 22,350 66,030 18,070 108,910New launch (units) 0 350 600 780 1,730Primary market – New avg. askingprice (US$ psm)N/A $1,440 $1,170 $700 $1,100Y-o-y change (%) N/A -16.6% -4.9% -16.8% -12.8%Secondary market – Avg. asking price(US$ psm)$2,990 $1,760 $1,320 $960 $1,760Q-o-q change (%) -6.7% -3.9% -3.7% -2.4% -4.2%Y-o-y change (%) -13.8% -13.0% -10.1% -8.4% -11.3%* All prices are VAT exclusive* All figures are preliminary & subject to revisions by EOQ11 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


CONDOMINIUM FOR SALEUnits Launched25,00020,00015,00010,0005,000Primary Price of Newly-launched Projects (psm)$4,000$3,500$3,000$2,500$2,000$1,500$1,000$500$00Q1 Q2 Q3 Q4 Whole yearLuxuryMid-endHigh-endLow-end1,7002005 2006 2007 2008 2009 2010 2011 2012YTD2008 2009 2010 2011 2012YTD• In anticipation of improved market sentimentfollowing int. rate cuts• 14% -> 9% in 3 months• Mostly in fringe districts1,100New launches slightly picked up• Esp. in attractive sub-market such as the West (Ha Dong66%, Tu Liem 21%,) & The East (Long Bien 9%)• Ha Dong regains its dominance after being inactive inQ1/2012Primary Prices continued at a low level• 100% < US$1,500 psm; 50% < US$1,000 psm• HIGH-END developers adopt NEW strategies:• Offer bare shell/basic finishing options to lower unitprice by up to 30%• Proved to work: increasing inquiries & improved sales• More developers are considering this technique• Preferential mortgage lending rate• Incentive period (until unit handover): mortgage lendingrate as low as 6%-7% (market rate: 15%)12 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


CONDOMINIUM FOR SALEBuyers: Balance Price vs. Risk• Past: First-time launches @ < $1,000 psm are highlyinterested• Many projects turn out to have slow construction progress• Now: Launches @ ~ $1,500 psm are accepted• These usually come with visible construction progress =>lower risks involvedAfter 1.5 years of constructionAfter 1.5 years of constructionSecondary price: Largest q-o-q drop• Prices: straight fall from Q2/2011, hit the hardest inQ2/2012:• 2011-2012 crisis worse than 2008 crisis in terms of bothlength & magnitude• Can this be the bottom?Secondary Price Change - exclude New Projects2008 2009 2010 2011 201213 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 201212%10%8%6%4%2%0%-2%-4%-6%Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2


CONDOMINIUM FOR SALEBuyers’ interests seem to be back• No. of inquiries is increasing:• Real estate becomes more attractive as interest rate’sdeclining• Mortgage lending rate is back to 2010 level (15%) frommid-2011 peak (23%);Annual Mortgage Rate30%20%10%Outlook0%Source: CBRE Vietnam2010 2011 2012• There are positive signals, but NOT yet conclusive that market will soon pick up• Developers• Should remain watchful of the market to enjoy the advantage of the first mover• Price vs. Quality competition?: Finding competitive edge instead• Buyers• Time to look for / buy right apartment (Deal closing takes time)• Price vs. Quality?: Give both due attention14 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


LANDED PROPERTY (in NUAs)An Hưng NUAHillstate VillasLiquidity Issue Further Pushing Prices• Secondary prices still on the wane q-o-q• Occurred in projects across different districts• West: Cầu Giấy, Từ Liêm, Hoài Đức (5%-25%)• South-West: Hà Đông (~20%)• East: Long Biên (~10%)• North: Mê Linh (~30%)• Down by 10%-30% q-o-q• Demand side• Rate cuts & easing credit policy encouraged morehouse purchase• However, effect is only intial as many still waiting formore signs of market / economic recovery• Many speculators are still looking to cut loss, furtherpushing secondary prices down• Few end-users are interested in under-developmentprojects as many among these have become too riskyto put capital in• Construction progress is key to getting end-usersinterested15 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


LANDED PROPERTY (in NUAs)Việt Hưng NUADevelopers Adapting to New Situation• Supply• Developers started looking longer term, making more effortsin branding / marketing & project quality• Sudico recently announced to “build before launching for sale”• Splendora broke ground Phase 2 (900 villas in Jun 2012)• An Hưng NUA: Handover Phase 1 in May 2012; full handoverof 770 units expected in Q3/2012• Outlook• Year 2012 expects a large number of units to complete(~9,400 units vs. ~11,300 units completed b/w 2004-2011).• 30%-40% won’t be completed on schedule• Those completed will be empty for a while• Infrastructures, amenities & services are key to making a new NUAbecome a livable residence• By end of H1/2012 ~3,000-4,000 units have been completed• Projects might need to be completed first before seeing a realflow of buyers’ interest return.• West West Lake NUA announced to commence constructionin Sep '1216 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


OFFICEMARKET SNAPSHOT, Q2/2012GRADE A GRADE B GRADE C TOTALNumber of Buildings 15 47 59 121NLA (sm) 254,332 508,282 251,907 1,014,521New Supply (sm) 0 30,200 0 30,200Vacancy Rate (%) 27.51% 20.00% - -Q-o-q change (pps) -8.07 -1.16 - -Y-o-y change (pps) 22.51 3.01 - -Average asking rents (US$/sm/month) $33.62 $22.31 - -Q-o-q change (%) -6.45% -6.00% - -Y-o-y change (%) -10.23% -16.98% - -* We don’t track data on Grade C office space due to lack of transparency in the market. Most Grade C buildings are developed,owned, & operated by small local developers.* All office rents are calculated on net floor area, excluding VAT, including service charge.17 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


Total Supply (sm)Grade A Grade B Grade C1,200,0001,000,000800,000600,000400,000200,0000Vacancy Rate (%)2009 2010 2011 2012• New Grade B completions: DETECH Tower(10,200 sm); ICON4 Tower (20,000 sm)• New launch: Hapro Cat Linh (9,000 sm) @US$2,000 psmOFFICESUPPLYMARKET PERFORMANCE50%40%30%20%10%0%Grade AGrade B2009 2010 2011 2012Asking Rents (US$/sm/month)$60$50$40$30$20$10$0Grade AGrade B• Vacancy rate: 3.7 pps q-o-q, mainly thanks toKeangnam’s take-up ( 24 pps q-o-q)• Grade A: CBD ( 0.6 pps), Midtown ( 2.2 pps),West ( 16.5 pps)• Grade B: CBD ( 1.5 pps), Midtown ( 0.5 pps),West ( 3.6 pps), Others ( 4.9 pps)• Asking rents: q-o-q downward trend dominated• Grade A: West ( 14.4%)• Grade B: West ( 8.7%) & Midtown ( 7.2%)2009 2010 2011 201218 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


OFFICEDEMANDFuture Supply (sm)• Strong net absorption at nearly 37,000 sm (nearlytripled Q1/12)• Keangnam (≈ 20,000 sm)• ICON4 Tower (11,000 sm)• Enquiries for office space:• Most popular: 50-100 sm• Start to pick up: 400-700 sm (mostly in the West)OUTLOOK• Expected completion in Q3/2012 (40,000 sm)• Indochina Plaza Hanoi (Grade A; 14,000 sm)• Hapro Cat Linh (Grade B; 9,000 sm)• Demand outlook• Some CBD areas are temporarily vacant, but will soonbe re-filled up thanks to strong demand• West: along with tenants’ relocation, vacancy will begradually reduced1,000,000800,000600,000400,000200,0000Grade A Grade B2012f 2013f 2014f 2015fIndochina Plaza Hanoi19 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


RETAILMARKET SNAPSHOT, Q2/2012DEPARTMENTSTORESHOPPINGCENTRERETAILLOBBYTOTALTotal supply Q2 /12 (NLA, sm) 46,000 198,091 10,310 254,401New supply (NLA, sm) 0 0 0 0Vacancy rate (%) 9.8% 15.6% 2.9% 14.1%Average ground floor asking rents(US$ psm per month)$63.9 $34.0 $78.5 $41.8•CBD - $59.4 $153.6 $70.4Q-o-q change (%) - 3.1% 7.5% 4.2%Y-o-y change (%) - 2.1% 2.8% 0.6%•Non-CBD $63.9 $27.9 $24.6 $36.0Q-o-q change (%) 0.1% -3.3% 0.0% -1.8%Y-o-y change (%) 18.3% -17.0% 10.5% 0.1%20 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


THE GLOBAL RETAIL DEVELOPMENT INDEXWINDOW-OF-OPPORTUNITY• Vietnam’s Ranking• 2008: No. 1• 2009: No. 6• 2010: No. 14• 2011: No. 23• 2012: out of the list 30emerging countriesNguôǹ: A.T Kearney Analysis• CBRE’s ranking:• •#3 for new market entries, tied withUkraine• •#55 Vietnam is the fifty-fifth mostattractive country, up four placesfrom 2011• •#146 HCMC the one hundredforty-sixth most attractive city, up 12places from 201121 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


RETAILTotal area vs. leased area (sm NLA)300,000250,000200,000150,000100,00050,0000Total area (sm NLA)2008 2009 2010 2011 2012Vacancy rate by location (%)CBDLeased area (sm NLA)non-CBD• No additional supplyHIGHLIGHTS• Market remains at 244,091 sm (NLA) indepartment stores & shopping centres• Retail Lobbies in CBD locations continue tobe attractive (premium of US$200 psm)• Shopping Centres in Non-CBD locations• continue to be challenging (aver. ground askingrents 3.3% q-o-q)• Consumers are still tightening their budgetfor shopping. Malls are busy only when eventstake place35.0%30.0%25.0%20.0%15.0%10.0%5.0%0.0%Source: CBRE Vietnam2008 2009 2010 2011 201217.06.12 – “The Mechnimals” Robot Cars Challenge -one of many events at Pico Mall22 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


RETAILTENANT/ BRAND MOVEMENTS• In shopping centres• 132 tenant/brand changes in Q2 (≈ Q1/12)• Opened: 56 (42%)• Refurbishment/ fitting out: 4 (3%)• Closed: 72 (55%)• By industry• F&B in highest (+1,490sm) & Electronics inlowest demand (-590sm) among tenants• Apparel: few openings of larger shops coverclosure of smaller shops• Street-front stores• Few openings, the majority is for CLOSURE orSUB-LEASERetail space opened/closed in Q2/12 by sector2,0001,5001,000500TXT=Textiles, SH=Shoes& Handbags, HHF=Household & Furniture, COS=Cosmetics,JEW=Jewelry, F&B=Food & Beverage, ELE=Electronics, OT=OthersQ2/12 Data analysed from Retail Lobbies (3), Shopping Centres (11), Department Stores (1)3020100-500-1,000-1,500COS ELE HHF JEW TXT SH F&B OTclosedopenedNo. of Shops opened/closed in Q2/12 by size0-10-20-30-30-40≈ 50% textile brands1-20sm 21-50sm 51-100sm 101-250sm 251-500sm 501-1,000smopened/fitting out/refurbishmentclosed23 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


RETAILOUTLOOK• Major expected openings (Q3/12)• Indochina Plaza Hanoi (IPH) – 35,000 sm (GFA)• Hapulico – 20,000 sm (GFA)Indochina Plaza Hanoi (IPH)HapulicoGood construction progress in midtown…• Major expected completion• 2012: 200,000 sm (GFA)• 2013: 700,000 sm (GFA)EurowindowMulticomplexVincom Royal CityLotte Center…& construction slows down at the city edgeThe Pride Habico Tower New Skyline24 CBRE RESEARCH & CONSULTING Photos taken in mid Jun ‘12MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


RETAIL OUTLOOKVietnam, Global Retail Development Index2004 2005 2006 2007 2008 2009 2010 2011 2012051015202530Source: A.T Kearney AnalysisRegional ComparisionsGRDI Thailand Indonesia Malaysia Phillipines Vietnam2008 24 15 13 26 12009 26 22 10 25 62010 - 16 17 22 142011 - 16 21 18 232012 - 16 11 29 -ISSUES STILL TO BE SOLVED• ENT is remains an unclear challenge to foreignretailers;• Unstable economy, most specifically in terms ofGDP growth & inflation after the economic crisis;• Modern retailing well represented in HCMC andHanoi but very little in second tier cities such asHai Phong, Da Nang, Nha Trang and Can Tho;• The QUANTITY of modern retail space increasesregularly but not yet the QUALITY;• Poor distribution/logistics infrastructure, whichis important to a company for deciding where tolocate an investment, build a factory, or establish anoutlet;• Expensive retail space• E.g: at prime locations in Hanoi, the rents usually arefrom US$100-$200/sm/month;25 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


SERVICED APARTMENTMARKET SNAPSHOT, Q2/2012INTERNATIONALOPERATORSELF-MANAGEDTOTALTotal Supply (units) 887 1,890 2,777New Supply (units) 0 0 0Vacancy Rate (%) market-wide (Q2) 15.45% 35.50% 29.10%Vacancy Rate (%) (excl. Keangnam Landmark 72) 15.45% 22.02% 19.59%Average asking rents (US$ psm per month) $39.28 $29.21 $32.13Q-o-q change (%) 2.71% -0.19% 0.73%Y-o-y change (%) 6.00% 2.90% 2.62%• Rents include service charges & VAT26 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


SERVICED APARTMENTVacancy Rate (%)International OperatorSelf-managedAverage50%40%30%20%10%0%2008 2009 2010 2011 2012Source: CBRE VietnamAsking Rents (US$/sm/month)International OperatorSelf-managed$60,0$40,0$20,0• No new supplyHigh Vacancy Due to New Projects• Asking rents almost the same q-o-q• Projects with international operators, slightly increasedin a few projects: ~$39 psm• Self-managed projects: ~$29 psm• Vacancy still at high level: ~29% marketwide• Mostly due to recently opened projects such asKeangnam• Projects under renovation (Hanoi Lake View, SomersetGrand)• A few projects struggling, esp those located furtheraway from the city (Me Linh Plaza)• Occupancy among projects with int’l operatorsimproved, while self-managed decreased$,02007 2008 2009 2010 2011 2012Source: CBRE Vietnam27 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


SERVICED APARTMENTCrowne Plaza West HanoiServiced ApartmentDEMAND & OUTLOOK• Demand• Enquiries remained stable with a little higher budget(~$2,000).• Demand still strong in CBD & West Lake area• Demand for serviced apartments in the West still low incomparison but on the rise as more offices are located in theWestKeangnam Landmark 72Serviced Apartment• Outlook• 2012 initially expects 270 new serviced apartments from 3projects but 2/3 projects likely delayed till next year• Candeo Hotels to open in Q3/2012• A few condo projects are considering reserving certain unitsfor serviced apartments• Older projects in the CBD will face more competition withnew projects in the West, esp. as more offices arerelocating in the West.28 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


3-5 STAR HOTELMARKET SNAPSHOT, Q2/20125-star 4-star 3-star 3-5 STARNumber of hotels 1 12 13 40 65Total supply (rooms) 3,880 1,945 2,828 8,653Change in supply (rooms) 0 115 71 186Average occupancy rate (%) 60.64% 52.48% 52.52% 56.68%q-o-q change 1.4 pp -0.4 pp -3.1 pp -0.2 ppy-o-y change 6.2 pp -0.4 pp -0.7 pp 2.9 ppAverage daily rate (US$/room/night) 2 $104.67 $62.39 $34.93 $76.77q-o-q change -1.9% -4.2% 0.6% -2.8%y-o-y change -6.8% -15.9% -1.0% -6.5%RevPAR (US$/room/night) $63.47 $32.74 $18.35 $43.51q-o-q change 0.5% -4.8% -4.9% -3.1%y-o-y change 3.7% -16.5% -2.2% -1.4%1 - Including all trackable 3-5 star hotels in Hanoi (offcially & not yet ranked by VNAT) with room capacity of above 40 rooms/hotel2 - Average daily rates are quoted exclusive of service charges & VAT29 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


Supply (rooms)Future Supply (rooms)No. of hotelsNo. of projectsHistorical Supply by GradeSupply by District/Grade (Q2/2012)3,0002,5002,0001,5001,00050010,00008,0006,0004,0002,000Future Supply by Grade7500HoanKiem5-star 4-star 3-star No. of hotels1995 2000 2005 2010 2011 YTD'125-star 4-star 3-starBa Dinh Dong Da Tay HoHai BaTrung706050403020100Cau Giay Others5-star 4-star 3-star No. of projects5• Current supply (8,653 rooms)• New supply: Authentic hotel & Lan Vien hotel• Over half of supply in each segment are in just 2 districtsHoan Kiem & Ba Dinh• Future supply• H2/2012• Last 68 rooms of 5-star Grand Plaza Hanoi• 3-star Hilton Garden Inn (86 rooms) in Tran Hung Dao St• 4-star Candeo Hotels Hanoi (68 rooms) in Doi Can St• 5-star InterContinental Hanoi Landmark (359 rooms)• 2013-2014• 2013: 5-star JW Marriott (450 rooms)• 2014: 5-star Lotte Hotel (300 rooms)3-5 STAR HOTELSUPPLY6004450300150321Lotte HotelGarden Inn00H2/2012 2013 2014Candeo Hotels30 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


3-5 STAR HOTELMARKET PERFORMANCE• Q-o-Q & Y-o-Y performance• By segment: 5-star > 3-star > 4-star• Whole market is generally under-performing (mostly due to fallin ADR)• Low-season for 4-5 star segments• 5-star still managed to have better occupancy with a reasonablereduction in ADR probably thanks to int’l brand• 4-star’s ADR reduction is more apparent (very few int’l brands withoverpriced ADR)• High-season for 3-star segment but still worsening performanceDEMAND• Increasing tourist arrivalsArrivals Q2 ‘12 Q-o-Q Y-o-Y (Q2) Y-o-Y (H1)Int’l 389,649 +12% +31% 20%Domestic 2,350,000 +5% +48% 24%• Staying in 1-5 star hotels, homestay, etc.• Korean & Japanese visitors 46% & 24% y-o-y (H1/12),respectivelyMarket Performance (Q2/2012)Y-o-Y Changes by Grade (Q2/2012)Arrivals to Hanoi (Millions)0.002010 2011 201231 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012$120$100$80$60$40$20$010%5%0%-5%-10%-15%-20%2.502.001.501.000.50ADR RevPAR Occupancy (%)5-star 4-star 3-starOccupancy ADR RevPAR5-star 4-star 3-starInternationalDomestic70%60%50%40%30%20%10%


3-5 STAR HOTEL• Thin demand• Visa hassles, High air ticket prices, Lack of tourism promotion,Service transparency issues• Short-term• Seasonal factor: Q3 is Low season for luxury hotels & Highseason for local budget hotels & vice versa in Q4• ADR is on the decline, esp in the 4-5 star hotels• New 5-star supply in the West will make competition in thesegment more severe• New supply (3-4 star) & many new budget / mini quality hotelsin the CBD are coming• Long-term• => competing with existing 3-star hotels• Flat market (ADR + Supply + little Demand)=> Capital Value• Potential to develope int’l standard budget hotels• Hotel acquisition by Local firms from Foreign partners• Local Hoteliers: more aggressive in expanding market share,but not in refurbishment/ renovation• New International BrandsOUTLOOK32 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012


To subscribe, please contact…Q2/2012 releasedFriday, July 20, 2012quarterlyreports@cbrevietnam.comTHANK YOU© 2012 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith & with due care by CB Richard Ellis (Vietnam) Co., Ltd. We obtained some of theinformation above from sources we believe to be reliable. However, we have not verified the accuracy of the information which we obtained from other sources & make noguarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us forexample only, & they may not represent current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, & cannot bereproduced without prior written permission of CB Richard Ellis.33 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012

More magazines by this user
Similar magazines