Global Integration Business Consultants project - gibc

gibc.com.vn

Global Integration Business Consultants project - gibc

GLOBAL INTEGRATION

BUSINESS CONSULTANTS

PROJECT

Jef frey Cohen, Jamie Graziano, Scott Howard, Radhika Krishnaswamy,

Brad Rosenthal – Georgetown MBA Candidate

Vietnamese

Real Estate

Market in

Perspective

F eb 2 5 , 2 0 1 1


Executive

Summary

Real Estate

Overview

DISCLAIMER

� All Information Provided in this presentation has been

researched using various informants and sources. For a

detailed breakdown of sourced information, please see the

attached appendix.

U.S.

Market

China

Market

Vietnam

Market


Jeff Cohen

Jamie

Graziano

Scott Howard

Radhika

Krishnaswamy

Brad

Rosenthal

Executive

Summary

GEORGETOWN TEAM INTRODUCTION

•B.A. Business Administration, Ross School of Business – University of Michigan

•Sales & Trading Capital Markets Analyst – Deutsche Bank

•Member of MSB‟s Real Estate Organization and case competition participant

•B.S. Civil Engineering & minor in Business Management - Johns Hopkins Whiting School of Engineering

•Real estate project management, budgeting, scheduling, and financial modeling experience

•B.S. Commerce (Management & Marketing) & Gov‟t Major – University of Virginia‟s McIntire School of Commerce

•Real estate project management, budgeting, scheduling, and financial mode

•Former Education Board Member, Young Leaders Group – The Urban Land Institute

•B.E and M.S. in Computer Science

•Software development consulting

•Focus on Economic development in developing and emerging markets

•B.S. Economics/Finance & minor in Mathematical Sciences – Bentley University

•Financial Analyst, Corporate Real Estate Group – Liberty Mutual; Investment Banking – Barclays Capital

•Charter Financial Analyst (CFA) Level III Candidate (June 2011)

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


Financial

Access

Infrastructure

Government

Executive

Summary

VIETNAM – KEY TAKEAWAYS

Real Estate

Overview

Availability and Cost of Financing

Lack of Deposits

Inadequate Infrastructure in a Quickly Evolving Market

Government push for Urbanization

Ability to maintain rental rates

Cultural Views on Property Ownership Rights

U.S.

Market

China

Market

Vietnam

Market


Supply Factors

Demand Factors

Volatility Influences

Unique to Real Estate

Economic Relationships

Executive

Summary

REAL ESTATE FUNDAMENTALS:

SUPPLY AND DEMAND FACTORS

Real Estate

Overview

U.S.

Market

China

Market

Supply and Demand is

the general framework

that determines real

estate prices.

Vietnam

Market


Executive

Summary

VOLATILITY CHARACTERISTICS

Real Estate

Overview

� Long Gestation Period for

Construction

� Mismatch between Desired and Actual

Demand

� Lending Practices

� Availability of Funding, Collateral

� Government Policy & Legal

Environment

� Land Use Fees

� Emerging Market Considerations

� Speculation

� Relative to Market Efficiency

U.S.

Market

China

Market

Vietnam

Market


MACROECONOMIC RELATIONSHIPS: STOCK MARKET

Executive

Summary

Stock Market Stock Market

Business activity on the

rise

� Companies looking to

expand by hiring more

� Headcount increase

requiring more real estate

� Increase in demand drives

price of real estate up

Real Estate

Overview

U.S.

Market

Business activity contracts

� Companies lay off workers

� Less need for space to house

employees

� Decrease in demand drives

prices down

� Lag on prices due to longterm

lease agreements

In general, the real estate market will follow swings in

the stock market

China

Market

Vietnam

Market


U.S. AND VIETNAM REAL ESTATE COMPARISONS

Key Differences

� Developed countries‟ real estate has evolved as an asset class

for investments in a big way rather than for immediate

operational needs

� Availability of financing

� REITs in Vietnam are in an early stage of development; IPG Invest has

plans to start one in the near future.

� In the US, REITs, CMBS and other complex instruments are in

common use.

In both countries, bank lending plays a big role making

quality of banking sector an important factor.

Differences between US and Vietnam real estate arise from different uses of

real estate as an asset class and types of financing options

Executive

Summary

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


REAL ESTATE CAPITAL FLOWS IN DEVELOPED MARKETS

Executive

Summary

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


Executive

Summary

U.S. CONSTRUCTION SECTOR

� Construction activity can be divided into 3 phases: pre -construction,

construction and post-construction. These 3 phases are associated with the

following outlays:

� Soft costs (architecture, engineering, marketing, legal, management), site

development.

� Hard costs (actual construction costs such as labor and materials)

� Building Operations (maintenance, repairs, utilities and management)

� Sector has a multiplier effect on the economy - final economic impact of one

dollar spent in the economy is multiplied several times over by a given

factor.

� For the US, the multiplier factor is estimated to be 3.19. This is because of

inter-industry connections between the construction, manufacturing and retail

sectors.

The economic impact of pre-construction and post-constructions phases as value

generators are often overlooked and undervalued. The phases in Vietnam‟s

construction sector and the multiplier factor estimate can be used to determine

relation between the construction and real estate sector in Vietnam.

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


Executive

Summary

LESSONS FROM HISTORICAL CRISES

Savings and Loan crisis (early 1990s)

• Regulator y changes in 1980s allowed S&L

to make profits

• 1981 Tax Reform Act incentivized

individuals to invest in Real Estate

• Massive over-building without adequate

demand led to crisis

• 2007-08 Global financial crisis

• Roots in sub-prime lending crisis

• Availability of sophisticated financial

instruments kept suppliers of Real Estate

well funded

• Inability of home owners to pay

mor tgages on over -valued homes caused

crisis in Residential, then eventually in

Commercial sector

An overview of historical crises is important to gain perspective of evolution of real estate

within the U.S. and to make comparisons with Vietnam

Real Estate

Overview

U.S.

Market

6%

4%

2%

0%

-2%

-4%

-6%

US Commercial Real Estate Returns (national)

China

Market

Vietnam

Market


� Commercial building construction contributed $288 billion to the US GDP in 2009.

� Commercial loans account for about $1 trillion or 14.2% of all loans and leases in the

banking industry.

Signs of a crisis…

� Vacancy rate rises

� Building values down

� Transaction volume

low

Executive

Summary

U.S. COMMERCIAL REAL ESTATE

Value of commercial real estate investment depends upon: the expected rate of

return, macroeconomic factors such as interest rates and the health of the economy, as well as

microeconomic factors such as vacancy rates, property taxes, land use regulations and price of land.

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


FAILURES AT SAVINGS AND LOANS INSTITUTIONS

Executive

Summary

Real Estate

Overview

U.S.

Market

China

Market

• Overbuilding in real

estate sector caused by

mismatch in supply and

demand.

• Total number of Nonperforming

loans as

proportion of total loans

increased.

• Office Vacancy rate

increased from 5.2%

(1979) to 18.8% (1992).

Vietnam

Market


• Less than 2% of commercial

mortgages securitized in 1990s.

• Over 26% securitized in 2007

• S&L crisis helped growth of

CMBS market – real estate loans

from failed institutions bundled

into CMBS

Executive

Summary

AVAILABILITY OF FINANCING

Booming CMBS market enabled rebound in U.S. real estate after S&L crisis. In contrast, a less

financially developed market such as Japan’s made recovery much slower after Asian financial

crisis. Same hurdles for recovery would apply in Vietnam’s case.

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


Executive

Summary

BANKING SECTOR IN U.S. AND VIETNAM

� Bank regulation in the US is evolving

af ter the financial crisis

� Greater capital reserve requirements

� Vietnam banking sector

� Large dong devaluation has

exacerbated banks‟ currency risk

since debt is denominated in

dollars, but cash flows predominantly

in dong

� There is worsening asset quality and

high expected growth in loan outlays

� Banks have insufficient Tier 1 capital

to deal with aggressive lending

Real Estate

Overview

U.S.

Market

China

Market

2008 2009

Offices Min Max Min Max % chg y-o-y

Hanoi 21.43 57.14 15 40 -30

Da Nang 11 24 10 19 -30

Ho Chi Minh City 20 90 15 70 -55

Retail

Hanoi 22.22 62.5 20 50 -30

Da Nang 27.75 50 25 40 -30

Ho Chi Minh City 67 170 50 120 -55

Industrial

Hanoi 4.44 8.75 4 7 -30

Da Nang 5.6 12.5 5 10 -30

Ho Chi Minh City 6.5 11 5 8 -55

Rentals in m 2 /month for 2008 and 2009, (US$)

Source: BMI

If we assume that average building time for a property is 3-5 years, continuing investment in the

Vietnamese commercial sector despite weak indicators (shown above) makes the probability of

recovery in vacancy rates and rental rates weak in the next few years.

Vietnam

Market


� Urbanization:

Executive

Summary

Real Estate

Overview

CHINA

� There has been a shift in population of

urbanization over the past decade and

this is predicted to continue

� The country has emphasized the

development of

infrastructure, connecting its 100 major

cities

� Developers purchasing land near future

high traffic transportation hubs

� 100 million people expected to gravitate

towards metropolitan areas over the next

15 to 20 years

� These factors have driven up the demand

for real estate

U.S.

Market

China

Market

Vietnam

Market


� New Loan Lending

Executive

Summary

Real Estate

Overview

CHINA (CONTINUED)

� Government has been promoting flow of

cheap credit to residential and

commercial real estate developers

� New loan lending by banks hit 7.95

trillion yuan, above the government‟s

target of 7.5 trillion yuan.

� This has been fueling the supply of real

estate within the country

� Lending stimulated residential property

sales to 6.1 percent of the country‟s GDP

in 2010, which is the same level as the

peak in the US in 2005 and only 2%

away from Japan‟s peak in the housing

boom in 1970 (Bloomberg News, 2011).

U.S.

Market

China

Market

Vietnam

Market


� Foreign Direct Investment

� China has been liberalizing financial markets and

increasing trade with the rest of the world

� FDI exceeded$105 mm in 2010, compared to $90mm in

2009

Executive

Summary

$150

$100

$50

$0

Source: World Bank

Real Estate

Overview

CHINA (CONTINUED)

FDI ($bn)

2006 2007 2008 2009 2010

U.S.

Market

China

Market

Vietnam

Market


� Attempts to slow growth

Executive

Summary

Real Estate

Overview

CHINA (CONTINUED)

� Minimum down payment on 2 nd homes raised from 50% to 60%

� Interest rates raised 25 basis points to 5.81% in December

2010 and another 25 basis points in February to 6.06%

� Introduction of a property tax on new home purchases in

Shanghai of 0.6% as of January 2011

� On February 24 th , The PBOC raised reserve requirements for

banks by 50 basis points for the second time this year

U.S.

Market

China

Market

Vietnam

Market


Executive

Summary

Real Estate

Overview

CHINA VS. VIETNAM

� Both countries are experiencing urbanization, high

inflation and face corruption in the business environment

� Infrastructure development in China connected the 100 of

the largest cities; developers purchased real estate in high

traffic transportation hubs. Vietnam lacks the

infrastructure development

� Vietnam‟s supply structure is more centrally controlled

� Vietnam requires foreign investors to form joint

ventures, limiting potential ownership

Due to these restrictions, Vietnam not facing the same

bubble threat as China

U.S.

Market

China

Market

Vietnam

Market


Strengths

Weaknesses

Opportunities

Threats

Executive

Summary

Source: Business Monitor International

VIETNAMESE REAL ESTATE INDUSTRY

SWOT ANALYSIS

Focus on urbanization

Foreign Direct Investment

increases

Dependence on raw

material imports

Lack of managers &

skilled workers

Lower cost of construction

materials

Labor shift from farm �

inexpensive labor

Growth slowdown &

financial crisis

Real Estate

Overview

Investor fear

U.S.

Market

Corruption/bribery persist

China

Market

Infrastructure Projects

Fast growing economy �

decreasing poverty

Weak infrastructure and

vulnerable economy

Easing inflation � Gov‟t

accelerate growth

Privatization of stateowned

enterprises

Tighter lending conditions

Gov‟t inability to stabilize

economy

Vietnam

Market


30,000

25,000

20,000

15,000

10,000

5,000

0

Executive

Summary

VIETNAM – POPULATION GROWTH

Vietnam Urban Population Growth (Thousands)

Based on 2009‟s figures of 26% of nearly 88 million Vietnamese are urban

dwelling. With the majority of the population also quite young, consumer

demand will lead to growth in prices including demand for housing.

Real Estate

Overview

U.S.

Market

China

Market

Whole Country

Red River Delta

Northern Midlands and Mountain Areas

North Central Area and Central Coastal

ARea

Central Highlands

South East

Mekong River Delta

Source: (General Statistics Office of Vietnam)

Vietnam

Market


$100,000

$80,000

$60,000

$40,000

$20,000

$-

VIETNAM – FOREIGN DIRECT INVESTMENT

Executive

Summary

FDI Registered Capital by Industry (Last 20 years)

Construction Transport; storage and

communications

Real Estate has seen more FDI inflow aside from

multinational investment in building out

manufacturing capacity

Real Estate

Overview

Mining and quarrying Hotels and restaurants Real estate; renting

activities

U.S.

Market

China

Market

Vietnam

Market

Manufacturing

Source: (General Statistics Office of Vietnam)


VIETNAM – GENERAL ECONOMIC GROWTH

Strong projected economic growth coupled with rising inflation, and a recently

devalued currency have created inflation concerns as prices continue to rise.

Executive

Summary

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


Executive

Summary

VIETNAM – INFLATION & PRICING

Population growth, FDI growth, and a weakening VND have led inflationary

pressure that have materially raised the price of housing over the last year.

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


VIETNAM – INFRASTRUCTURE DEVELOPMENT

� General

� Expectation for $23B USD committed to Infrastructure through 2020

� Less than 40% of projected funds from Government resources

� Transportation

� Vietnam has 93,300 kilometers of highways, 25% are paved

� Plans to develop 6,000km of expressways by 2025

� Power

� Ninh Thuan nuclear plant, a 2,000 megawatt facility

� Bin Thuan coal-fired plant, a 600 megawatt facility

� Construction

� Public Private Partnerships (PPP‟s) by highlighting projects most likely to

meet quick approval and provide highest returns to finance providers

Government investment emphasis on continued infrastructure development to

create baseline for continued development of major urban areas

Executive

Summary

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


Executive

Summary

VIETNAM – REGULATORY ENVIRONMENT

� Circular 16

� Provides increased clarity into approval process and required steps taken to

achieve approval

� Steps clearly outlined requirements for formal house purchasing contracts

� Decree 71

� Above a certain size, every development project requires Prime Minister approval.

� Construction timeline by requiring the foundation of the structure to be in place

prior to receiving capital contribution

� Only strict pre-approved forms of funding from pre-approved organizations allowed

to partake in these projects

� Law 48

� Cases of tax exemption with a view to promoting investment and developing the

national economy. Will apply to land of investment projects in sectors in which

investment is specially encouraged,

Vietnamese regulation is driven toward improving transparency and creating

clarity to help continue driving demand and growing the real estate market

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


Relative Performance

125.0%

100.0%

75.0%

50.0%

25.0%

0.0%

-25.0%

-50.0%

-75.0%

VIETNAM – STOCK MARKET RELATIONSHIPS

Trendlines of Ho Chi Minh stocks, by industry, show similar directional movement

from all industries. The growth of an individual component is a factor of the

growth of the Vietnamese market overall.

Executive

Summary

Performance Q1 2008 thru Q4 2010 by industry

Q1-'08 Q2-'08 Q3-'08 Q4-'08 Q1-'09 Q2-'09 Q3-'09 Q4-'09 Q1-'10 Q2-'10 Q3-'10 Q4-'10

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market

Automobile & Parts

Banking & Fin Services

Chemicals

Construction Materials

Distribution & Transport

Food & Drink

Elec tric & Electronics Equipment

Electricity

Household Equipment

Industrial Metals & Mining

Oil & Gas Equip, Services, & Distribution

Oil & Gas Production

Construction & Engineering

Paper & Wood Products

Personal Manufacturing (Clothing)

Pharmacy & Biotech

Real Estate

Tourism & Entertainment


Correlation

100.0%

VIETNAM – STOCK MARKET RELATIONSHIPS

80.0%

60.0%

40.0%

20.0%

0.0%

Correlations became pronounced on a quarterly basis. Smoother trends of a quarterby-quarter

comparison highlight the similar directionality of the industries, but

weekly correlations highlight the relative volatility of some industries.

Executive

Summary

Quarterly and Weekly Relative Return Correlations to Real Estate

Stocks

Real Estate

Overview

U.S.

Market

Qtrly Weekly

China

Market

Vietnam

Market


Infrastructure & RE Relatedness

VIETNAM – STOCK MARKET RELATIONSHIPS

Unexpectedly low

relative correlation

Executive

Summary

Relative Correlation Compared to

Expected Relatedness Factors

Consumerism Relatedness

Real Estate

Overview

Unexpectedly high

relative correlation

U.S.

Market

China

Market

Electric & Electronics Equipment

Construction & Engineering

Construction Materials

Distribution & Transport

Oil & Gas Equip, Services, & Distribution

Paper & Wood Products

Chemicals

Personal Manufacturing (Clothing)

Household Equipment

Banking & Fin Services

Food & Drink

Electricity

Industrial Metals & Mining

Automobile & Parts

Pharmacy & Biotech

Oil & Gas Production

Vietnam

Market


� Financial Access

Executive

Summary

VIETNAM – KEY TAKEAWAYS

� Vietnamese population‟s banking mindset creates a lack of deposits for bank lending

purposes

� Equity component often derived from gold or cash investment

� Expensive bank debt and high equity requirements limit the number of potential owners

� Infrastructure

� Lack of infrastructure has limited concentrated development efforts

� Government Involvement

� Vietnamese Government is pushing urbanization and growth efforts

� Vietnamese Government efforts to maintain rental rates despite growing vacancy rates

raises concern for forced growth without underlying demand

� Vietnam has a cultural deference to property -rights, making it harder to clear land for

development purposes

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


VIETNAM – MANAGING GROWTH GOING FORWARD

� Financial Access

� New methods of financing projects can create sustainable capital inflows

� Infrastructure

� Safest investments in Vietnam may be infrastructure – Public-Private Partnerships with

government ensure demand for projects and this long -term “backbone” work is necessary

for overall national development

� Government Involvement

� Government should seek measures to curb speculative construction while encouraging

ownership and use

� Government must be mindful of all the levers it uses (fiscal and monetary policy) so as to

encourage only stable, demand-based growth

� Take lessons from US Savings & Loan crises as well as the latest economic meltdown

– lose monetary policy may lead to short-term explosive growth, but has serious

consequences

� Government needs to move to document and make explicit FDI encouragement to

minimize risks of Vietnamese land use

� Investment Considerations

� Infrastructure and Affordable Housing are areas of growing demand

Executive

Summary

Real Estate

Overview

U.S.

Market

China

Market

Vietnam

Market


Executive

Summary

Real Estate

Overview

THANK YOU

U.S.

Market

China

Market

Vietnam

Market


Executive

Summary

Real Estate

Overview

APPENDIX

U.S.

Market

China

Market

Vietnam

Market


Supply Factors

Availability and Cost of:

Construction Activity

Executive

Summary

Real Estate

Overview

SUPPLY

U.S.

Market

APPENDIX

China

Market

Labor

Land

Building

Materials

Vietnam

Market


Demand Factors

•Demographics

•Income & GDP

•Price of Real Estate

•Cost & Availability of Credit

•Consumer Preference

•Investor Preference

•Substitutes & Compliments

•Interest Rates

Executive

Summary

Real Estate

Overview

DEMAND

Major Demographic

Variables

Population Size

Population

Growth

U.S.

Market

APPENDIX

China

Market

Demographic Size

Factors

•Family Size

•Age Composition

•Immigration &

Emigration

•Non Family versus

Family Household Trends

•Death Rates

•Divorce Rates &

Marriage Rates

•Lifestyle Preferences

Vietnam

Market


UNIQUE SUPPLY AND DEMAND CHARACTERISTICS

Unique to Real Estate

Executive

Summary

Real Estate

Overview

� Product Life Cycle

� Long Usage, Renovation of Existing Stock

� Time to Market

� Construction Lag Times

� Heterogeneity

� No two pieces of real estate are identical

� Asymmetric Information

� Possessors have more information

� High Transaction Costs

� Inhibits free flow of trade – barrier to

entry

� Multiple Uses

� Investment versus Consumer Good

� Immobility

� Location Externality Effects

U.S.

Market

APPENDIX

China

Market

Vietnam

Market


MACROECONOMIC INDICATORS AND THE PRICE OF REAL

Indicator

Gross Domestic Product Positive

Interest Rates Inverse

Exchange Rates Inverse

Gold Positive

Economic Relationships

Executive

Summary

Real Estate

Overview

ESTATE

Relationship

(ceteris paribus) Comments

U.S.

Market

APPENDIX

Firms expand and drive up

demand, supply lags to respond

Raises cost of capital, which

raises the discount rate and

lowers NPV of an investment

If currency depreciates, foreign

investors drive up domestic real

estate prices

Gold prices usually move in

tandem with real estate, but are

lagged

China

Market

Vietnam

Market


ECONOMIC EFFECTS OF DECLINING REAL ESTATE

Decline in

Real

Estate

Sales

Executive

Summary

Decline in

Real

Estate

Prices

Economic Relationships

Real Estate

Overview

Reduction

In Home

Values

PRICES

Reduction

In Home

Equity

Loans

U.S.

Market

Further Income

Reduction

APPENDIX

A Decline in Real Estate Sales can lead to a

reduction in consumer spending. The best

way to prevent a spiraling effect is if the

government can reduce interest rates

China

Market

Reduction

in

Consumer

Spending

Vietnam

Market

Increased

Unemployment


Executive

Summary

VIETNAM – RESIDENTIAL PROFILE

� Leasing

� Overall: Lower Rental Rates

(more competitive pricing)

with Higher Occupancies

� Absorption will gradually

recover as demand slowly

grows

� Rental Rates will remain

stable

� For Sale

� Near term available supply

predominantly not in inner

district of HCM

� Glut of new to market lower

quality supply provide

opportunity for affordable

housing buyer

Vietnam Residential market should see slower near term growth versus other asset classes as

absorption of existing supply picks up and higher quality development becomes available

Real Estate

Overview

U.S.

Market

APPENDIX

China

Market

Vietnam

Market


� Hotel

Executive

Summary

Real Estate

Overview

VIETNAM – HOTEL

� Tourism up 38% in August 2010 from last year (approx. 430,000 international

visitors)

� Estimated Annual Number of International Visitors is 5 million

� No new hotels in operation in the third quarter (3 to 5 stars)

U.S.

Market

APPENDIX

China

Market

Vietnam Hotel market

has seen stable REVPAR

which is a positive

indicator given general

slowness of Q3 in

tourism activity

Vietnam

Market


� Office

� Overall: Absorption is growing

while rents are declining

� Grade A office space rents

decreased to US$36.70psm per

month

� Grade B and C office space rents

saw increase in 3 rd quarter 2010

(first since ‟09)

� 63,180 sm of Grade B and C

buildings came on line in the 3 rd

quarter 2010

� Vacancy Rate declined to 13.4%

Executive

Summary

Real Estate

Overview

VIETNAM – OFFICE

Vietnam office market vacancy rates have climbed as a result of the longer rent roll

involved in office leases. Yet, continued emphasis on industry sector development

could create quick rebound in $ paid psf

U.S.

Market

APPENDIX

China

Market

Vietnam

Market


Executive

Summary

CHINA REAL ESTATE SWOT ANALYSIS

Opportunities

•Gov‟t promoting low-cost housing

•Money made from stock rise

make funnel to real estate

•Foreign inflows continuing

Real Estate

Overview

Strengths

•Population urbanization

•Gov‟t trying to reduce corruption

•Lending to developers and home

owners easily available

Weaknesses

•Poor labor conditions

•Guanxi – corruption still exists

•Difficult for foreign developers to

compete

U.S.

Market

APPENDIX

China

Market

Threats

•Construction workers protesting

against poor conditions

•No guarantee of foreign money

•Shortage of construction material

Vietnam

Market


China

� Currently in boom years

� Keeping currency

undervalued

� Considered a „state

capitalist‟ – government

controls investing in „pillar

industries‟

� Savings used for capital

investment

� Government does not want

real estate to be considered

a pillar industry

Executive

Summary

Real Estate

Overview

CHINA VS. JAPAN

Is China facing a similar real estate bubble to that in

Japan in the 1970s ?

U.S.

Market

APPENDIX

Japan

� Boom years occurred in

the „50s through „70s

� Kept currency

undervalued

� Was considered a „state

capitalist‟ – government

controlled lending

practices

� Large amount of savings

used for capital

investment

China

Market

Vietnam

Market


Picture: Population Density

VIETNAM – POPULATION CONCENTRATION

Executive

Summary

Real Estate

Overview

Though only roughly ¼ of the population was urban

dwelling as of 2009, the Government is focusing

efforts on infrastructure development to encourage

increased urbanization of the population.

We expect this to have strong effects on the demand

for both infrastructure development projects (often

Public Private Partnerships) as well as increased

residential and commercial developments at these

central population hubs.

U.S.

Market

APPENDIX

China

Market

Vietnam

Market


Executive

Summary

SOURCES: SHEET 1 OF 4

A New Property Bubbly? (2009 йил June). Business Monitor International .

Amadeo, K. (n.d.). How Does Real Estate Affect the U.S. Economy. Retrieved 2011 йил 5-February from

http://useconomy.about.com/od/grossdomesticproduct/f/Real_estate_faq.htm

American Chamber of Commerce in Vietnam. (2011 йил 11-February ). Vietnam devalues currency as inflation bites; Vietnam must tackle inflation:

IMF says. Retrieved 2011 йил 16-February from American Chanber of Commerce in Vietnam: Ho Chi Minh City Chapter:

http://www.amchamvietnam.com/?id=4300

Barriaux, M. (2011 йил 18-02). Associated Foreign Press. From China to raise banks' reserve requirement ratio:

http://www.google.com/hostednews/afp/article/ALeqM5iNJvZD1BgO1wORXKz2gdtS26PsIg?docId=CNG.723f734402a43f6ec2ae31bfc78e3d68.501

Bhaskar, Gopalan, Yadav, & Kiesn. (2010 йил 1-January). Commercial Real Estate: A Drag for Some Banks but Maybe Not for U.S. Economy. Retrieved

2010 йил December from AllBusiness: http://www.allbusiness.com/banking-finance/banking-lending-credit-services-mortgage/13877885-1.html

Blanchard, B., & Xin, Z. (2010 йил 25-December). China fights inflation with Christmas rate rise. Retrieved 2011 йил January from Reuters:

http://www.reuters.com/article/2010/12/25/us-china-economy-rates-idUSTRE6BO09H20101225

Bloomberg News. (2011 йил 31-January). Chia's Housing Market Nears U.S., Japan Bubble Levels: Chart of the Day. From Bloomberg News:

http://www.bloomberg.com/news/2011-01-31/china-s-housing-market-nears-u-s-japan-bubble-levels-chart-of-the-day.html

Bloomberg News. (2011 йил 8-February ). China Raises Rates to Counter Accelerating Inflation. Retrieved 2011 йил February from Bloomberg News:

http://www.bloomberg.com/news/2011-02-08/china-raises-benchmark-one-year-deposit-lending-rates-by-25-basis-points.html

BMI. (2011). China: Real Estate Report: Q1 2011. Business Monitor International.

Business China. (2010 йил 9-November). China's FDI to Top $420 bln in 2006-2010. From 21cbh: http://en.21cbh.com/HTML/2010-11-9/China-FDI-

2nd.html

Business Monitor International. (2010). New Construction market report: "Vietnam Infrastructure Report Q4 2010". Retrieved 2011 йил 20-February

from http://www.prlog.org/10893793-new-market-study-vietnam-infrastructure-report-q4-2010-has-been-published.html

Cash Flow into Real Estate Market and Gold Hoarding Worrisome. (2010 йил 7-December). Retrieved 2010 йил 15-December from Vietnam Banking

Finance News: http://www.vietfinancenews.com/2010/12/cash-flow-into-real-estate-market-and.html

China Economic Net. (2010 йил 24-December). Real Estate should not be pillar industry. Retrieved 2011 йил February from China Economic Net:

http://en.ce.cn/Industries/Property/201012/24/t20101224_22082943.shtml

ChinaTimes. (2011 йил 27-January ). How China's Local Government Rigs the Land-use Game. From Want ChinaTimes:

http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20110127000167&cid=1102

Decree Eases Road to Home-Ownership. (2007 йил 18-October). Retrieved 2010 йил 1-December from VietnamNet Bridge:

http://english.vietnamnet.vn/social/2007/10/750088/

Decree on Implementation of the Law on Residential Housing of Vietnam. (2010 йил 20-July). Mayer Brown JSM.

Real Estate

Overview

U.S.

Market

APPENDIX

China

Market

Vietnam

Market


Executive

Summary

SOURCES: SHEET 2 OF 4

Developers Unhappy over New Fees. (2010 йил 21-August). Retrieved 2010 йил 15-December from Vietnam Business News:

http://vietnambusiness.asia/developers-unhappy-over-new-fees/

(October/November 2010). Economic Pulse: A Report on the Asia Pacific Economy and Its Impact on Commercial Real Estata. Cushman & Wakefield.

ERisk. (n.d.). From http://www.erisk.com/learning/casestudies/ussavingsloancrisis.asp

Financial Intermediation Function. (2010). Quaterly Summary of Banking Statistics: Third Quater 2010. New York: Federal Reserve Bank of New York.

FT.com. (n.d.). Inflation Fears as Vietnam Devalues Dong. From http://www.ft.com/cms/s/0/233c8170-35a1-11e0-b67c-

00144feabdc0.html#axzz1E5PjXDpM

Fung, E. (2011). UPDATE: China Real-Estate Tax Seen As Mild But Part of Broader Effort. The Wall Street Journal .

General Statistics Office of Vietnam. (n.d.). Retrieved 2011 йил 10-January from http://www.gso.gov.vn/

Global Property Guide. (2010 йил 18-February). China may be at a tipping point - danger signals red! Retrieved 2011 йил January from Global Property

Guide: http://www.globalpropertyguide.com/Asia/China/Rental-Yields

Habitat International Coalition. (2011). China's Land Law: An Overveiw. Finance Asia.

Italian Institute for Foreign Trade. (2009). Vietnam - Infrastructure development in Ho Chi Minh City. Italian Institute for Foreign Trade.

Katz, A. (2008 йил 15-10). Gold's Relationship with Real Estate . Retrieved 2011 йил 21-2 from Seeking Alpha: http://seekingalpha.com/article/99979gold-s-relationship-with-real-estate

Lynn, D. J. (2010). Emerging Market Real Estate Investment: Investing in China, India, and Brazil. New Jersey: John Wiley & Sons, Inc.

Lynn, D., & Wang, T. (2010). Emerging Market Real Estate Investment: Investing in China, India, and Brazil. Hoboken, NJ: John Wiley & Sons, Inc.

(Q3 2010). Market Insights from CBRE's HCMC Quarterly Report . CB Richard Ellis (Vietnam) Co., Ltd.

(Q3 2010). MarketBeat: HCMC Hotel Report. Cushman & Wakefield.

(3Q 2010). MarketBeat: HCMC Residential for Sale Report. Cushman & Wakefield.

(3Q 2010). MarketBeat: HCMC Residential Leasing Report. Cushman & Wakefield.

Mayer-Brown JSM. (2010). Decree on Implementation of the Law on Residential Housing of Vietnam. Mayor Brown LLP.

Mayer-Brown JSM. (2010 йил 19-July). Vietnam: New Law on Non-agricultural Land Use Tax. Retrieved 2010 йил December from Mondaq:

http://www.mondaq.com/article.asp?articleid=105712

Monetary and Capital Markets and Western Hemisphere Departments. (2010). Financial System Stability Assessment. International Monetary Fund.

Muth, R. (1960). "The demand for non-farming housing", in A.C. Harberger, ed., The demand for durable goods. Chicago, United States of America:

University of Chicago Press.

NAIOP. (2010). The Contribution of Office, Industrial and Retail Development and Construction to the U.S. Economy. McGraw_Hill Construction.

Nollen, S. (2010). Monetary Policy. Class Briefing Notes . Georgetown University.

Real Estate Economics. (n.d.). Retrieved 2011 йил 8-February from Wikipedia.org: http://en.wikipedia.org/wiki/Real_estate_economics

Real Estate

Overview

U.S.

Market

APPENDIX

China

Market

Vietnam

Market


Executive

Summary

SOURCES: SHEET 3 OF 4

Real Estate Sector Seeks New Rules. (2010 йил 04-June). Retrieved 2010 йил 1-December from Vietbiz24: All Finance & Business:

http://www.vietbiz24.com/Real_estate_sector_seeks_new_rules-14404.aspx

(2010). Realty decoded: Investing across borders. Ernst & Young.

Renaud, K. M. (2000). Asia's Financial Crisis and the Role of Real Estate.

Reuters. (2010 йил 20-December). China Taps Brakes, Again, on Soaring Land Prices. Retrieved 2011 йил January from CNBC:

http://www.cnbc.com/id/40745856/

Schuman, M. (2011 йил 14-February ). Is China facing a Japanese future? Retrieved 2011 йил February from Time CNN:

http://curiouscapitalist.blogs.time.com/2011/02/14/is-china-facing-a-japanese-future/

Schweser. (2009). Alternative Asset Valuation (CFA Level II Book 4). Kaplan.

Sirmans, F. a. (n.d.). Reri.org. From The Role of Commercial Real Estate in a Multi-Asset Portfolio: http://www.reri.org/research/abstract_pdf/wp12.pdf

TBKTSG. (2010 йил 17-December). Vietnam Real Estate Prices to Continue to See Rise in the Next 10 Years. Retrieved 2010 йил 15-December from

Vietnam Business News: http://vietnambusiness.asia/vietnam-real-estate-prices-to-continue-to-see-rise-in-the-next-10-years-thien/

The Straits Times. (2011 йил 8-January). China land sales up 70% in 2010. Retrieved 2011 йил January from The Straits Times:

http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_622009.html

Trade, I. I. (2009 йил May). Vietnam: Infrastructure Development in Ho Chi Minh City. Retrieved 2011 йил 15-February from

http://www.ice.gov.it/paesi/asia/vietnam/upload/198/0905%20Vietnam%20-

%20Infrastructure%20development%20in%20Ho%20Chi%20Minh%20City.pdf

Tu, D. (2011 йил 26-January). Laws change propery sector. Retrieved 2011 йил 10-February from Uni Bros: http://www.unibros.com/en/news.php/laws_change_property_sector/id=16618/cid=2

Tuan, L. (2010 йил 17-Novermber). Untie Real Estate Market. Retrieved 2010 йил December from Vietnam Business Forum:

http://www.vccinews.com/news_detail.asp?news_id=22027

USAID. (2009). Country Health Statistical Report - Vietnam. United States, USAID, Washington.

VCCI. (2011 йил 12-February). Real Estate Market 2011: investors unlikely to cause major changes. Retrieved 2011 йил February from Vietnam Business

News: http://vietnambusiness.asia/real-estate-market-2011-investors-unlikely-to-cause-major-changes/

Vietnam - Infrastructure, power, and communications. (2000). Retrieved 2011 йил January from Encyclopedia of the Nations:

http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Vietnam-INFRASTRUCTURE-POWER-AND-COMMUNICATIONS.html

Real Estate

Overview

U.S.

Market

APPENDIX

China

Market

Vietnam

Market


Executive

Summary

SOURCES: SHEET 4 OF 4

Vietnam Banking Finance News. (2011 йил 15-February). Experts warn of mixed impact of VND devaluation. Retrieved 2011 йил 16-February from

Vietnam Banking Finance News: http://www.vietfinancenews.com/2011/02/experts-warn-of-mixed-impact-of-vnd.html

(2010). Vietnam: 2010 Article IV Consultation - Staff Report and Public Information Notice. International Monetary Fund.

Vietnam: New Law on Non-agricultural Land Use Tax. (2010 йил 19-July). Retrieved 2010 йил 15-December from Mayer Brown JSM:

http://www.mondaq.com/article.asp?articleid=105712

VietnamNet Bridge. (2001 йил 18-October). Decree eases road to home-ownership. Retrieved 2010 йил December from Viet Nam News:

http://english.vitnamnet.vn/social/2007/10/750088/

Vietnews. (2011, February 21). Vietnam devaluation negative for banks: Moody's. Retrieved February 23, 2011, from Vietnews:

http://www.dztimes.net/post/business/vietnam-devaluation-negative-for-banks-moody-s.aspx

Vietpartners. (2010). BMI View on FDI Attractiveness of VIetnam in year 2011. Retrieved 2011 йил February from Vietpartners:

http://www.vietpartners.com/statistic-fdi.htm

VNEconomyNews.com. (2011 йил 23-January). Laws change property sector. Retrieved 2011 йил 31-January from Vietnam Business & Economy News:

http://www.vneconomynews.com/2011/01/laws-change-property-sector.html

VNS. (2010 йил 21-August). Developers unhappy over new fees. Retrieved 2010 йил December from Vietnam Business News:

http://vietnambusiness.asia/developers-unhappy-over-new-fees/

Wachter, S. M. (2004). The Role of Speculation in Real Estate Cycles. Madison, WI: The Center for Urban Land Economics Research.

Wang, H., & Wang, Y. (2011 йил 29-January). Property tax aimed at cooling hot SHanghai residential market. Retrieved 2011 йил February from China

Daily: http://shandong.chinadaily.com.cn/cndy/2011-01/29/content_11936567.htm

Wang, L. a. (2010). Emerging Market Real Estate Investment. In L. a. Wang, Emerging Market Real Estate Investment (pp. 19,20). Hoboken: John Wiley &

Sons.

Wichita Kansas. (n.d.). US bank regulators warn on commercial real estate. Retrieved 2011 йил January from Wichita Kansas: http://wichita.comkansas.com/us-bank-regulators-warn-on-commercial-real-estate.html

Woolsey. (2008 йил 10-07). From Top U.S. Real Estate Markets For Investment: http://www.forbes.com/2008/07/10/american-cities-investmentsforbeslife-cx_mw_0710realestate.html

World Bank. (2010, 12 13). Retrieved 12 18, 2010, from Taking Stock: An Update on Vietnam's Recent Economic Development:

http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/VIETNAMEXTN/0,,contentMDK:22229235~pagePK:1497618~piPK:217

854~theSitePK:387565,00.html

WorldAtlas.com. (2010, 12 15). www.WorldAtlas.com. Retrieved from http://www.worldatlas.com/webimage/countrys/asia/vn.htm

Yuan. (2011, 1 18). Retrieved 2 2011, from 2010 FDI in China Tops US$ 100 Bln: http://english.caing.com/2011-01-18/100218277.html

Real Estate

Overview

U.S.

Market

APPENDIX

China

Market

Vietnam

Market

Similar magazines