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Ho Chi Minh City Knowledge Report - July 2011


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Ho Chi Minh City Knowledge Report - July 2011

Ho Chi Minh City Knowledge Report - July 2011

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  • 1. July 2011 |HO CHI MINH CITYKNOWLEDGE REPORT ECONOMIC OVERVIEW Overview Of which, the newly registered Vietnam GDP Growthrate (%) by Quarter The Governments battle against capital of 455 licensed projects 2008-20108.00% 7.49% 6.44% 7.18% 7.34% 6.90% inflation is putting the greatest was USD 4.3 billion (down7.00% 6.04% 5.84% 5.72%6.00% 5.98% 5.89% pressure on real estate compa- 49.9% by capital); the additional5.00% 4.46%4.00% 3.14% nies, curtailing new develop- registered capital of 132 projects3.00%2.00% ment, as credit has been signifi- licensed from previous years was1.00%0.00% cantly tightened. This has re- USD 1.2 billion. Realised FDI in Q1 Q2 Q3 Q4 2010 2009 2008 sulted in a catalyst effect em- the 1st six months was esti- phasizing M&A activity in the mated at USD 5.3 billion, down real estate sector. The industrial 1.9% from last year. and tourism sectors have bene- Manufacturing registered USD fitted from the dong devaluation 3.3 billion, including USD 2.6 making exports cheaper and billion of newly registered capi- Vietnam, as an increasingly at- tal and USD 666.5 million of tractive tourist destination. added capital; construction Vietnam FDI period 2001-2010 ($US Billion) (Source: General Office Statistic) GDP reached USD 474.8 million, in-80.0 71.7 cluding USD 333.2 million newly60.0 GDP in the 1st half of 2011 in- registered capital and USD40.0 creased by 5.57% compared to 20.3 21.4 18.6 20.0 141.6 million added capital; the20.0 6.3 3.3 7.8 4.1 5.0 11.7 10.0 11.0 11.5 the same period in 2010, During 0.0 water supply, waste manage- 2005 2006 2007 2008 2009 2010 2011F Q/1 it grew by 5.43% and in Q/2 ment and treatment gained USD New Registered (US$ Billion) Disbursed (US$ Billion) 5.67% respectively. Agriculture, 322.7 million. forestry and fishery rose 2.08%, industry and construction by CPI 6.49% and services by 6.12%, Junes CPI rose by 13.29% from FDI the end of 2010 and by 20.82% The attracted FDI for the 1st six if compared to same period in month of 2011 reached 5.6 bil- 2010. The average CPI for the lion USD, equaling 56.7% from first six month was 16.03%, al- the same period last year. though the increase in June Pg 1
  • 2. KNOWLEDGE REPORT | Q2 2011 | ECONOMICS | HCMCECONOMIC OVERVIEW A mere 1.09%, the lowest increase Exports this year, since the Government intro- June’s export turnover was estimated duced credit tightening measures to at USD 7.8 billion, up 7.8% from May control inflationary pressures. 2011 and 23.4% from the same period Retail sales of consumer goods and in 2010. The export turnovers for the services 1st six months attained USD 42.3 bil- As estimated, total retailed sales of lion, up 30.3% from same period in consumer goods and services in six 2010, of which the domestic economic months rose 22.6% from the same pe- sector gained USD 19.4 billion, up riod in 2010, if inflationary factors were 29.4%; the FDI sector (including crude excluded, the growth was 5.7%. Of the oil) USD 22.9 billion, up 31.1%. If gold total, trade increased by 23.2%; lodg- re-exportation was excluded, the six“Economy is the method by ing, eating and drinking by 19.6%; ser- months export turnover rose 33.2%which we prepare today toafford the improvements of vice by 22.3% and tourism by 19.1%. compared to the same period in 2010.tomorrow” The increase in export turnovers was Imports partly due to the increase in the vol- June’s import turnover was estimated ume of certain goods and also in-Calvin Coolidge - US reaching USD 8.2 billion, down 5.2% crease of commodity prices, e.g. pep-President, 1872-1933 from May 2011, however, up 16% from per rose 72.2%; rubber 62%; coffee same period last year. Import turnover 57.3%; cashew nut 42.3%; crude oil reached USD 49 billion, up 25.8% from 41%; petrol 38%; cassava and cas- last year, of which the domestic sector sava products 33%; steel 19%. If in-“Inflation is when you pay reached USD 27.6 billion, up 22.9%; flationary factors were excluded, thefifteen dollars for the ten- and the FDI sector, USD 21.4 billion, up 1st six months export turnovers rosedollar haircut you used to 29.7%. by 14.7%. The United States was stillget for five dollars whenyou had hair.” the largest market for Vietnamese ex- The price increase of some imported ports, comprising USD 7.6 billion, up items increased, of which, cotton rose 21.3% from last year followed by theSam Ewing - Writer 106.8%, petrol 43.8%, textile fibre EU with USD 7.4 billion, up 49.1%, 38.5%, wheat 40.6%, gas 21.6% and ASEAN with USD 6.1 billion, up plastics 18.8%. If the inflationary fac- 16.6%, Japan with USD 4.6 billion, up tors were excluded, the six months 32.4% and China with USD 4.5 billion, import turnovers rose 15.1%“Economics is a subject up 56.6%.that does not greatly re- The import structure also had aspect ones wishes” Trade Balance change from last year, of which, pro- portion of consumer goods rose from June’s trade deficit reached USD 400Nikita Krushchev - First 7.2% to 8.2%; while proportion of million, equaling 5.1% of export turn-secretary of the Communist means of production slowed down over, down from previous months,Party of the Soviet Union, from 92.2% to 91.3%. mainly due to re-exportation of gold. If1894-1971 gold was excluded, trade deficit Pg 2
  • 3. KNOWLEDGE REPORT | Q2 2011 | ECONOMICS | HCMCECONOMIC OVERVIEW estimated at USD 1 billion. The tradeproducts 80.4%; sugar 49.8%; deficit for the 1st six months was esti- constructional inflammable bricks, mated at USD 6.65 billion, equaling tiles and porcelains 45.6%; non- 15.7% of export turnover. If gold wasalcohol drinks 29.9%; inflammable excluded, the figure was USD 7.5 bil-porcelains (excluding those used in lion, equaling 18.1% of export turn- construction) 27.2%. Products with over. slowed down indexes were fibre and fabric 10.3%; steel 9.8%; animal feed Industrial Production Index (IPI) 8.8%; beer 6.2%; pulp, paper and pa- June’s industrial production index per board 4.5% and pharmaceutical (IPI), increased by 4.6% from May products 0.6%. 2011 and 12.7% from the same period Tourist Arrivals“Too many people spend in 2010. The six months, IPI of themoney they havent earned, whole sector rose 9.7% (higher than International visitors to Vietnam in theto buy things they dont st the 8% in the first half of 2010), of 1 six months were estimated atwant, to impress peoplethey dont like’ which mining and quarrying grew by 2,965,800, up 18.1% against the same 2.8%; manufacturing 12.7% and period last year. Of which, visitorsWill Smith - American Au- coming for tourist purposes werethor, Actor, Singer and Pro- power, gas and water 10.3%. 1,773,400, up 11.2%; for business pur-ducer -1968 to present Industrial products with higher IPI poses 493,300, down 1.7%; for visit- from the same period last year were ing relatives 512,900, up 77.6%. Visi- sugar 43.5%; prefabricated metal tors to Vietnam from China increased products 38.1%; inflammable porce- by 51.5%; Republic of Korea 3.7%;“The economy depends lains (excluding those used in con- United States 3.4%; Japan 11.7%;about as much on econo- struction) 35.3%; non-alcohol drinks Cambodia 77.4%; Taiwan 8%; Aus-mists as the weather does 35%; constructional inflammable tralia 6.2%; Malaysia 16.7%; France bricks, tiles and porcelains 24.2%; 8.5%; and from Singapore 7.8%.on weather forecasters.”Anonymous raw flour 23.8%; wrinkling paper and wrapping 18.3%; fertilizer and nitric compound 17%; steel 16.4%; clothes (excluding leather clothes) 16.1%; beer 15.7%; butter and milk 15.1%;“Ever wonder about thosepeople who spend $2 fibre and fabric 15% and cementapiece on those little bot- 14.7%.tles of Evian water? Tryspelling Evian backward. The consumption indexes forGeorge Carlin - May 12, processed and manufactured products1937 - June 22, 2008 - in the five first months of this yearAmerican stand-up come- increased by 17.5% from the samedian, social critic, actor and period in 2010. Products with higherauthor, indexes were prefabricated Pg 3
  • 4. KNOWLEDGE REPORT | Q2 2011 | INFRASTRUCTURE | HCMC INFRASTRUCTURE DEVELOPMENTSDevelopers to Pay Saigon Bridge under repair and afor Infrastructure adjacent new bridge to be builtCompanies involved in housing The Saigon bridge after 50 years of use is undergoing a significantprojects in HCMC’s District 2 overhaul after a hole, cracks, damaged concrete and rusted girderlook set to pay a new fee when and bolts where found after an inspection, the bridge will be up-building high-rises as district au- graded and the surface area will be re-placed and is expected to bethorities are mulling over a plan completed in 6 months at a estimated cost of USD$3.2 million andto make a fund for infrastructure undertaken by Freyssinet VN Co Ltd.development. The City’s People’s Committee have agreed to build a second bridgeThe move comes as the district adjacent to the existing bridge, currently three local companies havehas seen numerous townhouse tendered for the contract, although no final decision has been madeand villa projects being changed and no contractor has been accommodate high-rise build-ings. Streets in district 1 & 3 to go under-This has resulted in pressure groundbeing put on the infrastructuresystem as the density of the The People’s Committee have approved in principle a plan to interpopulation has increased. electricity and communication cables underground. Approximately 2,240 km of lines will disappear from the skyline in 337 street at aTo deal with the problem, the cost of VND10 trillion (US$476 million) in two phases.People’s Committee of District 2 The first phase will involve streets in District 1 and 3, including Tonare considering a pilot scheme Duc Thang, Hai Ba Trung, Le Duan, Dong Khoi and around Benwhich requires property devel- Thanh market and September 23rd Park. To avoid inconvenienceopers to be financially responsi- the work will be undertaken during the night and the HCMC Powerble for infrastructure develop- Company will coordinate with telecom and cable TV companies toment. ensure streets are not dug up several times. P2 | COLLIERS Pg 4
  • 5. KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL | SKER New Industrial Parks in the SKERAscendas Protrade Singapore Tech Park - DNN -Tan Phu Industrial Park - Long An Bing Duong Province ProvinceAscendas, from Singapore, develop, manage and DNN is an industrial group whose core business ismarket IT & Science parks, industrial parks, hi- the manufacturing spare parts for auto and motor-tech facilities, office and retail space. Their flag- cycle assembly and high precision moulds are inship developments include the Singapore Sci- the process of developing the DNN - Tan Phu IP inence Park, International Tech Park in Bangalore, Long An province.India and Ascendas-Xinsu Suzhou in China have Located approximately 35km and 40km from Tanteamed up with the Protrade Corporation, a state Son Nhat and HCMC CBD, respectively and con-owned company, whose core business includes veniently positioned for river access to the Ben Luc,F&B, healthcare, leisure and entertainment, real Long An and Hiep Phuoc ports and the Ho Chiestate, wood processing, furniture and textile and Minh and Trans Asia Highways, the national roadsgarments to develop a new 500 ha IP in Binh N1 and N2 to the west and access to national roadDuong province. 1A via road 825.Located approximately 35 km from Tan Son Nhat The IP will cover an area of 262 ha and will be de-Airport and 40km from HCMC CBD will also veloped in two phases, the 1st phase will comprisebenefit from an on site port and customs clear- 105 ha with land parcels ranging from 0.5 ha to 2ance facility and a on site power plant. ha or divisions thereof.The 1st phase comprising approximately 50 ha is The IP wants to attract a variety of company’s in-expected to come on line during Q1/2012 and will volved in the design and manufacture of precisioncomprise of a mixture of prepared land parcels, moulds, machines and equipment, motorcycle andbuild to suit and ready built facilities. car components, furniture, ceramics, paper, con- struction materials, food, garments, electronicsRental rates will average approximately $40-$45 manufacturing, agriculture and fishery productsper sqm on the remaining 47 years of the lease amongst others, like with many other IP’s, they areterm, however, the JV will also adopt a more averse to pollutant industries. The company hasflexible approach to those companies with ready specifically set aside a portion of the IP to focus onbuilt facilities on a 3-5 year lease with rates aver- the Biotech sector.aging approximately $4 per sqm.The company plan to provide dormitory housing The rental rate has yet to be determined, however,for companies within the park which can accom- anticipated to average approximately $45 per sqmmodate up to 5,000 workers and provide a one and incentives will be offered on CI, VAT and Ex-stop shop for incoming tenants for licensing and port and Import tax in accordance with Governmentadministrative issues. guidelines and terms and conditions of the Pg 5
  • 6. KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL | SKER INDUSTRIAL INVESTMENT TO IN- WORKER REQUIRED - PLEASE APPLY CREASEIndustrial parks and export processing zones in Foreign Direct Investment and domestic enterprisesHCM City are expecting investment to quadruple in industrial parks (IP’s) and export processingin the first half of the year, according to the HCM zones (EPZ) will need approximately 100,000 work-City Export Processing and Industrial Zones Au- ers to meet the demand the demand of existing andthority (HEPZA). new enterprises from now until 2015, according to the HCMC Export Processing and Industrial ZonesHEPZA’s forecast of US$1.352 billion while the Authority (HEPZA) with over 50% of recruitmentcomparable figure for last year was $319.5 mil- coming from new projects and an estimated 60% oflion, comprising nine new foreign-invested pro- the total workforce will be female workers..jects worth $1.023 billion and fresh capital infu-sion into 14 existing projects. The sectors requiring additional staff will be in the pharmaceutical, electronics, machinery and infor-In the first five months of the year, the citys 14 mation technology, however finding skilled workersIPs and EPZs attracted investment of $1.3 billion. remains a major problem and will account for ap-Approximately 70% of the 1,763 ha of land in IPs proximately 38% of the total demand.and EPZs is occupied with more than 256,000 It is considered that the number of new graduatesVietnamese and 2,180 foreign workers em- are significant enough to meet the demand, al-ployed. though many employers are having to provide po- tential employees with short term training courses to ensure that they are capable, in many cases they need training to adapt to the working environment, understand foreign languages and gain practical knowledge. Many foreign enterprises send more than 6,000 workers abroad to their parent company in order to reduce the number of foreign specialist, Japan leads the way followed by South Korea, Singapore, Taiwan and China.FDI, which last year was worth a mere $94 mil- Land & Warehouse Rental Rates in the SKERlion in the first half, is expected to surge to $1.18   Land Rental Price  Warehouse Rentalbillion in the same period this year.   (US$/sqm/leasehold/35-50 Price  Location years  (US$/sqm/month)  Excl. VAT and other fees Excl. VAT and otherFirms from Singapore, South Korea, Japan, fees HCMC Established EPZs&IPs: 150-300 USA, Netherlands and Malaysia are among those New IPs: 60-150 2.5-4.5so far this year with investment in high technol- Dong Nai 40-60 except AMATA 90-100 1.5-2ogy, packaging, plastic, engineering and other Binh Close to HCMC: 100-150 areas. Duong Elsewhere 40-60 1.5-3 Long AnIn terms of cumulative investment, Singapore 30-60 1.5-2.5leads with $1.08 billion in IPs and EPZs, followed Ba Ria- Vung Tau 35-70 1.5-2by Japan, $833 million, Taiwan, $468 million andSouth Korea, $179 million. Exchange Rate: VND 20,600/1USD Source: Colliers Pg 6
  • 7. KNOWLEDGE REPORT | Q2 2011 | RESIDENTIAL | HCMCRESIDENTIAL SECTOR deposit with interest. Another developer, Phat Dat Corporation, is offering buyers the opportunity toThe residential market has been hit particularly acquire an apartment with payments over 48 in-hard with the Governments plan on curbing infla- stalments. A deposit of 10% of the value is initiallytion, along with the devaluation of the dong and required, thereafter, the remaining payments arehigh interest rates. The Governments directive to based on 1.3% per instalment.the banks is to severely limit the amount of loansto real estate developers, which has led to devel- There have been a number of launches an-opments being stalled or having to find alterna- nounced both for condominium and villa projectstive sources for capital investment. with reports of all units registered, this does not mean sold, until there is greater transparency inM&A the market on actual sales, clever sound bites will not restore buyers confidence in a challengingWith the stock market still in the doldrums, issu- market, incentives and payment plans of shares to raise capital remains limited,however, there are indications of M&A activity Ban on unfinished houseswith acquisitions by a subsidiary of Capitaland,Singapore for 70% and 65% stakes in Khang The Ministry of Construction are consideringDien Saigon Real Estate JSC and Quoc Cuong whether to bring in a law to clampdown on devel-Saigon for apartment developments in D2 and opers selling unfinished houses. The current lawBinh Chanh district, respectively. states developers can issue a sales contract once the foundations are complete, however, the landMarket view plot may lay idle for several years thereafter, con- sidered to be a waste of necessary land re-A recent survey by Colliers International of D7 sources.and surrounding districts concluded that develop-ers with a track record still manage to find clien- It would appear that this change would be benefi-tele, high to mid end developments under con- cial to all an sundry, however, a clear indication asstruction with no previous track record struggle to to what comprises a completed house, as someattract buyers, however, affordable developments houses are sold as shell units with the occupierpriced below $1,000 per sqm are still able to at- completing the internal fit out would have to betract buyers with 2 bedroom units the most popu- clearly defined, also, inspecting each house wouldlar. However, in some of these developments the be timely and costly, perhaps, when the procedurequality of finishing and layout design remain of issuance of the red book is underway a con-questionable and may well hinder the sales take struction completion certificate is provided signedup. by the ministry, the developer and the purchaser.Flexible payments LACK OF HOUSING IN IP’s AND EPZ’sAs we highlighted at the beginning of 2011, many Only five IPs and EPZs have housing for workersdevelopments, in an increasingly competitive and they can accommodate only 6,000 people. Bymarket will have to adopt incentives and creative the end of this year nine more housing projectsflexible payment plans. Novaland have intro- are expected to be completed with a capacity toduced a scheme, whereas buyers will place a house 12,000 workers. In the future it is likely that20% deposit pertaining to the value of the apart- Investors in new industrial parks would be re-ment, pay an additional 60% on delivery, reside quired to set aside enough land for social infra-for a period of 2 years, thereafter pay the remain- structure and 20% or return the apartment and retrieve Pg 7
  • 8. KNOWLEDGE REPORT | Q2 2011 | HOTELS | HCMCHOTEL SECTOROccupancy Rate and Average Room Rates for 3-4-5 star Hotels in HCMC Q2/2011In Q2/2011, the overall occupancy rate of 3-5star hotels is approximately 63.33% on average.Specifically, 5-star hotels have the highest occu-pancy with 67%, 4-star with 66% and 3-star with57%. Marriott Hotels expanding across VietnamThe average room rate in June 2011 for 5-star International hotel chain operator Marriot Interna-hotels is approximately $329 per person per tional, operators of the Renaissance Riverside Hotelnight. The average for 4-star hotels is $151 and Saigon, are seeing the potential of Vietnam tourism3-star hotels is $74, respectively. market with the growing numbers of tourist arrivals Hotel Market Performace, HCMC, Q2 2011 and have embarked on an expansion plan across 68% $350 Vietnam with a focus on beach locations and major 66% $300 Occupancy Rate 64% $250 cities. Room Rate 62% $200 60% Currently projects under construction include the $150 58% $100 JW Marriott Hotel in Hanoi, comprising 450 rooms 56% 54% $50 with completion in 2013, the Courtyard by Marriott in 52% $0 5 Star 4 Star 3 Star Ham Tan, south of Phan Tiet, comprising 200 Occupancy Rate 67% 66% 57% Average Room Rate $329 $151 $74 Hotels rooms with completion in 2014 and the Nha Trang Occupancy Rate Average Room Rate Marriott Hotel, comprising 250 rooms with comple- (Source: Colliers International) tion in 2014.In comparison to May 2011, there is a minimal Other projects in the design stage are the Marriottdecrease in average rental rates of 5-star hotels, Resort & Spa in Hoi An, comprising 250 rooms withapproximately 3% and for 3-star hotels approxi- completion scheduled for 2015, the JW Marriottmately 2%; however, the average rental rate of Vinh Hoi Bay Resort & Spa , comprising 320 rooms,4-star hotels has increased about 10%. The oc- the Vinh Hoi Bay - A Ritz-Carlton Reserve, 100 vil-cupancy rate for of 3-5 star hotels also de- las, both in Quy Nhon and the JW Marriott Da Nangcreased from 66.65% in May 2011 to 63.33%; in Resort & Spa, comprising 271 rooms, with all threeparticular, 5-star hotels had the most significant projects scheduled for completion in 2016. Marriottdecrease, from 77% to 67%, bearing in mind we International are eager to spread their brandsare in the midst of the low season. across Vietnam and expect to announce at least an- other two hotels by the end of the Pg 8
  • 9. KNOWLEDGE REPORT | Q2 2011 | RETAIL | HCMCRETAIL SECTOR Average rental rate Q2/2011Current Supply Based on the chart below, the average rental rate ofCurrently, there are 10 department stores, 20 prime street front retail is approximately $90 pershopping centre’s, 11 retail podiums, 58 super- sqm per month, retail podiums $112.5, departmentmarkets and 3 wholesale markets in the city with stores $102.5 and shopping centre’s $52.5, respec-a total area of approximately 625,450 square me- tively.tres, an increase of 27% year on year, of which58% percent of the increased growth rate camefrom the CBD and 24% from suburban areas. (Source: Colliers International) In comparison to Q1/2011, there is no change in rents for prime street front retail and retail podiums; HCM Retail Rents by Type-Q2 2011 (Source: Colliers International Vietnam) $250 $145 $180 $200 $115 $150 $90 $100 $80 $65 $50 $25 $15 $0 Prime Street Retail Podiums Departm ent Shopping Front Retail Stores Centres Min of Asking Rents (US$/sqm, excluding VAT, SC) Max of Asking Rents (US$/sqm, excluding VAT, SC) (Source: Colliers International) however, there is an increase in average rental rates for department stores, approximately 26% and a decrease in average rental rates for shopping centre’s, approximately 35%. (Source: Colliers International) Pg 9
  • 10. KNOWLEDGE REPORT | Q2 2011 | OFFICE | HCMCOFFICE SECTOR 1 million sqm when many multiple projects go intoOverview operation, such as M&C Tower, Vietcombank andIn Q2/2011, the average rental rate for office SJC Tower, if the completed as scheduled. Over-leasing continued to decrease compared to all, the office market rental rates have continuedQ1/2011, due to the large supply of office space to decline, however, buildings of good quality, pro-available. According to Colliers research, there is fessional management attract the best tenants inapproximately 80,000 sqm Grade A space avail- this competitive for leasing. In 2010, the total supply of office HCMC Office Rental Price by Grade, as at Q2 2011 (US$)for lease was approximately 134,000 sqm, how- (Source: Colliers International Vietnam) 41 450,000 80 $ever, in Q2/2011, this number increased to 400,000 70 $ 350,000 35 60 $214,000 sqm. 300,000 50 $ 250,000 22 40 $Average Occupancy and Rental Rates across all 200,000 150,000 30 $grades 34 100,000 20 $ 50,000 10 $ 14 - 10 0$ Grade A Grade B Grade C Sqm(NLA) End Price Start Price (Source: Colliers International) Rental Office Rate by Grade in Q2/2011 Based on the chart above, which indicates the HCMC office rental rate of grade A, grade B and grade C in Q2/2011. The rental range for grade A offices is $34 USD to $41 USD per sqm, $14 USD to $35 USD for grade B offices and for grade C (Source: Colliers International) offices $10 USD to $22 USD.Office leasing market is currently is a very com- Furthermore, this chart also indicates the total cur-petitive, not only in the grade A sector but also in rent supply of grade A,B and C offices. It is calcu-grade B. It is expected that in 2011-2013, the lated that the total current supply of grade A build-new supply will increase rapidly, within 4 years, ing is 141,246 sqm, 420,890 sqm for grade Bthe supply will go up to 2.7 million sqm; from buildings and 416,101 for grade C. Current occu-which the total supply of Grade A is approxi- pancy rate in grade A is 88.24% and for grade B ismately 720,000 sqm. In 2013, there will be the 90.8% with grade C approximately 78%.largest supply coming on line with a total of Pg 10
  • 11. KNOWLEDGE REPORT | Q2 2011 | SERVICED APARTMENTS | HCMCSERVICED APARTMENT SECTOR Serviced Apartment Occupancy & RentalServiced Apartment Supply: Rates Q2/2011 No. of Units Rent/ unit/ month Occupancy RateThere are currently a total of 3,076 units of ser- Average Rent 100.0% $45.00viced apartment in HCMC, of which, Grade A com- 90.0% $40.00 80.0% $35.00prises 1,048 units, Grade B 1,147 units and Grade 70.0% $30.00 60.0%C 881 units. The current supply comprises 9 $25.00 50.0% $20.00 40.0%Grade A apartments, 14 Grade B apartments and 30.0% $15.00 20.0% $10.0034 Grade C apartments. 10.0% $5.00 0.0% $0.00 Grade A Grade B Grade C Supply By Units Across All Grades Up  Occupancy Rate 93.0% 85.0% 73% Average Rent $38.79 $25.58 $16.9 to Q2 2011 Grade A Grade B Grade C (Source: Colliers International) Market News 29% 34% A local property developer, Saigon City Residence 37% Co, Ltd, plans to develop a chain of service apart- ment projects, the first completed project, the Sai- gon City Residence building at 8A/3D2 Thai Van (Source: Colliers International) Lung Street in District 1. The project cost 72 billionOccupancy and Rental Rate Q2/2011 VND and has 10 floors and a basement compris-According to the adjacent chart, which indicates ing 17 serviced apartment of one and two bed-the occupancy and rental rates of serviced apart- rooms. More than 80% of apartments of the build-ment in Q2/2011. Grade A has the highest occu- ing have been leased after only a week since itspancy rate of 93% as well as the average rental launch with rental rates for the remaining 1 bedrate for serviced apartment, approximately $38.79 units of 43 sqm and 47 sqm at $1,800 to $2,200per sqm, grade C has the lowest occupancy rate per month for this Grade C development.with 73% and grade B with the rate of 85%. Market OutlookIn comparison with Q1/2011, there is a decrease in The current economic climate may have a signifi-occupancy rate for Grade A and Grade C; espe- cant impact on the serviced apartment market ascially, Grade C occupancy rate has went down many foreign operated enterprise (FOE), due tofrom 88% in Q1/2011 to 73% at the beginning of inflation and uncertainty have either reduce theQ2/2011. number of expatriate employees or are not engag- ing new replacements until the situation Pg 11
  • 12. KNOWLEDGE REPORT | Q2 2011 | CONSTRUCTION COSTS | VIETNAMConstruction cost comparison Residential Mid 2010 Q1 2011 Q2 2011from Turner and Townsend (USD)from mid 2010 to Q2 2011 de- Individual detached house medium standard 589 600 600noted in US dollars. Individual detached house prestige 638 650 650Highlights: Townhouses medium standard 491 500 500• During Q/2, from April to Apartments private medium density 638 650 650 June the Dong has deval- Apartments high rise 736 750 750 ued further against the dol- lar to around 20,650 VND/ Aged care/affordable units 491 500 500 USD, Commercial• Rate of main material and Office- business park 589 600 600 labour costs have not CBD office- up to 20 floor medium 736 750 750 changed. CBD office- prestige 834 840 840• High interest rates have Warehouse dampened demand for pro- jects. Warehouse/ factory units- basic 393 400 400 Large warehouse distribution center 393 400 400• The nett effect is little High-tech factory/laboratory 687 700 700 change in construction Retail prices this quarter, but still 8% up on the year to end Large shopping centre including mall 638 650 650 June 2011. Neighbourhood including supermarket 491 500 500 Prestige car showroom 540 550 550 Hotels Three star travelers 1,178 1,200 1,200 Five star luxury 1,570 1,580 1,580 Resort style 883 900 900 Hospitals Day centre 589 620 620 Regional hospital 1,227 1,230 1,230Turner & Townsend is a global General hospital 1,227 1,230 1,230professional services organisa-tion with 2,400 staff in 59 offices Schoolsworld-wide, advising businesswhich invest in, own and operate Primary and secondary 491 500 500assets. In Vietnam we have two University 589 600 600offices, in Hanoi and Ho ChiMinh city and we are supported Car Parksby a regional pan Asia networkof nine offices and 250 staff, Multi- storey above ground 589 600 600from whom we can draw on col-lective resources and expertise. Multi- storey below ground 638 700 700 Airport Airport terminal 2,159 2,160 2, Pg 12
  • 13. KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL LISTING | SKER INDUSTRIAL PROPERTY FOR SALE1. Linh Trung 1 EPZ, HCMC 4. Dong Xuyen IP, Vung Tau Factory 1: Land area: 22,760 sqm, GFA 36,905 23,325 sqm sqm Shed: 2,199 Factory 2: sqm 10,960 sqm, GFA 33,750 sqm Warehouse: 1,554 sqm2. Tan Uyen District, Binh Duong 5. Viet Huong 2 IP, Binh Duong Land area: Land area: 34,438 sqm 102,004 sqm Factory: 4,800 sqm Office: 150 sqm3. Linh Trung III EPZ & IP, Tay Ninh 6. Nhon Trach I IP, Dong Nai Land area: 10,836 sqm Land area: 19,977 sqm 3 factories with total GFA: Factory: 6,360 sqm 5,471 sqm Office & Show- Office:1,008 room: 996.6 sqm sqmFor further Information on the above or other properties contact: Naim Khan, or for factories, land or warehouses you have for saleor lease, contact: Ms. Thuy Phan - Pg 13
  • 14. KNOWLEDGE REPORT | Q2 2011 | HCMCColliers International are here to assist you with all your real estate goalsfrom inception to completion and beyond. 512 offices in 61 coun-Colliers International advise and provide the solutions to give your devel- tries on 6 continentsopment the cutting edge. United States : 125 Canada : 38 Latin America : 18 Asia Pacific : 182 EMEA : 117 • $1.6 billion in annual revenue • 978.6 million square feet under management Vietnam HCMC Bitexco Building, 7th Fl 19-25 Nguyen Hue, District 1, HCMC, VN Tel: + 84 8 3821 8777 Fax: + 84 8 3827 5667 Email: Hanoi Capital Tower Building, 10th Fl 109 Tran Hung Dao St, Hoan Kiem District, Hanoi, VN “ACCELERATING SUCCESS” Tel: 84 4 3941 3277 Fax: 84 4 3941 3278 Email: International provide you with the following services: • Research > Market research across all sectors and geographical locations. > Feasibility study to determine your NPV, IRR and highest and best use. • Valuation & Advisory Services NAIM KHAN-TURK > Valuations for land, existing property or development sites. Director - Research > Development advice on unit sizing, phasing and selling price. Bitexco Building, 7th Fl 19-25 Nguyen Hue, District 1, HCMC, VN • Office Services TEL + 84 8 3821 8777 > Tenant Representation FAX + 84 8 3827 5667 > Landlord Representation • Residential Sales & Leasing • Retail Services This document/email has been prepared • Investment Services by Colliers International for advertising • Real Estate Management Services • Corporate Services • Industrial LeasingColliers International provide a comprehensive service tailored to your in-dividual needs for development, investment, sales, marketing, leasing Pg 14