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Dec 2013 Colliers HCMC CBD Market Report

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Colliers Vietnam's monthly market report on the Central Business District of Ho Chi Minh City. It covers the Office, Retail, Hotel, and Serviced Apartment markets.

Colliers Vietnam's monthly market report on the Central Business District of Ho Chi Minh City. It covers the Office, Retail, Hotel, and Serviced Apartment markets.

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  • 1. DECEMBER 2013 | HCMC CENTRAL BUSINESS DISTRICT HO CHI MINH CITY CBD MARKET Report www.colliers.com/vietnam
  • 2. TABLE OF CONTENTS HCMC CBD MARKET REPORT | DECEMBER 2013 Market Highlights OFFICE MARKET ................................................................ 2-4 ............................................................... 2 ............................................................... 3 ............................................................... 3 ............................................................... 4 ............................................................... 4-5 Market Overview ............................................................... 4 Market Performance ............................................................... 4 Outlook ............................................................... 5 Table ............................................................... 6 ............................................................... 8-10 Market Overview ............................................................... 7 Market Performance ............................................................... 7 Outlook ............................................................... 8 Table ............................................................... 6 ............................................................... 8-9 Market Performance ............................................................... 8 Outlook ............................................................... 9 Table ............................................................... 9 ............................................................... 10 • Market Overview • Market Performance • Outlook • Table RETAIL MARKET • • • • HOTEL MARKET • • • • SERVICED APARTMENT • • • Page CONTACTS
  • 3. HCMC CBD MARKET REPORT DECEMBER 2013 Economic Overview FDI IN HCMC BY MONTH, NOVEMBER 2013 Foreign direct investment (FDI) registered in HCM City in the first 11 months of the year amounted to US$1.6 billion, a year-on-year increase of 30%. By November 20, the city had 412 FDI projects licensed and 120 others approved for capital expansion. Regarding domestic investment, the city also granted 23,675 business licenses, an increase of 7% adding up to the total investment of VND107.6 trillion (equivalent to US$5.12 billion). A significant decline of 39% y-o-y for domestic investment reflects that local firms are still suffered from tough economic Source: Statistical Office in HCMC, Colliers International FDI IN HCMC BY SECTORS, NOVEMBER 2013 condition. Approximately 2,200 businesses (equaling 9.3% of the newly established businesses in the city) have been dissolved in the same period. It can be seen from the FDI by business sector chart a notable increase in the Science - Technology sector as its capital contribution rate to total investment to HCMC jumped from 4% in 2012 to 31% in this review term. The portion of real estate in total FDI capital in the first 11 months decreased over the same period in 2012, the actual investing amount for HCMC property market from the foreign investors increased by 25% to reach US$147 million. Source: Statistical Office in HCMC, Colliers International FDI BY COUNTRY HCMC NOVEMBER 2013 Source: Statistical Office in HCMC, Colliers International P.1 | Colliers International
  • 4. HCMC CBD MARKET REPORT DECEMBER 2013 | COMMERCIAL OFFICE MARKET Market Performance LIM TOWER There is no new supply in Central Business District (CBD) in November. More than half of the city’s office supply is located in the CBD, including all Grade A and the majority of Grade B buildings. By the end of last month, the monthly average Grade A asking rent decreased slightly to US$38.3/sqm. However, this rental rate was 10.7% higher than the same period last year. Given the limited new supply entering the market and growing demand of international companies in centralizing their workplaces, the vacancy rates of Grade A properties Source: Public Domain Outlook decreased 6% m-o-m. Lim Tower on Ton Duc Thang and With limited commercial space available in the future and Times Square on Nguyen Hue Street leased the most area. a slight increase in demand growing from tenants due to In November, the average asking rent of Grade B segment reached US$22.3/ sqm. per month but the occupancy rate was unchanged, staying at 93%. economic recovery and healthy FDI flows, it is expected that landlords in the CBD will start to push back on rental offerings and predict to increase rental prices offered and decrease incentives. New Grade B projects will enter the market in 2014 creating some downward pressure on asking rental prices but it is thought that premier Grade A developments will not be significantly influenced by this. MARKET PERFORMANCE BY GRADE GRADE A PERFORMANCE Source: Colliers International Source: Colliers International RECENT TRANSACTIONS BUILDING President Place Empress Tower Lim Tower LEASE (L) / SALE (S) L L L TENANT / PURCHASER NHN Vietnam Hansea Puma AREA (sq m) 500 400 2,500 P.2 | Colliers International
  • 5. HCMC CBD MARKET REPORT DECEMBER 2013 | COMMERCIAL OFFICE MARKET Office Market Overview 1 2 3 4 5 6 7 8 Saigon Centre Saigon Tower Sunwah Tower The Metropolitan Diamond Plaza Kumho Asiana Plaza Bitexco Financial Tower President Place 65 Le Loi 29 Le Duan 115 Nguyen Hue 235 Dong Khoi 34 Le Duan 39 Le Duan 45 Ngo Duc Ke 93 Nguyen Du 11,650 13,950 20,800 15,200 15,936 26,000 37,710 8,330 Service Charges (*) 6.0 6.0 6.0 6.0 8.0 8.0 8.0 6.0 9 10 Times Square Lim Tower 22-36 Nguyen Hue 9-11 Ton Duc Thang 9,000 29,265 7.0 6.0 67% 86% 55.0 28.0 187,841 6.9 90% 38.3 No Name Address Grade A NLA (sq m) Occupancy rate NFA asking rent (*) 90% 100% 90% 95% 98% 98% 85% 92% 38.8 37.0 42.5 41.3 41.0 51.3 30.0 33.0 1 2 3 4 5 6 7 OSIC Yoco Building Somerset Chancellor Court Central Plaza Saigon Riverside Office Saigon Trade Center Harbour View Tower 8 Nguyen Hue 41 Nguyen Thi Minh Khai 21-23 Nguyen Thi Minh Khai 17 Le Duan 2A-4A Ton Duc Thang 37 Ton Duc Thang 35 Nguyen Hue 6,500 5,000 3,200 6,094 10,000 31,416 8,000 6.0 5.0 5.0 5.0 5.0 6.0 6.0 99% 94% 98% 100% 98% 97% 93% 20.0 16.0 21.0 26.0 20.0 21.0 20.0 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 MeLinh Point Tower Zen Plaza Bitexco Office Building The Landmark Opera View Indochina Park Tower Petro Tower City Light The Landcaster Gemadept Tower Fideco Tower Havana Tower Sailing Tower Royal Center TMS Bao Viet Tower Green Power Tower Vincom Center Saigon Royal A&B Tower Maritime Bank Tower Empress Tower 02 Ngo Duc Ke 54-56 Nguyen Trai 19-25 Nguyen Hue 5B Ton Duc Thang 161-167 Dong Khoi 4Bis Nguyen Dinh Chieu 1-5 Le Duan 45 Vo Thi Sau 22Bis Le Thanh Ton 5 Le Thanh Ton 81-85 Ham Nghi 132 Ham Nghi 51 Nguyen Thi Minh Khai 235 Nguyen Van Cu 172 Hai Ba Trung 233 Dong Khoi 35 Ton Duc Thang 68-70-72 Le Thanh Ton 91 Pasteur 76 Le Lai 192 Nguyen Cong Tru 138 Hai Ba Trung 17,600 11,037 6,000 8,000 3,100 2,145 13,304 10,000 7,000 14,000 15,000 7,326 16,910 14,320 4,000 10,650 15,600 56,600 5,340 17,120 19.596 19,538 6.5 6.0 5.5 6.0 7.0 4.0 5.0 5.0 5.0 6.5 6.0 6.0 5.0 5.0 4.0 6.0 6.0 5.0 4.0 6.0 5.0 5.0 100% 89% 100% 82% 95% 80% 99% 96% 100% 100% 99% 99% 99% 100% 100% 98% 97% 77% 100% 99% 94% 85% 24.0 20.0 22.0 16.0 26.0 11.0 30.0 15.0 24.0 23.0 20.0 21.0 25.0 19.0 23.0 21.0 22.0 24.0 19.0 28.0 19.0 25.0 364,396 5.5 93% 22.3 Grade B * US$/ sq m/ month (on net area) ** buildings are sorted by Year of Completion P.3 | Colliers International
  • 6. HCMC CBD MARKET REPORT DECEMBER 2013 | RETAIL MARKET Retail Market Overview In November, of Ho the Chi previous the Minh month Consumer City and Price increased by improved Index (CPI) 0.17% CPI RETAIL & SERVICES REVENUE from 4.97% y-o-y. Data from the municipal Statistics Office shows that the highest price increase was recorded in the group of housing-powerwater-fuel and construction materials at 0.58%. According to report from Statistical Office, HCMC’s total retail sales and service revenue in the first 11 months of this year reached VND548,499.1 million, the figure represented a 12.3% Source: Statistical Office in HCMC, Colliers International y-o-y rise. The revenue from trade sector, which accounted for 81.2% of the RETAIL SALES REVENUE BY SECTORS total, rose 12.2% over the same period of last year while that of hotel, restaurant services and tourism industry grew 19% y-o-y. Market Performance The average rents of shopping centers and department stores within CBD went flat during last month while that of non-CBD commercial places decreased steadily under pressure of retain existing tenants. Unlike office market, mismatch in rentals between retail landlords Source: Statistical Office in HCMC, Colliers International and tenants remained a major obstacle for this segment. Given stable supply in November, the decline in net absorption of retail spaces also indicated response of tenants to the current high RETAIL PODIUM @ TIMES SQUARE UNDER-CONSTRUCTION asking rents. It is reflected that landlords of department stores in CBD area are trying to maintain the rentals while the occupancy rate of these places is still fluctuated. RETAIL SALE REVENUE GROWTH RATE Source: Colliers International Source: Colliers International P.4 | Colliers International
  • 7. HCMC CBD MARKET REPORT DECEMBER 2013 | RETAIL MARKET RETAIL MARKET DEPARTMENT STORE Source: Colliers International Source: Colliers International RETAIL PODIUM SHOPPING CENTRE Source: Colliers International Source: Colliers International Outlook In general, shopping malls in downtown city benefit from Generally, retail tenants are expecting a pick up in sales prime location advantage with good foot traffic of shoppers. In throughout the festive seasons from Christmas, New Year to contrast, non-CBD retail places face difficulties in improving Lunar New Year holiday. take-ups of vacant spaces that leads to building renovation or Regarding future supply, it looks like both Saigon Airport functional conversion beside typical pricing strategy. Plaza (Tan Binh) and Times Square (District 1) will not be For example, Thien Son Plaza in District 7 has been renovating open this year but during first quarter of 2014. The other retail since late of 2Q13 to alter retail area to office space. Similarly, podiums in District 2 (Thao Dien Pearl and Cantavil Premier) Zen Plaza also reduced retail floor areas by transfer Hoang are showing good construction progress and expected to Yen Buffet and Sushi Bar to the first two floors while leaving commence operation in the second half of 2014. 3F to 5F available for office lease. P.5 | Colliers International
  • 8. DECEMBER 2013 RETAIL MARKET KUMHO MONTHLY |MARKET REPORT Name of Project / Building No HCMC CBD MARKET REPORT Address Location NLA (sq m) 750 Average Rental (US$/sq m/month) Occupancy Rate 125 100% 1 Sheraton Saigon 88 Dong Khoi District 1 2 Caravelle Hotel 19 Lam Son Square District 1 150 95 94% 3 Rex Arcade 141 Nguyen Hue District 1 2,000 120 100% 4 New World Hotel 79 Le Lai District 1 1,000 50 95% 5 Hotel Continental Saigon 132-134 Dong Khoi District 1 200 90 100% 6 Opera View Lam Son Square District 1 1,260 85 100% 7 Bitexco Financial Tower 45 Ngo Duc Ke District 1 8,000 42 95% 8 Times Square 22-36 Nguyen Hue District 1 9,000 90 70% 9 President Place 93 Nguyen Du District 1 1 Diamond Plaza 34 Le Duan District 1 800 30 100% 23,161 Retail Podium 73.1 86% 9,000 83 100% 2 Zen Plaza 54-56 Nguyen Trai District 1 6,817 52 100% 3 Parkson Saigon Tourist 35 Le Thanh Ton District 1 17,000 90 100% 4 Kumho Asiana Plaza 35 Le Duan District 1 6,830 35 100% 39,647 72.4 100% Department Store 1 Saigon Center 65 Le Loi District 1 3,500 75 100% 2 Tax Center 135 Nguyen Hue District 1 7,000 75 100% 3 Saigon Square 1 77-89 Nam Ky Khoi Nghia District 1 1,300 167 100% 4 Nowzone Nguyen Van Cu District 1 9,000 48 88% 5 Saigon Square 2 7-9 Ton Duc Thang District 1 1,400 75 75% 6 Vincom Center B 72 Le Thanh Ton District 1 45,000 55 90% 7 City Plaza 230 Nguyen Trai District 1 5,250 25 100% 8 Taka Plaza 102 Nam Ky Khoi Nghia District 1 1,000 90 100% 9 Vincom Center A Dong Khoi District 1 38,000 70 85% 111,450 61.9 90% Shopping Centre DECEMBER 2013 | HOTEL MARKET No 1 Name of Hotel Caravelle HCMC CBD MARKET REPORT Address 19 Lam Son Square Location Total Room Occupancy ARR(*) District 1 335 75% 150 2 New World Saigon 76 Le Lai District 1 533 71% 148 3 Sofitel Plaza Saigon 17 Le Duan District 1 290 75% 144 4 Rex 141 Nguyen Hue District 1 289 80% 136 5 Renaissance Riverside 8-15 Ton Duc Thang District 1 350 70% 140 6 Legend 2A-4A Ton Duc Thang District 1 283 68% 142 7 Sheraton 88 Dong Khoi District 1 480 81% 205 8 Park Hyatt Saigon 02 Lam Son Square District 1 259 80% 333 9 Majestic Saigon 1 Dong Khoi District 1 175 72% 148 10 InterContinental Asiana 39 Le Duan District 1 305 79% 206 11 Nikko Saigon 235 Nguyen Van Cu District 1 334 64% 140 12 Pullman Hotel 146 Tran Hung Dao District 1 306 10% 128 3,633 69% 167 86 74% 85 5 Star 1 Continental Saigon 132-134 Dong Khoi District 1 2 Norfolk Hotel 117-119 Le Thanh Ton District 1 104 71% 92 3 Duxton 63 Nguyen Hue District 1 203 72% 103 4 Kim Do Royal City 133 Nguyen Hue District 1 135 70% 48 5 Palace Saigon 56-66 Nguyen Hue District 1 146 88% 54 6 Oscar 68A Nguyen Hue District 1 108 62% 41 7 Liberty Central 179 Le Thanh Ton District 1 140 72% 104 8 Golden Central Saigon 140 Ly Tu Trong District 1 132 70% 78 9 Grand 08 Dong Khoi District 1 107 65% 89 1,161 70% 84.6 4 Star P.6 | Colliers International
  • 9. HCMC CBD MARKET REPORT DECEMBER 2013 | HOTEL MARKET Hotel Market Overview INTERNATIONAL VISITORS TO HCMC The number of foreign travelers to Vietnam in November showed an increase after negative performance in the last few months. According to the General Statistics Office, Viet Nam welcomed around 731,000 international tourists in November, an increase of 8.8% compared to the same period last year, of which, Russian holiday makers comprised a large element. HCMC agencies estimates that approximately 419,750 international tourists came to the city in November, up 15% Source: Statistical Office in HCMC, Colliers International y-o-y; while the figure of the first 11 months of the year is 3.64 million visitors. The tourism sector made a revenue of VND76,024 billion over INTERNATIONAL ARRIVALS the past 11 months, rising by 19% y-o-y. Outlook Vietnam tourism and relevant agencies are working to join tourist single visa with counterparts from Thailand and Cambodia. As these two countries have already had a single visa agreement, we expect to attract a large number of tourists Source: Statistical Office in HCMC, Colliers International to Vietnam due to this convenience. This joint also shows an improvement in policy of Vietnam government on ASEAN common visa system which was rejected in 2010. There would be no new supply for the 4- and 5-star hotel FUTURE SUPPLY BY STATUS market in the first month of 2014. Le Meridien Saigon Hotel is still being delayed due to capital shortage though it reached an exterior finishing phase. Meanwhile, 231 rooms of Reverie Times Square Hotel are being fitted out and is expected to open in late of 2Q 2014. Regarding the Meetings, Incentives, Conference, Exhibitions (MICE) segment, in November Ibis Saigon South hosts participants of four international exhibitions given its favor location nextby Saigon Exhibition and Convention Center in District 7. These events probably make hoteliers pay more Source: Colliers International attention on potential of MICE market. P.7 | Colliers International
  • 10. HCMC CBD MARKET REPORT DECEMBER 2013 | HOTEL MARKET Market Performance November witnessed an improvement in both average room rate (ARR) and occupancy rate of 4-star hotels with an increase of 14.98% and 10.92% respectively. Besides, despite the performance in occupancy rate of 5-star segment reflected positive figures of 1.29% gain , the ARR dropped 4.16% m-o-m during this peak tourism season. The two newly opened hotels in District 1 Pullman Saigon Centre on Tran Hung Dao Street and Liberty Central Saigon Riverside catch up well in their segments with occupancy rate reached 30% and 70% respectively in last month. China had the highest number of tourists travelling to Vietnam in November while European countries like England, Holland, Spain and Belgium were top sources of foreign visitors of the month. PERFORMANCE OF 4 & 5 STARS HOTEL Source: Colliers International PERFORMANCE OF 5 STARS HOTEL PERFORMANCE OF 4 STARS HOTEL Source: Colliers International Source: Colliers International DECEMBER 2013 | SERVICED APARTMENT MARKET Serviced Apartment Overview GRADE A SERVICED APARTMENTS GRADE B SERVICED APARTMENTS Source: Colliers International Source: Colliers International P.8 | Colliers International
  • 11. HCMC CBD MARKET REPORT DECEMBER 2013 | SERVICED APARTMENT MARKET Market Performance Serviced apartment segment received no new supply in November. District 1 accounts for about 42% of total supply in the serviced apartment segment of HCMC. In the review month, both top grades experienced a low performance in terms of rents and vacancy. Monthly average rate of Grade A declined to US$34.5/ sq m., down by 4.1% m-o-m. At the same time, Grade B average rents remained unchanged from last month at US$24.6/ sqm. per month. Grade A occupancy rate averaged at 92.9%, showing increase of 2.91% m-o-m as a reaction to falling price; Grade B occupancy rose to 83% from 80% in November. PERFORMANCE OF GRADE A & B Outlook Serviced apartment sector are being competed from new rivals of large numbers of buy-to-let apartments and tighten housing budget of tenants. During this year end period, expat tenants are busy with business as well as travelling schedule. Hence the occupancy rate is not expected to change considerably. However, landlords are getting pressure in accept flexible rentals in order to maintain their Source: Colliers International occupancy rates. No 1 2 3 4 5 6 7 Address Location Total Room Average Occupancy ARR(*) 5B Ton Duc Thang 21-23 Nguyen Thi Minh Khai 65 Le Loi 111 Nguyen Du 22 Bis Le Thanh Ton 39 Le Duan 08 Phung Khac Khoan District 1 District 1 District 1 District 1 District 1 District 1 District 1 66 172 89 41 55 260 18 88% 94% 88% 90% 98% 97% 40% 30 36 35 30 36 36 34 855 90% 36.0 165 154 126 42 76 30 60 54 14 17 83% 90% 91% 93% 76% 72% 60% 50% 85% 94% 26 29 28 26 24 20 24 25 19 20 738 92% 28.9 Project Name The Landmark Somerset Chancellor Court Sedona Suites Nguyen Du Park Villas The Landcaster InterContinental Asiana Saigon Lafayette De Saigon Grade A 1 2 3 4 5 6 7 8 9 10 Somerset HCM Saigon Sky Garden Norfolk Mansion Diamond Plaza Garden View Court Ben Thanh Luxury Vincom Center Nikko Saigon Spring Court Saigon City Residence 8A Nguyen Binh Khiem 20 Le Thanh Ton 17-21 Ly Tu Trong 34 Le Duan 101 Nguyen Du 172-174 Ky Con 72 Le Thanh Ton 235 Nguyen Van Cu 1Bis Phung Khac Khoan 8A/3D2 Thai Van Lung Grade B District 1 District 1 District 1 District 1 District 1 District 1 District 1 District 1 District 1 District 1 * US$/sq m/month ** Not including VAT and service charge *** Buildings are sorted by Year of Completion P.9 | Colliers International
  • 12. HCMC CBD MARKET REPORT | DECEMBER 2013 About Colliers International Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and a shared sense of initiative, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. We connect through a shared set of values that shape a collaborative environment throughout our organization that is unsurpassed in the industry. With more than 100 professionals in 2 offices in Vietnam, the team is market driven and has proven and successful track record with both international and local experience. From Hanoi to Ho Chi Minh City, we provide a full range of real estate services • Research >>Market research across all sectors >>Market analysis, advisory, and strategy 482 offices in 62 countries on 6 continents United States Canada Latin America Asia Pacific EMEA : 140 : 42 : 20 : 195 : 85 $2 billion in annual revenue • Valuation & Advisory Services 13,500 professionals and staff 2.5 >>Valuation for land, existing property or development sites >>Feasibility studies to determine NPV, IRR and highest & best use billion square feet under management • Office Services >>Tenant Representation >>Landlord Representation COLLIERS INTERNATIONAL • Residential Sales & Leasing HO CHI MINH CITY Bitexco Office Building, 7th Floor 19-25 Nguyen Hue Street District 1, HCM City, Vietnam Tel: + 84 8 3827 5665 • Retail Services • Investment Services • Real Estate Management Services • Corporate Services • Industrial Leasing The foundation of our services is the strength and depth of our experience. Please contact, If you would like to recieve our other research reports Publication Coverage Frequency Content Availability Research & Forecast Report Vietnam Cities Quarterly All market sectors Publicly available CBD Report HCMC CBD Monthly Office, Retail, Hotel and Serviced Apartment Publicly available Asia Pacific Office Report Asia Pacific including Vietnam Quarterly Office market Publicly available Vietnam Property Market Report Vietnam cities Quarterly All market sectors On subscription Development Recommendation Vietnam cities At request All market sectors On subscription HANOI Capital Tower, 10th Floor 109 Tran Hung Dao Street, Hoan Kiem District, Hanoi, Vietnam Tel: +84 4 3941 3277 QUANG NGUYEN Research Manager quang.nguyen@colliers.com +84 938 056 603 YEN NGUYEN Research Analyst yen.nguyen@colliers.com +84 915 478 778 This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). ©2013. All rights reserved. www.colliers.com/vietnam Accelerating success

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