Colliers International Vietnam HCMC Market Insights Q22015 - Office Sector

1. SUPPLY
In Q2 2015, one new shopping centre the SC Vivo City in district 7 entered
the market supplying 62,000sqm NLA. The total retail space currently
covered approximately 479,600sqm from 34 projects. Shopping centre
continued to dominate the modern retail format in the city, accounting for
64% of total supply. Due to limited land availability, only 26% of the total
retail space is located in the CBD. In which, District 1 remained the biggest
retail supplier, accounting for 19% of total supply, whilst the rest of the
retail projects are based in the decentralised districts such as District 7,
District 2, Tan Binh and Tan Phu.
PERFORMANCE
The retail market continued to see a gradual improvement in three main
segments with healthy occupancy rate despite tightened spending budget
in difficult economy. The average occupancy in the review quarter was
91%, stable q-o-q. Shopping centres space remained highest occupied,
at 92%, followed by department store, at 91% and retail podium at 90
percent.
The average rent in all segments was stable q-o-q, stayed at US$49/
sqm/mth. Rents was unchanged in the retail podium and the department
store segment, whilst rent in the shopping centre segment decreased -2%
q-o-q due to competitive rents in large retail projects that recently joined
the market in the secondary area.
DEMAND
HCMC is the leading city in Vietnam in terms of total retail sales, accounted
for approximately 20.5% of total retail sales in the country. In 1H 2015,
real retail growth rate achieved 8.2%, at 6% higher than the target
estimation of last year. The total value was VND267 trillion (US$12.27
billion), increasing by 10.1% y-o-y, reflecting a significant improvement in
local buying power.
Since 2014, the city has witnessed many giant retail conglomerates
placing their foothold in the market, mainly from Thailand, Japan, Korea
and the US with the trend of expansion in the non-CBD. This is due to
the increasing middle class population in HCMC as well as more open
investment policies.
RETAIL SECTOR
Q2 2015 | MARKET INSIGHTS
HO CHI MINH CITY
ECONOMY OVERVIEW
Vietnam has experienced a positive sign of the economic recovery in
1H 2015 when GDP grew 6.28% y-o-y, which is the highest level in the
last 10 years. The consumer confidence index also witnessed significant
improvement when reaching 143.1 points, up 10 ppts y-o-y compared to
the average target of last year.
Total disbursement rate in the foreign funded projects grew by 9.6%
y-o-y to US$6.3 billion. In which, real estate sector continued to attract
lucrative foreign direct investments with 13% of total new FDI, placed at
second after manufacturing.
In parallel with the new legal amendment of the Vietnam Housing Law
came into effect in July 1st 2015 allowing foreigners to legally own, sell and
transfer their properties will boost confidence in property investments.
Shopping
Centre
Retail
Podium
Department
Store
Total
Total Supply (Project) 11 14 9 34
Total Supply ( NLA) 307,410 63,399 108,827 479,636
Average Rent Rate
(US$/sqm/month)
39 55 52
Q-o-q change (%) -2
Occupancy (%) 91 91 90
Q-o-q Change (%) 0.3 -0.2
Project District Type Total GFA
Expected
completion
Pearl Plaza
Binh
Thanh
Shoping
centre
21,000 2017
Vincom Masteri 2
Shoping
centre
120,000 2017
Vincom Landmark 81
Binh
Thanh
Shoping
centre
59,000 2017
Aeon Mall Binh Tan Binh Tan
Shopping
centre
120,000 2016
Table 1: Market Snapshot
Table 2: Significant future projects under construction in 2015
DAVID JACKSON
General Director
david.jackson@colliers.com
PLEASE CONTACT US FOR ANY INFORMATION
TRAN NGUYEN
Business Development Manager
tran.nguyen@colliers.com
www.colliers.com/vietnam
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©2015 Colliers International Research
0
20
40
60
80
100
Shopping Center Retail Podium Department Store
US$/m²/month
Source: Colliers International Research
CBD Average asking rent (US$/m²/month)
Non-CBD Average asking rent (US$/m²/month)
Figure 1: Market Performance by type
* All rents are gross rents per sqm, including service charge but exculding VAT
OUTLOOK
There will be approximately 320,000sqm of future retail supply
entering the market in the next two years. Notable recent involvement
of mega retail projects are Vincom Landmark 81, Vincom Masteri, and
Pearl Plaza; all of which is expected to start operation before 2018.
The benefits of the Trans-Pacific Partnership (TPP) and the EU
Free Trade Agreement (FTA) coming into effect in a year or two
will set Vietnam as an attractive hub for modern retail development
towards global retailers since commodity tariff tax are eased. Strong
expansion is projected to be in decentralised areas such as the East
of the city with vigorous development of high-rise residential projects
in District 2, 9, Thu Duc and Binh Thanh.