Dq1 assignment karl


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Dq1 assignment karl

  1. 1. Real Estate and UrbanDevelopmentLecturer: Prof. Karl Kluegel, Urban DevelopmentStudent: NGUYEN DAN QUYNH VGU 2010-2011
  2. 2. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl KluegeldCONTENTSI. INTRODUCTION ………………………………………………………………….….2II. THE RESON OF RESEARCH………………………………………………….…. 4III. METHO OF EVELUATION…………………………………………………………4IV. EVALUATION………………………………………………………………….….5 1. Design and Image analysis___________________________5 2. Parking___________________________________________6 3. Traffic____________________________________________6 4. Marketing_________________________________________7 5. Economic_________________________________________9 6. Social __________________________________________ 13 7. Inveronment_______________________________________13 8.V. In conclusion…………………………………………………………………..15ReferenceStudent: Nguyen Dan Quynh VGU 2010-2012 Page 1
  3. 3. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl Kluegeld I. INTRODUCTION: 1. The main function of buildingThe high-rise building - Sabeco World Trade Center, located on 2-4-6 Hai Ba TrungStreet, Ben Nghe Ward, District 1 is Complex Building included Hotel sixth star, GradeA International Standard Office for Rent, retail service convention hall commercialcenter and basement using for parking elevators related utilities. However, the numberof apartments for rent is limited just about 5%- 7% area of building. The architecturalplanning criteria: + Lot size: 6044 m2 + Number of storey : 40 storey (without basement, mezzanine, and terrace) + Maximum building height: 170 m. + Maximum of Building density- space for development: 3626,40 m2 ( 60%) + Plot ratio : 15 (regardless of building floor area of basement garage and technical level) + Minimum building Setback 4m. + Estimated construction cost: $160 million. 2. Describes the building:The building is design by 2 principal component – one is a high-rise tower with 40-storey, another is a podium block with 5-storey, which is separate by a walking street.This is an important design which creates difference of the building. The designemphasizes simplicity in form and function in the midst of a cluttered architecturalenvironment.According to describe of the designer, the building has a triangular shape with a largefloor plates at the center of the tower. With the shape like this, a triangle shape ischosen because it could province 20% more of the office area with river views ascompared with conventionally-shaped buildings. Internally, the tower transforms toaccommodate different space requirements. The hotel is located at upper floors tocommand better views while the lower levels house the offices. The residentialcomponent is located immediately below the hotel component so both components canshare some recreational facilities. In addition, the wedge-shaped site has influenced thedesign of the retail and convention podium block to take on a trapezoidal shape. All theretails and F&B Functions are concentrated in the lower floors of the podium block whilethe upper level of the podium block houses the international conferences and seminarrooms. The overall simplicity of the buildings form has a richly textured cladding systemStudent: Nguyen Dan Quynh VGU 2010-2012 Page 2
  4. 4. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl Kluegeldmade up of glass and metal, providing another beautiful skyscraper for Ho Chi MinhCity.Student: Nguyen Dan Quynh VGU 2010-2012 Page 3
  5. 5. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl Kluegeld2-4-6 HAI BA TRUNG, DIST1, HCMCII. THE REASON OF RESEARCH:The objective of this paper is to analyze about the real estate in Ho Chi Minh City,particularly District 1 through towers are building and will be built. To doing that,eachmembers in class will choose one project in District 1 reported by CBRE, Vietnam RealEstate to reported. Besides that learning how to evaluate a building - it is necessary fordeveloping society and economic.III.METHOD OF EVALUATION:A set of criteria which was discussed and collected from all of the ideas of the membersin class choose the appropriate criteria for this paper. And then the end seven criteriawere selected such as design and image, parking capacity, traffic, market analysis,economic, social, environment. (Table 1)Student: Nguyen Dan Quynh VGU 2010-2012 Page 4
  6. 6. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl KluegeldUsing the proper availability of information about Sabeco Tower from Design Companyand the Departments and the real estate webs such as: CBRE, Viet Nam national realestate association, Vietnam economic forum and Skyscraper Asian analysis.Collecting reports about the real estate in Ho Chi Minh in recent years is to evaluatesome criteria such as marketing, designing.Using some technical calculation to estimate some criteria such as parking andeconomic analysis IV. EVALUATION: Table 1: Real estate assessment criteriaNo. Criteria Notes on method Assessment1 Design Social harmony Beautiful and luxury interior and Social status exterior decoration2 Parking Capacity Motorbikes Not have information to assess Cars however according the calculate the parking will be enough if it was build 2 basement3 Traffic Accessibility Easy – not have traffic jam in the Mobility peak hours.4 Market analysis Faced to a lot of challenges.5 Economic Calculation Face to a lot of challenges because Rent cost/total cost price for lease always change due to economic crisis.6 Social impact Analyze at 500m Provide for the real estate a huge radius area about office, retail, hotel…7 Environmental Be interest in about environment in friendly design. 1. Design and Image analysis:The building which is one of important points in city takes part in huge skyscrapers inCBD to create a magnificent Melinh square. Comparative with current building with 2-3stories belong Sabeco beverage, the new Sabeco Tower will be change the face of areaaround also is linking point between district 1 and district 2-Thu Thiem District.Student: Nguyen Dan Quynh VGU 2010-2012 Page 5
  7. 7. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl KluegeldNow the building is not built however the license and advertise has been done.However, there is the International Architecture Design Contest Sabeco in 2008.Currently, the HOK Company – Hongkong was an experience company about high- risebuilding designed it. According to design, to have a integrate shape and transitionalspace between areas around, the designers is take care of environment by the waythat they create a walking street in a building friendly with residents. It makes buildingbecome unique and more luxury.However, architect Dan (2008) criticized that this building will overwhelm the buildingsaround by a large scale of project. Another person said that with the glassy design ofbuilding is again effect to the harmony between traditional material and new materialbuilding. In my opinion, this is a beautiful project and combines with nearby skyscraperswhich will create a landscape harmony for Bach Dang Quay and Me Linh square. 2Parking capacity:Being lacking of information about the area for the parking, this paper will calculate thenumber traffic in this building to estimate the number of basement ones depend on theViet Nam Stander for designing. If the number of basement is about one or two floor, itwill be easy to accept.Supposing that whole area 6044m 2 (1) using for parking and techniqueArea for parking per car 18 m2Area for parking motorbike, bike 2.5 m2Area for technique 10 %- 604.4 m2 (2)  Parking area (1) –(2)= 5440 m2 (3) + Gross rental revenue at 100% occupancy : 70.026.652 + The area for each floor 2266.5 with 5% using for auxiliary block such as toilet, passage-way  the space for development 2153 m2  65 apartments With 4 apartment/1 car, 1apartment /3 motorbike+ bike  16 cars and 195 motorbike  775,5 m2 (a)  Office and retail for lease 1923 m2* (20+ 5) stories With 100 m2/ 1car  480 cars  8.640 m2 (b)Student: Nguyen Dan Quynh VGU 2010-2012 Page 6
  8. 8. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl Kluegeld  Hotel grade A 272 rooms estimate With 8 rooms/1 car  34 cars  612 m2 (c)The area for parking (a) + (b) + (c) 10.027,5 m2 (4)In conclusion:Comparison (3) and (4), the project needs to build 2 basements to adapt a number ofcar and motorbike in building. 3.Traffic:The tower is located at Melinh square and surrounded by Hai Ba Trung, Thi Sách, Dongdu so it have many benefits for traffic in the time construction and using it.Between two block of building, the design have a walking street and the all area ofbasement using for parking so the access for residents and transport is easy.Besides that, although this is a CBD but traffic jam in the peak hours rarely happen.This is also an importable point for the investor and user when they choose this tower towork. In addition, in case of unexpected things such as fire is the user have many thestreet to escape because four face of building is contiguous with many street.Moreover, the Sabeco tower is near many the bus station, which makes people have alot of change to access the building. It is also easy to connect with district 2 by ThuThiem tunnel and district 4 by Khanh Hoi Bridge.All of assessment above, the accessibility to tower is good. 9. Marketing:According to the function of the Sabeco building, it will provide for the market realestate: A m2 for apartment, b m2 for office for lease, room A for leases, C m2 for retail.To assess this criteria, the rent price of building will comparison with available data fromCBRE in Q2-2011 to analyze the benefits and challenges of projectStudent: Nguyen Dan Quynh VGU 2010-2012 Page 7
  9. 9. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl Kluegeld Office marketFirstly, rents throughout all grades of office softened during the quarter, albeit at aslower rate than Q1 2011. Renting Grade A in CBD decreased 1.3% quarter-on-quarter. The average occupancy in second quarter decreased from 79.8 % at the endof Q1 2011 to 82.5%. However, the grade A was still slower at approximately 66% thanGrade B,C at over 80%.In addition, according to Trang Le, Manager of DTZ Occupier Services departmentcommented that the office landlords for all grades are still facing challenging times atthe end of the first half of 2011. Residential for sale marketAlso like the office market, the residential for sale market continued to decline in quarterof 2011. The number of new launched in the second quarter went us by 12.5% q-o-qStudent: Nguyen Dan Quynh VGU 2010-2012 Page 8
  10. 10. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl Kluegeldwith a total of 4,926 units being launched. Therefore, many projects will be delay to lookfor uptick in market sentiment. Retail marketBesides that although consumer confidence has fallen in the first half of 2011, arelatively stable retail property market in Q2 2011. CBD department store rents went upto 5.8% q-o-q to US$ 109.35 in the second quarter. According to the forecast, if theeconomic recovery around in next four quarter, rents prime in CBD could still increasedue to short of available space.In short, in front of this situation, this building cans unavoidable difficulties about rentprice and high vacancy rate. The first thing to overcome is try to introduce for user thebest services such as an increasing rent-free and fit-out periods, stepped rents orcomplimentary parking spaces. 5. Finance: Economic Feasibility: + Estimated construction cost: $160 million + Gross rental revenue at 100% occupancy with the space for development 2153 m2 (1)  65 apartments level A 2.153 * 3 floors *35 USD/ apartment * 12 months  2.712.780 USD  Office for lease 2.153 m2* 20 stories *20 USD/m2 *12 months  10.334.400 USD  Retail for lease 2.153 m2 *5storeies *150 USD/m2 *12 monthsStudent: Nguyen Dan Quynh VGU 2010-2012 Page 9
  11. 11. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl Kluegeld  19.377.000 USD  Hotel grade A 2.153m2 * 12storey = 272* 400 USD/ day * 356 days.  38.732.800 USD + Gross rental 71.156.980 USD + 10% Vacancy Rate 7.115.698 USD + 35 % Operating Cost 24.904.943 USD  Net operating Income 39.136.339 USDBreak Even ROR 38.523.209/ 160.000.000 24.46 % Items Amount( $) Project Cost 160.000.000 Gross Retail revenue at 100% Occupancy 71.156.98 10 % Vacancy Rate 7.115.698 25% Operate Cost 24.904.943 Net Operate Income 39.136.339 Break Even ROR Table 2. Rough Estimate of Economic FeasibilityConclusion: - Project is economically feasible if investor require ROR ≤ 24.06 - Project is economically not feasible at 25% since 39.136.339/0.25 = 155.545.356 income value < 160 million USA 3.454.644 loss - Project generates substantial Development Profit at 23% required ROR= (39.136.339/0.23) – 160.000.000 = 10.157.995 USDThis build belong to Sabeco Beverage – one of the biggest company beverage in VietNam.Student: Nguyen Dan Quynh VGU 2010-2012 Page 10
  12. 12. year 1 2 3 4 5 6 7 8 9 10 Total cost for the building ( $ millions) 160,000,000 Construction schedule 0.50 0.25 0.25 Total cost for the building ( $ millions) 80,000,000 40,000,000 40,000,000 Equity ($ millions) 40% 32,000,000 16,000,000 16,000,000 Bank loan 60% 48,000,000 24,000,000 24,000,000 Loan 96,000,000 48,000,000 72,000,000 96,000,000 Debt payment 14,000,000 14,000,000 14,000,000 14,000,000 14,000,000 14,000,000 12,000,000 Debt at the end of year 82,000,000 68,000,000 54,000,000 40,000,000 26,000,000 12,000,000 - Interest rate 20 % Interest 8,160,000 12,240,000 16,320,000 13,940,000 11,560,000 9,180,000 6,800,000 4,420,000 2,040,000 - Table 3 The Project Finance year 3 4 5 6 7 1 2 8 9 10 Gross Rental Revenues 67,599,131(95%)Vacancy Loss (%) 15% 15% 10% 10% 5% 5% 5%Vacancy Loss ($) 3,379,957 3,379,957 10,139,870 10,139,870 6,759,913 6,759,913 3,379,957 - - - - - - -Net Rental Revenues 64,219,174 64,219,174 57,459,261 57,459,261 60,839,218 60,839,218 64,219,174
  13. 13. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl KluegeldExpenses 12,843,835 12,843,835 6,759,913 6,759,913 6,759,913 11,491,852 11,491,852 12,167,844 12,167,844 12,843,835Interest and debt 18,420,000 12,000,000 8,160,000 12,240,000 16,320,000 27,940,000 25,560,000 23,180,000 20,800,000 16,040,000Cash flows In years 142,463,846 32,955,340 39,375,340before taxes (14,919,913) (18,999,913) (23,079,913) 18,027,409 20,407,409 25,491,374 27,871,374 35,335,340Corporate Income Tax 12.5% 12.5% 12.5% 12.5% 25% 25% 25% 25% - - Cash flows In years 24,716,505 29,531,505after taxes (14,919,913) (18,999,913) (20,194,924) 15,773,983 17,856,483 22,304,953 20,903,531 26,501,505Equity 64,000,000 24,716,505 29,531,505 (64,000,000) (14,919,913) (18,999,913) (20,194,924) 15,773,983 17,856,483 22,304,953 20,903,531 26,501,505IRR 24.18%Return on Equity -23.3% -29.7% -31.6% 24.6% 27.9% 34.9% 32.7% 38.6% 41.4% 46.1%Break Even Occupancy 68.6% 64.5% 58.1% 54.2% 48.7% 45.0% 38.7%RateIRR 24.18% Table 4 Cash Flows and IRR According to calculation, the result shows IRR of building is higher than interest rate assumption. It means the project will operate effective. However, in the economic crisis, the company always stands avoidable risks due to increasing interest rate, decreasing number of the resident renting. Student: Nguyen Dan Quynh VGU 2010-2012 Page 12
  14. 14. 6. Social impact:The building locates at center of city therefore it has many benefits:- Security condition is always important criteria for building so the user can believe whenusing this building.-This area belongs Sabeco Beverage cooperate company without residents living so itis not change the living of residents in this area. Besides that designing of building alsocreate pleasant for user by convenient and spatial relaxing.- Besides that this building also provide for office, retail for lease makes stability pricesand create jobs for resident in city. However, the number labor work at Sabeco will haveto move to another place. It means the changing function of building also adverselyaffect to living of worker.- One of the points that the building locate at the best exorbitant place of city. So anincreasing number of investor comes to this area, which will affect to real estate market. 7. Environment impact:This maybe is a first building in CBD which is interest in environment inside the project.Between two blocks is arranged a lot of trees created a green environment for user.However, Viet Nam is one of countries in ASIA is offered hardly by change climate sowith the design cover glassy affect directly to environment of city. In addition, lack ofinformation about using energy, water and material for construction which make theassessment become more difficult. Thus, we can hope that the expert company aboutdesigning skyscrapers and many projects care about using effective energy andenvironment, which will make the tower, become friendly building.V. CONCLUSION No. Criteria Ranking Score 1 2 3 4 5 Good Bad 1 Design 1 2 3 4 5 2 2 Parking Capacity 1 2 3 4 5 2 3 Traffic 1 2 3 4 5 1 4 Market analysis 1 2 3 4 5 3 5 Economic 1 2 3 4 5 4
  15. 15. Real Estate and Urban Development – Lecturer: Prof.Dr.Karl Kluegeld 6 Social impact 1 2 3 4 5 2 7 Environmental friendly 1 2 3 4 5 3 Total 15This is an important building in center of city however in that time, the information isvery limit such as planning design, office space, hotel, apartment for lease. Several theinformation is collected for internet so the accuracy have to limit, which make theassessment of project meet a lot of difficulties.However, standing at situation of investor, this is a good project to invest. It locates at abeautiful sight so building will attract a lot of people coming to rent, work.ReferenceChanging tackhttp://news.vneconomy.vn/20110805104543528P0C4/changing-tack.htmThe Market View Ho Chi Minh City In July 2011.Mid Year Market Review, July 5, 2011.Real Estate Market Get Nearer To Real Valuehttp://vnre.blogspot.com/2011/08/real-estate-market-gets-nearer-to-real.htmlDTZ Vietnam Released Property time quater1-2011http://vnre.blogspot.com/2011/04/dtz-vietnam-released-property-times.htmlhttp://www.cbrevietnam.com/loadpage.php?page=homepage:Sabeco Tower information:http://www.skyscrapercity.com;Document No 3212QHKT-QHKTT, 12/01/2010 from Ho Chi Minh Department of urbanplanningDiễn Đàn Doanh nghiệp- Business forumhttp://dddn.com.vn/20110818082034574cat168/nhieu-ngan-hang-giam-lai-suat-cho-vay-xuong-17nam.htmStudent: Nguyen Dan Quynh VGU 2010-2012 Page 14