Savills - HCMC Market Brief Q3 2009 ENG

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Savills - HCMC Market Brief Q3 2009 ENG

  1. 1. Office for lease Ho Chi Minh City, Vietnam Q3/2009 Supply Trends Demand Trends There are 37 office buildings of Grade A and Grade B Savills is able to track the demand for office space through the standard in HCMC, accounting for approximately 475,000 number of inquiries we receive. There has been considerable square metres net office space. fluctuation; however, this has been an upward trend since May 2008. In the latter part of Q3, Savills has seen a slight In Q3 2009, the office market in HCMC has received one new decrease in inquiries and is expecting this trend to continue Grade A supply - the Kumho Asiana Plaza with about 25,700 into Q4 or until such time as another Grade B building is square metres net area. In total, the HCMC office market launched. supply has received a slight increase of 5% compared with Q2 2009. Most of the transactions have been from existing tenants capitalizing on the reduction in rents with very few new No. of Approx. Occupancy Average comers to the market. Savills has seen a number of tenants Grade returning to the CBD from suburban locations or upgrading to Building Supply (%) rent Grade A 6 100,071 81% 63 a better quality building due to the fall in rents making it Grade B 31 374,356 86% 30 affordable to move. Grade C 85 277,914 84% 22 Outlook Total/ Average 122 752,341 85% 32 Source: Savills Research & Consultancy, Q3 2009 Potential Future Supply, 2009E – 2012E * Rents, in US$, are based on quoted rents and package net, inclusive of service Future supply sq m charge but exclusive of VAT (10%), payable monthly. 700,000 600,000 Performance of HCMC office market (all grades), 500,000 Q3 2008 – Q3 2009 400,000 Occupancy Average Rent % US$/sq m/mth 100% 50 300,000 200,000 80% 40 100,000 60% 30 0 40% 20 2009E 2010E 201 E 1 P o tential Source: Savills Research & Consultancy, Q3 2009 20% 10 Savills estimates that there could be total new supply of more 0% 0 than one million square metres of office space to be Q308 Q408 Q109 Q2 09 Q309 completed in the next few years. Future supply will be mainly Source: Savills Research & Consultancy, Q3 2009 concentrated in District 1, accounting for nearly 60% of total future supply. Notably, there could be one more grade B The average rent for all districts and grades remained building – Crescent Plaza – completed by the end of 2009. unchanged in Q3 2009 while the average occupancy rate has increased slightly by 2% for all grades and districts. However, The estimated future supply as at the end of 2009, 2010 and as Kumho Asiana Plaza was completed late in the quarter, 2011 is expected to complete as all buildings have begun Grade A has suffered a sharp reduction in occupancy of 15 construction. For projects that are planned to be completed in percent. 2012 and beyond, there may be some further delays since they are still typically at the planning stage. For further information, please contact: vietnam – ho chi minh city vietnam - hanoi corporate website Brett Ashton Matthew Powell www.savills.com Managing Director Branch Director +84 8 3823 9205 – Ext.116 +84 4 3946 1300 – Ext.105 bashton@savills.com.vn mjpowell@savills.com.vn address address Savills Vietnam Ltd – Ho Chi Minh City Savills Vietnam Ltd – Hanoi 18/F, Fideco Tower 13/F Pacific Place 81-85 Ham Nghi , District 1 83b Ly Thuong Kiet, Hoan Kiem Ho Chi Minh City Hanoi Vietnam Vietnam T: +84 8 3823 9205 T: +84 4 3946 1300 F: +84 8 3823 4571 F: +84 4 3946 1302 This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills.© Savills Vietnam Co., Limited. 2009
  2. 2. Retail Ho Chi Minh City, Vietnam Q3/2009 Supply Trends Demand Trends Presently there are five department stores, 15 shopping The foundations for predicted retail sector growth in HCMC centres, six retail podiums, 59 supermarkets, and three appear evident such as rising GDP per capita and high wholesale markets in the city with total area of approximately consumption levels that have fuelled this market over the past 452,400 sq m. This supply is considered small for a city with an few years. Demand has persisted into Q3 2009, but slowing estimated eight million people. The retail market in HCMC is in GDP growth will have an impact on consumption and the infancy stage when compared to other regional markets. investment decisions in Viet Nam. In spite of slowing GDP growth, long-term prospects for retail are promising. In the first Quarter 3 2009 saw the re-opening of Lucky Plaza with no new nine months of 2009, HCMC’s GDP grew at only 6.1%, but the stock during the quarter. total retail sales in HCMC increased by 18.7% compared with the same period last year. Savills expects a higher increase in Average rents in shopping centres, retail podiums and retail growth when the economy recovers. department stores in this quarter ranged from US$35 to US$140 per sq m. In general, rents have decreased slightly Demand for international-standard retail space should rise in during Q3 2009. The highest rent was around US$220 per the coming 1-3 years, particularly in the central business square metre. districts, as Viet Nam is now obligated to provide equal legal treatment for domestic and international retailers as part of Occupancy in the retail market is approximately 96%, flat WTO accession. Therefore, from this point forward the retail compared to Q2 2009. sector in Viet Nam is open to 100% foreign ownership. The Retail Market by Area, Q3 2009 Wholesale Outlook Retail Podiums Department markets 1.3% Store Potential Future Supply, 2009E – 2012E 11.3% 14.6% sq m 450,000 400,000 350,000 300,000 250,000 Shopping 200,000 Centres Supermarkets 150,000 30.6% 42.2% 100,000 50,000 Source: Savills Research & Consultancy, Q3 2009 0 The Retail Market by Location, Q3 2009 2009E 2010E 2011E Potential Suburban CBD Source: Savills Research & Consultancy, Q3 2009 46.1% 18.8% There is a shortage of supply of developed retail space in HCMC until 2011. However, the years from 2012 onward is clearly the one to watch, as supply and demand dynamics start to mature. The expected influx of retail supply may apply a downward pressure on both rents and occupancy levels. The majority of future supply will come from District 1 and District 7. Secondary 35.1% Source: Savills Research & Consultancy, Q3 2009 For further information, please contact: vietnam – ho chi minh city vietnam - hanoi corporate website Brett Ashton Matthew Powell www.savills.com Managing Director Branch Director +84 8 3823 9205 – Ext.116 +84 4 3946 1300 – Ext.105 bashton@savills.com.vn mjpowell@savills.com.vn address address Savills Vietnam Ltd – Ho Chi Minh City Savills Vietnam Ltd – Hanoi 18/F, Fideco Tower 13/F Pacific Place 81-85 Ham Nghi , District 1 83b Ly Thuong Kiet, Hoan Kiem Ho Chi Minh City Hanoi Vietnam Vietnam T: +84 8 3823 9205 T: +84 4 3946 1300 F: +84 8 3823 4571 F: +84 4 3946 1302 This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills.© Savills Vietnam Co., Limited. 2009
  3. 3. Hotel Ho Chi Minh City, Vietnam Q3/2009 Supply Trends Demand Trends There are 21 hotels from ‘4-star’ to ‘5-star’ in HCMC, totalling Demand has clearly been affected by the global economic about 5,600 rooms and Savills observed that there was one downturn. During the first nine months of 2009, international new 5-star hotel entering the market in Q3 2009 – the visitors to HCMC only reached 1.95 million persons, Intercontinental Asiana Saigon. The majority of both 4 and decreasing by 11% compared to the same period last year. 5-star hotels are located in District 1 accounting for 70% of the Business visitors to HCMC decreased 12% compared with Q3 market. 2008. This is relatively positive in these difficult times given Total hotel supply has not increased significantly in the last that business visitors are the main target market for the 4 and three years in HCMC. This has allowed 5-star hotels to 5-star hotels. achieve high room rates, whilst 4-star hotels have typically Furthermore, as a result of the government’s stimulus and the gained better occupancy rates than 5-star hotels. ‘’Impressive Vietnam’’ program organized by VNAT*, Viet Nam’s economy is slowly recovering. Viet Nam is expected to Performance of HCMC hotel market (4 & 5-star) in Q3 2009 receive 4.3 million international visitors in 2009, according to No. of Approximate Average Average Room VNAT. Grades Occupancy Rate* Hotels No. of Rooms * Viet Nam Administration of Tourism (%) (US$/room/night) 5-star 13 4,200 50 117 Outlook 4-star 8 1,300 54 72 Potential Future Supply, 2010E – 2012E Source: Savills Research & Consultancy, Q3 2009 No. of rooms * Estimated average achievable room rate inclusive service charge and 2000 breakfast, exclusive of VAT. 1800 1600 Revenue per available room (RevPAR), Q3 2008 – Q3 2009 1400 RevP A R(US$ ) 120 1200 1000 100 800 80 600 400 60 200 40 0 2010E 2011E Potential 20 Source: Savills Research & Consultancy, Q3 2009 0 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Based on future projects, there are approximately 2,700 four & 5-star 4-star 4 & 5-star five-star rooms expected to enter the market in the next few Source: Savills Research & Consultancy, Q3 2009 years. Future supply will continue to concentrate in District 1 and furthermore there appears a considerable investment RevPAR has increased slightly over the last quarter due to interest in the luxury hotel market. better occupancy resulting from domestic travellers, as well as promotional programs. RevPAR for 4 & 5-star hotels in Q3 However, economic woes in Q3 2009 and for the foreseeable 2009 is around US$49, a decrease of over 35% compared to future have probably had a negative impact on the financial Q3 2008. Whilst RevPAR for the top 5-star hotels in Q3 2009 capacity of many developers, which may lead to project was around US$65, a decrease of 30% compared to Q3 2008. delays. For further information, please contact: vietnam – ho chi minh city vietnam - hanoi corporate website Brett Ashton Matthew Powell www.savills.com Managing Director Branch Director +84 8 3823 9205 – Ext.116 +84 4 3946 1300 – Ext.105 bashton@savills.com.vn MJPowell@savills.com.vn address address Savills Vietnam Ltd – Ho Chi Minh City Savills Vietnam Ltd – Hanoi 18/F, Fideco Tower 13/F Pacific Place 81-85 Ham Nghi , District 1 83b Ly Thuong Kiet, Hoan Kiem Ho Chi Minh City Hanoi Vietnam Vietnam T: +84 8 3823 9205 T: +84 4 3946 1300 F: +84 8 3823 4571 F: +84 4 3946 1302 This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills.© Savills Vietnam Co., Limited. 2009
  4. 4. Apartment for Sale Ho Chi Minh City, Vietnam Q3/2009 Supply Trends market, about 43% of the primary supply was absorbed in Q3 2009. At present, there is some short term over supply in the There were approximately 5,620 apartments available for sale HCMC apartment for sale market. Overall, Savills believes in the HCMC primary market in Q3 2009, which was a that the secondary apartment for sale market reached its significant increase of about 55% compared with the number bottom in Q2 2009 from the economic downturn in the second of apartments on the primary market in Q2 2009. Grade C half of 2008. The average asking secondary price in Q3 2009 apartments contributed about 75% of the total supply on the went up in most of the districts; however, the number of HCMC primary market in Q3 2009. The new supply has been transactions seemed to remain low. focused on Grade C apartments in 2009 and this trend could continue in the next year. The main supply in the primary Savills expects a continued steady improvement in the market came from District 8, District 7, and District 2; these apartment market over the next six months as confidence three districts accounted for more than half of the primary returns and new projects are launched. supply. Outlook In Q3 2009, there were approximately 41,500 apartments, an increase of 4% compared with Q2 2009, in HCMC’s About 87 planned projects are expected to come to the market secondary market. District 2, District 7 and Binh Thanh District in the next three years (2010 - 2012). If these planned projects continued to be the main suppliers in the secondary market arrive on schedule, the total supply of apartments for sale and accounted for about 50% of the secondary supply. would double. District 7, exploiting the advantage of the Phu My Hung new Primary market in Q3 2009 urban town, contributes about 26% of HCMC’s future supply. Primary supply in Q3 2009 # of units sold in Q3 2009 A verage Primary Price Units US$ per sq m 4,500 3,000 District 2 and District 9 have the advantage of an improving 4,000 2,500 transportation system, their available land supply and the 3,500 presence of a Hi-tech industrial park in District 9 that is being 3,000 2,000 developed. These two districts could be the main suppliers for 2,500 1,500 the HCMC apartment for sale market in the mid-term and 2,000 accounts for about 25% of HCMC’s future supply over the 1,500 1,000 next three years. 1,000 500 500 0 0 Expected future supply in the HCMC market by year Grade A Grade B Grade C # of planned units # of planned projects Source: Savills Research & Consultancy, Q3 2009 Units Projects 30,000 45 40 25,000 35 Demand Trends 20,000 30 25 In the third quarter of 2009, the average primary price (VAT 15,000 20 excluded) of the HCMC apartment for sale market was 10,000 15 approximately US$1,200 per square metre, about a 30% 10 decrease compared with the average primary price in Q2 5,000 5 2009. The price stumbled substantially because the majority of transactions came from low price Grade C apartments. Out 0 2010E 2011E Potential 0 of the 5,620 apartments available for sale in the primary Source: Savills Research & Consultancy, Q3 2009 For further information, please contact: vietnam – ho chi minh city vietnam - hanoi corporate website Brett Ashton Matthew Powell www.savills.com Managing Director Branch Director +84 8 3823 9205 – Ext.116 +84 4 3946 1300 – Ext.105 bashton@savills.com.vn mjpowell@savills.com.vn address address Savills Vietnam Ltd – Ho Chi Minh City Savills Vietnam Ltd – Hanoi 18/F, Fideco Tower 13/F Pacific Place 81-85 Ham Nghi , District 1 83b Ly Thuong Kiet, Hoan Kiem Ho Chi Minh City Hanoi Vietnam Vietnam T: +84 8 3823 9205 T: +84 4 3946 1300 F: +84 8 3823 4571 F: +84 4 3946 1302 This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills.© Savills Vietnam Co., Limited. 2009
  5. 5. Serviced Apartment Ho Chi Minh City, Vietnam Q3/2009 Supply Trends Demand Trends Savills research concludes that there are 48 buildings in In Q3 2009, the demand for serviced apartments has shown a grades A to C, comprising 2,666 internationally and locally slight increase. It is predicted to remain relatively stable for the managed serviced apartments for lease in HCMC. Nearly half next few years and increase with Viet Nam’s continued of those apartments are two bedroom units and mainly integration into the global economy. disbursed in the Central Business District (District 1 and District 3) which represents about 67% of the serviced The demand is supported by continued foreign direct apartment market. investment with the top six countries being Korea, Singapore, Japan, the US and Taiwan. No. of Approx. Occupancy Avg. Rent* Grade Buildings Supply (Unit) (%) (US$/sq m/mth) Grade A 7 658 64% 27 Outlook Grade B 11 1,272 94% 24 Future Potential Supply, 2009E – 2012E Unit Grade C 30 736 90% 16 1000 Source: Savills Research & Consultancy, Q3 2009 800 * Estimated average rent inclusive service charge, exclusive of VAT, 600 on a net area basis. Performance of Serviced apartments (All Types), Q3 2008 400 – Q3 2009 Leased Vacancy A vg Rent 200 Units US$ / sq m/ mo nth 3,500 27 0 3,000 2009E 2010E 2011E Potential 24 2,500 Source: Savills Research & Consultancy, Q3 2009 2,000 21 Some additional new supply is due to be launched in the last 1,500 quarter of this year. The Crescent is expected to launch the 1,000 first Phase of about 120 units in the next quarter. The 18 entrance of the Crescent in the next quarter is likely to create 500 a negative impact on existing projects’ rents and occupancy - 15 levels. In addition, the Crescent will launch an additional 170 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 units in the first half of 2010. Source: Savills Research & Consultancy, Q3 2009 The market witnessed the entrance of Intercontinental Asiana Saigon with a total of 260 apartment units – the first new supply since 2005. This is equal to about 10% of the total market, as a result total occupancy in the serviced apartment market in Q3 2009 is significantly lower than in the last few years. Occupancy of Grade A serviced apartments is down 12 percent. The average rental rate in Q3 2009 is down 7% with the largest change occurring in Grade C. For further information, please contact: Vietnam – ho chi minh city Vietnam - hanoi corporate website Brett Ashton Matthew Powell www.savills.com Managing Director Branch Director +84 8 3823 9205 – Ext.116 +84 4 3946 1300 – Ext.105 bashton@savills.com.vn mjpowell@savills.com.vn Address Address Savills Vietnam Ltd – Ho Chi Minh City Savills Vietnam Ltd – Hanoi 18/F, Fideco Tower 13/F Pacific Place 81-85 Ham Nghi , District 1 83b Ly Thuong Kiet, Hoan Kiem Ho Chi Minh City Hanoi Vietnam Vietnam T: +84 8 3823 9205 T: +84 4 3946 1300 F: +84 8 3823 4571 F: +84 4 3946 1302 This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract, interested parties should not only rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of Savills has any authority to make any representations or waranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills.© Savills Vietnam Co., Limited. 2009

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