The Slow Road Back

THE SLOW ROAD BACK
Presented by: Marc Townsend, Managing Director, CBRE Vietnam
Park Hyatt Saigon, HCMC
10 July, 2013

2 CBRE BIG BREAKFAST 2013 | THE SLOW ROAD BACK
COULD THE LONG WAIT FOR SUCCESS BE OVER?
Andy Murray ended Britain's 77 year wait
for a men's Wimbledon champion
British and Irish Lions ended barren 16
years with a crushing victory
How much longer for the Vietnamese
real estate market?

RECOVERY IS JUST AROUND THE CORNER

THE ECONOMY
MOVING IN THE RIGHT DIRECTION

1H 2013 ECONOMIC OVERVIEW
Gold and Bank Deposits Become Less Attractive
 Global gold price: decreases
24% YTD.
 Local gold price: reached its
bottom in June (down 22%) and
currently down 19% YTD
 Deposit rates: 800bps reduction
over the last 18 months.
-1
0
1
2
3
4
0
5
10
15
20
25
Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13
CPI(%m-o-m)
CPI(%y-o-y)/Interestrates(%)
CPI(y-o-y, Vietnam) RediscountingRate RefinancingRate CPI(m-o-m, Vietnam)
Monetary contraction
Inflation surged
Monetary expansion
Inflation controlled
1,000
1,200
1,400
1,600
1,800
2,000
30
34
38
42
46
50
09/2011 12/2011 03/2012 06/2012 09/2012 12/2012 03/2013 06/2013
Globalgoldprice(US$)
Localgoldsellprice(VNDmillion)
LOCALGOLD GLOBALGOLD
Source: SJC
Source: State Bank of Vietnam

1H 2013 ECONOMIC OVERVIEW
Regional stock markets,
y-o-y return as of July 9, 2013:
 Thailand (SET) up 23.1%;
 Singapore (SGX) up 19.9%;
 Indonesia (JCI) up 12.8%;
 Vietnam (VNINDEX) peaked at
528 points in June, up 26%, but
dropped back to 24%.
Stock Market Recovers, Real Estate to Come Back into Focus?
REAL ESTATE INDEX 2Y 1Y 6M 3M 1M Current
Real Estate Holding & Development Listed Companies
(66)
55.5 44.8 39.5 41.9 42.2 45.4
Real Estate Services Listed Companies
(2)
84.4 25 23.8 25.3 22.3 26.1
Source: Stockbiz
Source: Bloomberg

Support on the Way
GOVERNMENT POLICIES
Expansion Monetary Policies (as June 27)Fiscal Policies - Tax Cut (from July 2013)
 Devaluation of the dong 1% versus the U
Dollar (to VND21,036)
 The interest-rate ceilings on short-term
dong-denominated bank deposits: lowered
to 7.0% from 7.5%
 The ceiling on dollar deposits:
• For institutional depositors: fall to 0.25%
from 1.0%
• For individual depositors: fall to 1.25%
from 2.0%.
 For social housing:
• Corporate tax rate: 10%;
• VAT: cut from 10% to 5%.
 Personal income tax:
• Level of deduction: increased to VND9
million/month from VND4 million/month.
• Level of deduction for each dependent:
increased to VND3.6/month from
VND1.6 million/month for one dependent.
• Boost domestic consumption and production
• Improve trade balance
• Reduce banks' funding costs => Lend at
lower rates
• Encourage people to transfer USD for VND
• Bolster foreign-exchange reserves

GOVERNMENT POLICIES
VAMC –
…come back next year…

-0.6
-0.2
0.2
0.6
-
20,000
40,000
60,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2008 2009 2010 2011 2012 2012
No. of cars selling % change YoY
Car Sales Volume Recovers
SOME PEOPLE ARE STILL SPENDING
Vietnam Car Sales Volume
Source: VAMA
Registration fee reduced from 10% -
20% to 10% - 15% in April.
GM and Ford accounted 18% of total personal car sales in 5M/2013

Steady Construction Progress at Some Major Development Sites
SOME ARE STILL BUILDING …
Liberty Central Riverside
Vietcombank Tower
MB Sunny Tower
C.T Leman Plaza
New Pearl
Him Lam Riverside

According to BCI Asia…..
THOUGH LESS THAN AT THE END OF 2012
All Future Projects
(2013-2022)
HCMC Hanoi Da Nang Can Tho Khanh Hoa
Ba Ria -
Vung Tau
Hai Phong
Office 269 529 74 43 15 36 20
Retail 124 284 39 5 5 30 6
Hospitality &SA 45 68 38 9 47 22 11
Residential 383 556 191 18 26 49 19
Total 821 1437 342 75 93 137 56
% Change compared to
end of 2012
-12% -6% 0% 0% -9% 3% 30%
Projects Under
Construction
HCMC Hanoi Da Nang Can Tho Khanh Hoa
Ba Ria -
Vung Tau
Hai Phong
Office 131 153 16 16 6 11 9
Retail 52 64 3 3 1 7 4
Hospitality &SA 20 16 12 2 7 5 2
Residential 144 149 25 3 4 10 3
Total 347 382 56 24 18 33 18
% Change compared to
end of 2012
-14% -13% -11% 71% -22% -11% 13%
Source: www.bciasia.com; CBRE, 4 July 2013

Metro Line 1, Metro Line 2, Saigon Bridge 2, Flyover
HOWEVER, INFRASTRUCTURE MOVING AT PACE
Metro Line No. 1 is making good progress

METRO LINE NO. 1 IS TAKING SHAPE
Infrastructure Development Will Increase Property Values
Thao Dien
Pearl
The Vista
Imperia An
Phu
The Estella
Cantavil
Premier
Future projects
Existing projects
Metro line 1
Metro station
Source: CBRE

Prices in HCMC Rank Second after Bangkok
REGIONAL LUXURY CONDOMINIUM
* HCMC’s CBD Luxury projects: The Lancaster, Sailing Tower, Avalon, Saigon Luxury Apartment, Leman CT Plaza. (Except: Vincom Center B)
** Hanoi Luxury projects: Pacific Place, Vincom Park Place, Golden Westlake, Landmark 72 (Keangnam Landmark), Indochina Plaza Hanoi,
Hoang Thanh Tower, D’ Palais de Louis
Source: CBRE Research
Bangkok,5,157
HoChi Minh,3,838
Hanoi,2,596
Phnom Penh, 1,470
Yangon,1,611
0
1,000
2,000
3,000
4,000
5,000
6,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 Q12013
US$/sm
Bangkok HoChi Minh Hanoi Phnom Penh Yangon
Condominium Selling Price (US$/sm)

 30 trillion loan scheme for residential
real estate:
• Unit size: < 70 sm each
• Price: < VND15 million psm
 The interest rate will be capped at 6%
per annum for 10 years.
Resolution 02/NQ – A Push For Real Estate
GOVERNMENT POLICIES
Khang Gia Tan Huong (Tan Phu
District) - 289 units - the first
project in HCMC to benefit from
the loan scheme
• Address apparent demand issues by providing mortgages to buyers
• Encourages developers to focus on the mass market

HCMC RESIDENTIAL MARKET
Unsold Stock Improved
Source: CBRE
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Newlaunch Unsoldinventory Paused/On-hold/Distressed
Q22012 Q12013 Q22013
 by ~400 units
by ~260 units
due to some projects
converted to social
housings or changed
to other components
 by ~400 units
thanks to flexible
payment terms plus
incentives
New launches

03%
30%
26%
42%
Luxury High-end Mid-end Affordable
While “affordable” is now truly affordable
“HIGH-END” HAS BECOME MIDDLE-CLASS HOUSING
Units Sold by Quarter
Units Sold by Segment, Q1/2013 Units Sold by Segment, Q2/2013
“ Affordable units continued
to be the most-sought after.
 More units sold in high-
end segment y-o-y thanks
to more attractive
payment terms plus
incentives.
”Source: CBRE
00%
40%
17%
43%
Luxury High-end Mid-end Affordable
$0
$500
$1,000
$1,500
$2,000
$2,500
0
1,000
2,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013
AveragepPrice(US$/m2)
SoldUnits

Prices
Imperia An Phu – District 2
• 700 units
• Current asking price: $1,500-$1,800/sm
• Excellent payment terms: hand-over
when 10%-30% paid, the rest payable
with 0% interest rate
• Free parking
• Furniture package
• Gym free for 1 year
The Estella – District 2
• 719 units
• Good payment terms: hand-over when
50% paid, the rest payable with 0%
interest rate in 2 years
Him Lam Riverside – District 7
• 314 units
• Current asking price: $1,357 - $1,457/sm
• Good payment terms: 50% hand-over, the
rest payable in 2 years with 0%
Sunrise City (North – District 7)
• 554 units
• Current asking price: $1,119 - $1,428/sm
•Smaller unit size, lower price than P1,
•Good payment terms (54 months) –
Central towers
Tropic Garden– District 2
• 388 units
• Good payment terms: hand-over when
50% paid, the rest payable with 0%
interest rate in 3 years
Xi Riverview Palace – District 2
• 258 units
• High discount: 18% if 98% payable
Happy Valley – District 7
• 541 units
• Current asking price: $1,500 - $1,700 /sm
• Longest payment schedule (30 months) in
PMH NUA
• Free parking
“ Improved payment schedules for purchasers, with reduced interest
rates on a temporary basis  increase d sales
”
Source: CBRE

More launches coupled with more advertising activities
MORE DEVELOPER CONFIDENCE
Residential Projects Advertised, HCMC, 2013
0
5
10
15
20
25
30
March April May June MTD July
NoofProject
Tracked on: Tuoi Tre; Mua & Ban; Tap chi Bat Dong San (Property
Magazine); Thanh Nien; Nhip Cau Dau Tu; Doanh nhan Sai Gon;
Saigon Times Daily; Vietnam Investment Review; Vietnam News.
Units Launched by Year
0
5,000
10,000
15,000
20,000
2008 2009 2010 2011 2012 2013
NumberofUnit
Annual launch Q2launch “New launches increased by 51.0%
q-o-q and 234.5% y-o-y y.
”Source: CBRE
“ Some delayed projects were resumed
and introduced to the market:
PetroVietnam Landmark (D2), New
Pearl (D1), Central Plaza (Tan Binh).
Others starting to prepare for
construction or launch.
”

New Launches – 1H/2013
The Prince Residence
Phu Nhuan District
277 units by Novaland
@ $2,000-$2,600/sm
Happy Valley (P1+P2)
District 7, 429 units
Phu My Hung Corp.
@ $1,500/sm
Metro Apartment (Screc II)
by Saigon Corp. &
Hung Thinh Land @ $811/sm
Nhat Lan 3
Binh Tan District
240 units by BCCI
@ $571 - $619/sm
Sunrise City (North)
District 7, 182 units (total 554)
by Novaland
@ $1,119 - $1,428/sm
Dragon Hill Residence & Suite*
Nha Be District, ~150 units
by Phu Long RE Corp.
@ $1,190 - $1,286/sm
Homyland 2
by Bao Son Co., Ltd.
@ $761 - $881/sm
Ehome 3 P2
Binh Tan District
161 units by Nam
Long @ $794/sm
Dream Home*
Go Vap District, 518 units
by Dream Home Co., Ltd.
@ $567/sm
* Soft launch

THE REST OF THE MARKET
STILL TURNING

VIETNAM BECOMING REGIONALLY ATTRACTIVE
Yangon is seriously overpriced
Bangkok (Grade A), 27
Ho Chi Minh (Grade A), 31
Hanoi (Grade A), 33
Phnom Penh (Grade B and C),
21
Yangon (Grade B), 83
0
10
20
30
40
50
60
70
80
90
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013
USD/sm
Bangkok (Grade A) Ho Chi Minh (Grade A) Hanoi (Grade A) Phnom Penh (Grade B and C) Yangon (Grade B)
Office Rent (US$/sm/month)

Highlights
HCMC OFFICE
“85 office leases signed in 6 months by
CBRE Vietnam, up 20% on 2012.
Healthy absorption as market sentiment
improves and Average Grade A office rents
rise 0.5% q-o-q. Oversupply a
misconception !
Major occupiers FLIGHT TO QUALITY in
1H 2013 and CONSOLIDATION taking
advantage of available opportunities in
new buildings.
Local banking sector emerging as the
largest occupiers of prime District 1 office
buildings.
New office buildings showing strong
commitment, while major delayed projects
have seen no movement.
”CBRE
$15.00
$17.00
$19.00
$21.00
$23.00
$25.00
0
200,000
400,000
600,000
800,000
1,000,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013
Leased Area Vacant Area Asking Rent
24%
16%
16%
13%
13%
10%
8% Finance
Pharmaceutical
Others
Technology
Manufacturing
Retail
Legal
Tenant breakdown – 1H/2013 (based on CBRE deals)
HCMC Office market performance – Grade A&B
10.5
%
89.5
%
Local
Foreign
Source: CBRE

HCMC OFFICE
Oversupply is beginning to disappear
“ Number of successful deals during the
first half of 2013 done by CBRE
Vietnam went up 20% on 2012.
”CBRE
Office Vacancy Spaces – NLA (sm) Office net absorption (Grade A &B) – NLA (sm)
0%
10%
20%
30%
40%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013
Grade A Grade B
-
10,000
20,000
30,000
40,000
50,000
60,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013
Grade B Grade A
Source: CBRE

President Place - LEED Office building achieved noticeable performance
HCMC OFFICE
Key facts
 More than 75% of total space occupied after 3 months of official opening with
the remaining 25% under offer
 100% of Tenants are multinational organisations, with 66% of committed
occupiers technology based clients
 Key tenants:
• Canon
• Diageo Vietnam Limited
• Microsoft Vietnam LLC
• Schindler Vietnam
“ A pioneering office development becoming Ho Chi
Minh City's first LEED Gold accredited office building.
Point of difference is key
”
President Place
Developer Sapphire Vietnam
Address 93 Nguyen Du, D1
Total GFA 11,475 sm
Note: Leadership in Energy and Environmental Design (LEED) consists of a suite of rating systems for the design, construction and operation
of high performance green buildings, homes and neighborhoods.

0
500,000
1,000,000
1,500,000
2,000,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014 2015
Existing Space - GFA (sm) New Space Come Online
Limited supply from prolonged planning/under construction projects
HCMC OFFICE
HCMC Office Supply Forecast (Grade A & B), GFA sm – 2013 to 2015 Completed - Q1/2013
Limited supply
To be completed - Q3/2013
 180,240sm
8 quarters
Source: CBRE

Regional Comparison
RETAIL RENTS
Siam Paragon, Bangkok
Vincom Center A (Eden A), HCMC
Bangkok,117
Ho ChiMinh, 107
Hanoi,102
PhnomPenh,40
Yangon,21
0
20
40
60
80
100
120
140
2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1
2013
US$/sm
Bangkok Ho ChiMinh Hanoi PhnomPenh Yangon
Retail Rent (US$/sm/month)

ASIAN RETAIL
 Asia Pacific will continue to
drive global retail growth in
2013.
 Slower economic growth poses
significant obstacles for retailers
planning to expand.
Retailer Expansion: Asia is Not Easy but Still THE Strategy
Top Cities for New Retailer Entries, 2012
Source: CBRE Global Research & Consulting
2013 50th store opening

Taxation and Infrastructure Create Cost Burdens Restricting Both
Retailers & Consumers
HCMC RETAIL
Net absorption (NLA, sm)
Source: CBRE
-7%
-1%
5%
11%
17%
23%
-40,000
-20,000
0
20,000
40,000
60,000
2010 2011 2012 2013
Net Absorption (sm) Vacancy Rate (%)

Busy High-street Leasing
HCMC RETAIL
Number of shop houses for
lease
1H/2012 2H/2012 1H/2013
Hai Ba Trung 10 8 10
Mac Thi Buoi 4 1 2
Le Loi 3 4 4
Nguyen Trai 7 5 8
Cao Thang 3 2 2
Vo Van Tan 3 6 5
“The retail market is still driven by high-street
leasing due to ready availability. Retail is
constrained by infrastructure, mass public
transport that generates foot traffic.
”CBRE

CAPITAL MARKETS THAW
Vietnam reappears on the radar
“As forecast earlier in the year, Vietnam has
seen transactional activity pick up.
Deal velocity has increased in the first half,
but with investment enquiries to CBRE up
20 – 30% in the first half, notable capital still
remains unserviced on the side lines.
”CBRE

CLUB DEALSFOREIGN INVESTOR
REAL ESTATE
FOREIGN INVESTORS REVIEW STRATEGY
Greater Clarity Needed for Investors Sourcing Deals
Capital Placement: Evolution 2005 - 2013
“With capital remaining on the
sidelines, fundamental and
basic changes are still
necessary to further increase
deal flow.
Investors, across Asia, are
favouring a more direct form of
investment, where visibility of
deals is key.
”CBRE
FUND ENTITIESFOREIGN INVESTOR
REAL ESTATE

DOMESTIC PLAYERS NEED TO FORGET 2005
Quite simply - It is called Investment, not Charity
 Foreign investors are not here
to make you rich!
 The big four questions still
remain– without a realistic and
honest approach to these,
foreigners will look elsewhere.
VALUATION
TRANSPARENCY STRUCTURING TRACK RECORD

 After several years of hurt, Vietnam shows opportunity and return….;
• (Unfortunately, where ever there is a winner, there will always be a loser)
 Residential Real Estate again becomes attractive to Vietnamese investors as
other alternatives (gold, stock market, deposit accounts) offer limited returns;
• By the 2014 Fearless Forecast – the residential market will have passed
the bottom
 As Andy Murray will testify, a win does not come easily;
• Those already committed to Vietnam, still have many battles to survive;
• Particularly for residential developers, flexibility will still be the key for
success – buyers still need to be nurtured;
From our Crystal Ball
CBRE’S FORECASTS - 2H 2013

 The next round of interest cuts proves to be one of the most decisive in
improving residential purchaser sentiment;
 “Middle-class” housing projects, such as those seen on the Hanoi Highway in
District 2, will see over 50% of the lights switched on by year end;
 Grade A office rents finish the year unchanged or slightly up as vacancy drops
below 10% and new options on the horizon look slim;
 High street corners to become further dominated by foreign brands looking to
expand their foot print;
 Investment deal flows continues to be at heightened levels as in the first half;
• However, many foreign investors still fly out of Vietnam without their
wallets having been opened;
• Vietnam upgraded from completely toxic to just toxic!
A Few More Thoughts….
CBRE’S FORECASTS – 2H 2013

For more information regarding this presentation please contact:
MARC TOWNSEND
Managing Director
T +84 8 3824 6125
F +84 8 3823 8418
Email: marc.townsend@cbre.com
CBRE QUARTERLY REPORT
Available now with new pricing options,
longer historical data and more in-depth analysis.
quarterlyreports@cbrevietnam.com

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