CBRE VIETNAM, HCMC MARKET OVERVIEW Q4/2013

PRESENTED BY:

GREG OHAN, DIRECTOR, VIETNAM

NOVEMBER 19TH

2013

CONTENTS

2

1. Know The Market

Overview of Vietnam Office Market

2. Know Your Business

Key Considerations When Making an Office Relocation / Renewal

Decision

3. Know the Future

Outlook

CBRE Predictions

4. Lim Tower & Hoa Lam Corporation

Overview of Lim Tower

Hoa Lam Corporation and Lim Tower 2

HOW TO MAKE THE RIGHT DECISION ?

3

Increase 66% y-o-y ($19 billion) in FDI exceed the 2013

target ($18.13 billion), led by Japan (25%)

VN ranks 99th on business-friendly list (90th in 2012,

78th in 2011)

Gold price decreased to VND 36.6 mil/tael. Global

gold down to US$1,286/ounce

VN highest car sales @ 9m/2013, increasing 18%

y-o-y, led by Toyota, Ford and GM

Credit growth is expected to reach 11% - 12% in 2013

Haiyan Typhoon ravaged through the Philippines

causing floods, storms and damage in central VN

…. … Is the worst behind us?

RECENT HEADLINES

1 KNOW THE MARKET

MARKET OVERVIEW - HCMC

5

Q3 SNAPSHOT

OFFICE GRADE A GRADE B GRADE C TOTAL

Number of properties 11 54 266 330

Total supply (GFA, sm) 329,931 881,718 911,437 2,123,086

New supply (properties) 1 1 2 4

Net absorption (NLA,sm) – Q3/2013 12,000 20,802 27,720

Q-o-q change (%) 207.2% 10.1% 31.1%

Y-o-y change (%) 104.1% 220.1% 180.3%

Vacancy rate (%) 11.8%(*) 11.3% 11.5%

Q-o-q change (pp) -0.3 -0.2 -0.2

Y-o-y change (pp) -3.5 -0.3 -1.2

Average asking rents (US$ psm per

month) 32.47 18.73 22.49

Q-o-q change (%) 3.0% 3.2% 2.9%

Y-o-y change (%) 6.2% 8.2% 7.0%

6

AVERAGE ASKING RENTS

GRADE A GRADE B

Number of buildings 11 54

GFA (sm) 329,931 881,718

MARKET OVERVIEW - HCMC

RENT

Average asking

rent increases.

Asking rent in the

Grade A and

Grade B segment

risen by 3.0% q-o-

q and 3.2% q-o-q.

Mature buildings

are already raising

rents whilst those

in the next tier

down, be A- or

B+, are

maintaining their

rents.

$0

$20

$40

$60

$80

2007 2008 2009 2010 2011 2012 2013

Grade A Grade B

7

GRADE B VACANT SPACE AND AVERAGE ASKING RENTS

GRADE A VACANT SPACE AND AVERAGE ASKING RENTS

RENT & VACANCY

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

0

20,000

40,000

60,000

80,000

100,000

120,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2011 2012 2013

Average

Askin

g Rent

(US$

psm

per m

onth

)

Vacant

Space (s

m)

GRADE B VACANT SPACE AND AVERAGE ASKING RENT

Vacant Space Asking Rent

$0

$20

$40

$60

$80

$100

0

20,000

40,000

60,000

80,000

100,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2011 2012 2013

Average

Askin

g Rent

(US$

psm

per m

onth

)

Vacant

Space (s

m)

GRADE A VACANT SPACE AND AVERAGE ASKING RENT

Vacant Space Asking Rent

MARKET OVERVIEW - HCMC

RENTS CONTINUE AN

UPWARD TREND

Increased slightly by

2.5% q-o-q to US$21.8

psm, p/mth

Vacancy rate in Grade A

market declining

Vacancy rate in Grade B

market rising slightly

owing to new buildings

launched over the last

quarter

8

HCMC Office Market Performance – Grade A & B

GRADE A VS. GRADE B PERFORMANCE

$15

$17

$19

$21

$23

$25

0

200,000

400,000

600,000

800,000

1,000,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2011 2012 2013Ask

ing rent (U

S$/s

m/m

onth

)

Are

a (sm

, N

LA)

Leased Area Vacant Area Asking Rent

MARKET OVERVIEW - HCMC

9

MARKET OVERVIEW - HANOI

RISING NEW SUPPLY AND DECREASING OCCUPANCY RATES

0%

10%

20%

30%

40%

50%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2009 2009 2010 2011 2012 2013

Grade A Grade B

ASKING RENT

Grade A average asking rents decreased by 2.8% q-o-q while Grade B improved by

1.5%

Grade A - downward pressure as Landlords are more competitive

Grade B asking rents decreased by 14% and projected to continue

VACANCY

Grade A vacancy rate continued to decrease 2to 26.31%

Grade B vacancy increased up to 34.7% due to the new supply of 4 grade B buildings

Y-O-Y Grade A vacancy decreased 1.16 pp while Grade B increased sharply 15.5 pp

$0

$10

$20

$30

$40

$50

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2009 2010 2011 2012 2013

Grade A Grade B

Office Asking Rents Office Vacancy

2 KNOW YOUR BUSINESS

TENANT PROFILING - HCMC

Strong occupier interest (26%) remains Vietnamese / local companies

expanding and consolidating

US continues to remain the largest foreign occupier group by country

dominating enquiry levels followed by Japan and Korean based organization's

respectively

ENQUIRIES BY ORIGIN - YTD

Source: CBRE

26%

19%

8%7%

7%

6%

26%

Vietnam

US

Japan

UK

Korea

China

Other

Demand driven by office occupiers seeking expansion / relocation

Fringe / New CBD buildings have given occupiers flexibility to upgrade and

consolidate.

The focus 2H 2013 has been consolidation and taking advantage of limited /

remaining cost effective opportunities in NEW buildings offering attractive

packages to raise occupancy levels

ENQUIRY – BY TRANSACTION YTD ENQUIRY – BY INDUSTRY YTD

Source: CBRE

84%

16%

Relocation or extension New entrant

20%

17%

13%6%

5%4%

35%

Technology

Manufacturing

Finance

Education

Retail

Pharmaceutical

Others

TENANT PROFILING - HCMC

TENANT PROFILING

13

1. TYPE OF BUSINESS • Industry type can define location

• E.g. Banking / Finance D1. Call centre non CBD

2. LENGTH OF TENANCY • Current lease term length

3. REASON FOR MOVING • Expansion? Consolidation? Cost

4. CURRENT REQUIREMENTS

• Understanding current needs and whether

existing size / accommodation suitable.

• Current location, space, head count, expiry etc

5. FUTURE REQUIREMENTS

• Headcount, location, space sqm, building grade

desired, operational date, operational hours, IT

provider etc

6. PARKING • No. of car and motorbike

7. BUDGET • Monthly / p/sqm

8. OTHER OPERATIONAL FACTORS • Security, Back Up Power, IT. Fire & Safety,

Signage

KEY FACTORS TO UNDERSTAND BEFORE MOVING

TENANT PROFILING

14

1. FIT OUT • Fit out : US$350 – US$450 p/sqm

KEY FACTORS TO CONSIDER WHEN MOVING

2. RE INSTATMENT • Reinstatement : US$25 – US$35

3. SERVICE CHARGE

• Grade A : US$6 - US$8

• Grade B : US$5 - US$6

• Grade C : US$3+

4. FLOOR MEASUREMENT

(Net or Gross)

• Gross: most common areas contained within the

external walls

• Net: within a tenancy at each floor level

measured from finishes

5. SECURITY DEPOSITS • 3 months rent +SC in cash held for the duration

of lease, returned at expiry

6. PAYMENTS TERMS • Quarterly in advance for rent +SC.

• Longer payment terms = lower rent

7. LEASE TERMS • 2 – 5 years + (Negotiable)

8. PARKING COSTS • Cars: US$150 - US$250/lot/month

• Motorbikes: US$6 - US$20/lot/month

9. STANDARD OPERATING HOURS • Monday - Friday : 8.30am to 6.00pm

• Saturday : 8.30am to 1.00pm

10. LEASE DENOMINATION • By law denominated in VND

15

RELOCATIONS / NEW OFFICES IN Q4/2013

MAJOR TENANTS WHO HAVE MADE THE MOVE YTD

IT Pharma Consumer goods Pharma

Insurance Pharma Finance Pharma

Securities Sourcing operation Conglomerate

Construction Electronics Banking

Banking

Assurance

Construction

3 KNOW THE FUTURE

ABSORPTION YTD – HCMC REVIEW

17

Net Absorption

2009 2010 2011 2012 2013 YTD

Grade A 27,535 34,016 33,917 24,209 26,250

Grade B 48,140 97,744 85,367 39,921 55,058

Total 75,675 131,760 119,284 64,130 81,308

Total supply

2009 2010 2011 2012 2013 YTD

Grade A 134,279 232,728 232,728 232,728 241,853

Grade B 356,728 477,777 593,919 601,296 644,553

Total 491,007 710,505 826,647 834,024 886,406

Net absorption in 2013 to increase by 25+ Vs. 2012

Net absorption dominated by increased activity in Grade B

0

200,000

400,000

600,000

800,000

1,000,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010 2011 2012 2013

Gro

ss F

loor

Are

a (

sm)

GRADE B OFFICE STOCK

Existing supply New supply Total GFA

0

100,000

200,000

300,000

400,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010 2011 2012 2013

Gro

ss F

loor

Are

a (

sm)

GRADE A OFFICE STOCK

Exisitng space New supply Total GFA

18

SUPPLY YTD - HCMC

CURRENT & FUTURE SUPPLY

19

SGGP Building

21,700 sm GFA

NTMK, D3

Vietcombank Tower

55,000 sm GFA

CBD

Vietin Bank Tower

24,315 sm GFA

CBD

HCMC UPCOMING COMPLETED 2014 SUPPLY

Viettel Tower

65,971 sm GFA

CMT8, D3

OPPORTUNITIES FOR TENANTS

Q4 2013

MB Sunny Tower

16,000 sm GFA

CBD

2013 AND THE FIRST HALF OF 2014 WILL END WITH STABILITY FOR OFFICE SEGMENT.

2014 will require a strategic approach with major occupiers NOW planning and negotiating for expiries

in mid to late 2014.

Asking rents in mature buildings with quality asset management services will maintain good performance

even though there will be additional new supply in the next few quarters as demand for high quality and

good location office space continues.

Flexible leasing terms and high quality services are still the keys to attracting or retaining tenants.

HCMC Office Supply Forecast (Grade A & B), GFA sm – 2013 to 2015

Source: CBRE

0

400,000

800,000

1,200,000

1,600,000

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

175,346 sm8 quarters

OUTLOOK

SUPPLY PIPELINE - HCMC

21

Occupancy Area Occupancy Area

Q4 2012 (approx m2) Q4 2013 (approx m2)

Lim Tower D1 00.00% 00.00 74.00% 5,118.00

President Place D1 00.00% 00.00 85.00% 1,350.00

Bitexco Financial Tower D1 68.00% 10,000.00 85.00% 6,000.00

Kumho Asiana Plaza D1 99.00% 867.00 100.00% 00.00

Metropolitan D1 98.00% 500.00 97.00% 700.00

Sun Wah Tower D1 96.00% 1,028.00 95.00% 1,500.00

Diamond Plaza D1 100.00% 00.00 100.00% 0.00

Saigon Centre D1 93.00% 600.00 93.00% 600.00

Saigon Tower D1 97.00% 187.00 97.00% 227.00

Me Linh Point Tower D1 100.00% 00.00 100.00% 00.00

A&B Tower D1 98.30% 308.20 100.00% 00.00

Green Power D1 95.00% 300.00 92.00% 950.00

Vincom Center D1 74.69% 19,488.00 83.60% 13,156.00

Centec Tower D3 98.00% 300.00 97.00% 1,078.00

An Phu Plaza D3 00.00% 00.00 95.00% 1,147.00

Saigon Trade Center D1 91.00% 3,500.00 83.00% 12,116.00

Maritime Bank Tower D1 87.00% 2,499.00 88.00% 4,500.00

CentrePoint PN 99.70% 87.00 96.00% 900.00

E town TB 98.00% 1,073.00 96.00% 2,984.00

Ree Tower D4 97.00% 494.00 99.00% 107.00

TOTAL Q4 2012 41,231 Q4 2013 52,433

OPPORTUNITIES FOR TENANTS

OCCUPANCY IN KEY OFFICE BUILDINGS

22

OPPORTUNITIES FOR TENANTS

OCCUPANCY IN KEY OFFICE BUILDINGS

Occupancy%

Q4 2012 vs Q4 2013

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

Q4 2012

Q4 2013

23

SMALL – MEDIUM SIZED BUILDING PIPELINE - HCMC

CBRE is tracking 175 new mixed use office developments in key

and fringe CBD Districts e.g. 1,3, Tan Binh and Phu Nuan

24

In the HCMC CBD, Only 8 buildings (A and B Grade) can

provide over 1,000 sqm contiguous space today. 5 of them

are Grade A – Lim Tower one of them.

Only 4 buildings (A and B Grade) combined in the HCMC

CBD have a floor plate over 1,000 sqm

This means, VERY limited options for MNCs looking for

seeking international standard, quality larger commercial

buildings

50% of the 175+ NEW Small-Medium sized buildings are

being built by SOEs and 50% are for owner occupation

For any major occupier planning an occupancy solution, the

opportunity is tightening with timing and planning early the

key to achieving your occupancy solution

PLANNING FOR RELOCATION – MAKING THE RIGHT MOVE

4 LIM TOWER & HOA LAM

CORPORATION

26

LIM TOWER - OVERVIEW

27

Positioned at the corner of Le Thanh Ton and Ton Duc Thang street, the Building positioned at the gateway to District 1,

is the largest Grade A office building to be completed in 2013 with a total area of over 34,000sqm, 34 floors, 550

parking spots within the building and additional parking also available in close proximity.

LIM TOWER – PRIME LOCATION

28

The building design incorporates the latest architecture to

create an environmentally and operationally efficient office

building for Tenants

Over 80% of the Building façade is covered by the latest Euro

window double glazed UV protection glass

Each levels features floor to ceiling glass, maximizes the best

view in HCMC along with allowing additional natural light.

The curtain wall glazing system at LIM reflects over 90% of

external sound and heat.

Saving operation cost and providing efficient and comfortable

working environment.

LIM TOWER – MODERN & EFFICIENT

29

LIM TOWER – PROJECT OVERVIEW

Developer Mai Thanh Service Company Limited

Height 34 levels (123m) & 2 basements; 30 floors for office

Total Net leasable area 20,466 sqm

Typical Net plate Approx. 700 sqm

Ceiling height 2.55 m (finishing to finishing)

Total Parking

6 levels for car and motorbike parking:

2 basements: car parking (150 lots),

3rd – 6th floor: motorbike parking (950 lots)

Lift

9 high speed Thyssen Krupp lifts:

Low zone: 4 passenger lifts (up to 20th floor),

High Zone: 4 passenger lifts (21st floor – 34th floor)

1 service lift; 1600kg/lift

Air-conditioning Centralized chiller AC system. 10-12 FCU/floor

Security system 24 hour security and CCTV throughout

Back-up power Provide 100% back-up power (2,000 KVA)

Asking rent Please call +84 936 299 699

Service charge $6 p/sqm

Completion Q3 /2013

30

LIM TOWER – PROJECT OVERVIEW

Technique floor & Rooftop

2 basements: car parking

21st – 34th floors: Leasable area

7th – 20th floors: Techcombank

3rd - 6th floor: Motorbike parking

1st - 2nd floors: leased by Techcombank

31

LIM TOWER 2 , 158 VO VAN TAN – Q1 2015 COMPLETION

32

LIM TOWER 2 , 158 VO VAN TAN – Q1 2015 COMPLETION

THANK YOU

© 2013, CBRE, Group Inc. CBRE Limited confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not

doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and

completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior

written permission of CBRE.

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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011

revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices

(excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management;

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