q.1 2013 cushman & wakefield market beat report

Cushman & Wakefield Vietnam Unit 602, Asia Tower 6 Nha Tho Str., Hoan Kiem Dist Hanoi www.cushmanwakefield.com/knowledge

For more information, contact: Minh Nguyen, Senior Manager Tel: (84-4) 39381786 [email protected]

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2012 Cushman & Wakefield, Inc. All rights reserved.

ECONOMIC OVERVIEW CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% compared with Q1 2012. However, inflation may still accelerate. In regard to GDP, this quarter grew by 4.89% as compared with the same

period in 2012 (according to General Statistics Office of Vietnam – GSO)

Total new registered and additional FDI in this quarter reached around US$6.0 billion, increasing 63.6% Y-o-Y. The property sector still ranks second in total FDI, after manufacturing, with nearly US$250 million, accounting for approximately 4.1% of total investment. This figure has reduced significantly compared to Q1 2012. Japan remains the leading investor in Vietnam, contributing more than 50% of total investment in Vietnam; followed by Singapore, then Korea. INCREASE IN GRADE A STOCK In first quarter 2013, one Grade A office project, Corner stone, came into the market which raised the total stock of Grade A to approximately 330,000 square meters (sq.m.)—an increase of 9.0% quarter-on-quarter.

The total Grade B stock remains at roughly 557,000 sq.m., unchanged compared with the previous quarter.

ASKING RENT REMAIN STABLE Asking rents for Grade A this quarter remained unchanged q-o-q. The average asking rent for Grade A is around VND660,000 (equivalent to approximately US$31.5 per sq m per month (all rents are quoted with VAT excluded, service charge included).

Grade B, average asking rent also remained unchanged q-o-q at around VND400,000 (equivalent to approximately US$19.5) per sqm per month (VAT excluded, service charge included).

Grade A occupancy rate reached around 72%, down 4% q-o-q but up 8% y-o-y . Meanwhile Grade B occupancy stood at about 78%, which is stable y-o-y but down 2% q-o-q.

OUTLOOK

In Q2, we expect to see two more office projects come online - one in the CBD and one in the CBD-fringe area. Thus, total supply in the market will continue to increase and as a result, we expect rental rates to witness further compression, with Grade A offices at the forefront of these decreases.

From a demand perspective, an increase in inquiries on tenant relocation is forecast throughout the rest of 2013 as firms seek to take advantage of low rental rates offered in the West of the city.

With increases in office supply predicted to continue in the short to medium term, 2013 will remain a tenant’s market.

STATS ON THE GO

Q1 2013 Q-O-Q CHANGE

Y-O-Y CHANGE

12 MONTH

FORECAST

Grade A Overall Vacancy 28% 4% -8%

Grade A Overall Rents $31.5 0% -7 %

Grade A Absorption (sqm) 8,000 165% -65%

ECONOMIC INDICATORS

VIETNAM 2011 2012 2013F GDP Growth 5.89% 5.6% 5.9%

CPI Growth 18.58% 10% 6.2%

Unemployment 5% 5% 4.5% SOURCE: GSO, IMF

DIRECT RENTAL VS. VACANCY RATES

Q1 2013 HANOI, VIETNAM

OFFICE SNAPSHOT MARKETBEAT

A Cushman & Wakefield Research Publication

0% 5% 10% 15% 20% 25% 30% 35% 40%

30

32

34

36

38

40

42

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13

US

$/sq

m/m

th

Grade A overall rent Vacancy


For more information, contact: Minh Nguyen, Senior Manager Tel: (84-4) 39381786 [email protected]


HANOI, VIETNAM

SUBMARKET INVENTORY (SQM)

OVERALL VACANCY

RATE

UNDER CONSTRUCTION

(SQM)

YTD CONSTRUCTION

COMPLETIONS (SQM)

OVERALL NET

ABSORPTION (SQM)

AVERAGE GROSS RENT (US$/SQM/MTH)

US$SF/YR EURO SF/YR

Q4 2012 Q1 2013 Q1 2013 Q1 2013

CBD A - Grade 152,000 14% 0 25,853 12,000 40 38 42.4 32.9

CBD B - Grade 56,000 7% 28,000 0 0 27.3 28.5 31.8 24.6

CBD TOTALS 208,000 12% 28,000 25,853 12,000 36.2 35.4 39.5 30.6

Non- CBD A-Grade 178,000 36% 205,000 0 -4,000 25.3 26 29 22.5

Non-CBD B-Grade 501,000 21% 412,000 0 -10,500 18.8 18.6 20.7 16

NON-CBD TOTALS

679,000 28% 617,000 0 -14,500 20.7 20.5 22.9 17.7

* RENEWAL NOT INCLUDED IN LEASING ACTIVITY STATISTICS

MARKET HIGHLIGHTS

Significant Q1 2013 Lease Transactions

SUBMARKET TENANT BUILDING CLASS SQUARE METER Cornerstone Cornerstone Cornerstone Cornerstone Indochina Plaza Vinafor

Hoan Kiem Hoan Kiem Hoan Kiem Hoan Kiem Cau Giay Hai Ba Trung

VIB Vietnamese Lottery Company Grass Savoye Fuji Electric I-Global Diageo

A A A A A B

6,000 6,500

307 700 145 200

Significant Projects Under Construction

SUBMARKET AREA (SQM) COMPLETION DATE STATUS

Tuan Duc Tower CBD 8,000 2013 Finishing

Hong Ha Building CBD 12,000 2013 Finishing

EVN Twin Tower Ba Dinh 45,261 2013 Finishing

Apex Tower My Dinh 26,000 2013 Under construction

Handico Tower My Dinh 17,400 2013 Under construction

Lotte Center Hanoi Ba Dinh 43,835 2014 Under construction


This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ©2012 Cushman & Wakefield, Inc. All rights reserved..

ECONOMY CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% compared with Q1 2012. However, inflation may still accelerate. In regard to GDP, this quarter grew by 4.89% as

compared with the same period in 2012 (according to General Statistics Office of Vietnam – GSO)

Total new registered and additional FDI in this quarter reached around US$6.0 billion, increasing 63.6% Y-o-Y. The property sector still ranks second in total FDI, after manufacturing, with nearly US$250 million, accounting for approximately 4.1% of total investment. This figure has reduced significantly compared to Q1 2012. Japan remains the leading investor in Vietnam, contributing more than 50% of total investment in Vietnam; followed by Singapore, then Korea. SUPPLY Currently, Hanoi has around 700,000 sqm of retail space including shopping centres/department stores, retail podiums, supermarkets, electronic marts and wholesales markets. In which, shopping centres/department stores account for the highest market share of 67%. Q1 2013 witnessed the re-launching of one shopping centre in the CBD area, which increased the total supply of this sector to nearly 420,000 sqm. MARKET PERFORMANCE In Q1 2013, the average asking rent of the whole retail market in Hanoi, including both CBD and non-CBD area stays at around US$50/sqm (VAT excluded, service charge included). CBD area has the highest asking rent, with a range of US$40 – US$220/sqm, depending on the area, location and tenants’ brand. Rents tend to decrease on upper levels compared to ground floor space in the same shopping center. Roughly 88% of retail space (shopping centre/department stores and retail podium only) was occupied in this quarter. This quarter still witnessed the trend of low & medium fashion brands such as Topshop, Topman, and Oasis entering the retail market. OUTLOOK It is forecasted that there will be no uptrend in retail market performance in 2013. Vincom Mega Mall Royal City - one of the largest scale retail projects is expected to be completed end of this year and will add to the retail market 230,000sqm.

Up to 2015, approximately 1.3 million sqm from 66 projects is planned to enter the retail market.

ECONOMIC INDICATORS

NATIONAL 2010 2011 2012

GDP Growth 6.8% 5.89% 5.03%

CPI Growth 11.8% 18.6% 9.2%

Retail Turnover 24.5% 24.2% 16%

PRIME RETAIL RENTS – Q12013

MAINSTREETS MIL VND SQM/MTH

EURO SF/MTH

US$ SF/MTH

Q-O-Q CHANGE Y-O-Y CHANGE

Trang Tien 1.6 - 4.2 5.7 - 14.3 7.4 -18.6 0.0% 0.0%

Ba Trieu 1.05 - 1.6 3.5 - 14.3 4.6 -18.6 -10% -20%

Pho Hue 1.05 - 1.6 3.5 -14.3 4.6 -18.6 -10% -20%

Thai Ha 1.05 - 1.6 3.5 - 14.3 4.6 -18.6 -10% -20%

Lang Ha 0.8 - 1.2 2.8 - 4.3 3.7 - 5.6 -10% -30%

MALLS MIL VND SQM/MTH

EURO SF/YR

US$ SF/YR


Vincom City Towers Trang Tien Plaza

2.06

4.6

7.04

15.7

9.14

20.4

0%

-

-2%

-

Parkson Viet Tower Savico Megamall

2.16

0.68

7.4

2.31

9.6

3.0

0%

0%

0%

-7%

SIGNIFICANT LEASING TRANSACTIONS

PROPERTY LOCATION TENANT SQUARE FEET Opera Business Centre 6 Trang Tien Maison 840

13-15 Ngoc Khanh Building

13-15 Ngoc Khanh

Hi-way supermarket 5,000

SIGNIFICANT PROJECTS UNDER CONSTRUCTION PROPERTY LOCATION SQUARE

METERS COMPLETION

DATE Vincom Mega Mall Royal City

Thanh Xuan 230,000 2013

Cho Mo Plaza Lotte Center Hanoi Vicom Mega Mall – Times City

Hai Ba Trung Ba Dinh Hai Ba Trung

23,000

34,682

230,000

2013

2014

2014

HANOI/VIETNAM

MANCHESTER

MANCHESTER

RETAIL SNAPSHOT

RETAIL SNAPSHOT

MARKETBEAT


Q1 2013


For more information, contact: Minh Nguyen, Senior Manager Research & Consultancy Tel: (84-4) 39381786 [email protected]

This report has been produced by Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. Should you not wish to receive information from Cushman & Wakefield LLP or any related company, please email [email protected] with your details in the body of your email as they appear on this communication and head it “Unsubscribe”. ©2012 Cushman & Wakefield LLP All rights reserved.

1


SERVICED APARTMENT

MARKETBEAT


ECONOMY CPI in Q1 2013 was recorded at low level, increasing by 6.91% in comparison with Q1 2012. However, inflation may still rise. Regarding GDP, IMF forecast that Vietnam will achieve around 5.9% growth in 2013.

Total new registered and additional FDI in this quarter reached around US$6.0 billion, and increase of 63.6% compared to the same period of last year. FDI into the property sector still ranked second after manufacturing, with nearly US$250 million, accounting for approximately 4.1% of the total investment. This figure reduced significantly compared to Q1 2012. Japanese investors remained the leading nationality of investors into Vietnam, making up more than 50% of the total investment in the country; followed by Singapore, then Korea.

NEW GRADE B SUPPLY COMING ONLINE

Total stock in all grades this quarter stayed at approximately 3,000 units, an increase of 1% compared to Q4 2012.

Total stock for Grade A has no change in comparison with the previous quarter. Meanwhile, Grade B has witnessed an additional supply from 2 new projects namely Dolphin Plaza located in Tu Liem District (70 units) and My Way situated in Cau Giay District (39 units). However, one Grade B project in Tay Ho District stopped to lease for renovation, supply still increased by 9% q-o-q.

The market witnessed a more common trend of converting apartments for sale into serviced apartments so supply will keep increasing.

BIG CHANGE IN GRADE B RENTS AND OCCUPANCY RATE

The average asking rent in the Grade A segment in this quarter on par with Q4 2012, at roughly VND672,000 per sqm per month, that equates to US$32/sqm/month (VAT excluded but service charge included).

Due to the new projects in the Grade B segment offering competitive terms, average quoting rents stood at VND407,000

per sqm per month, that equates to US$19.4/sqm/month, (VAT excluded but service charge included), a decrease of 14% q-o-q and 8% y-o-y.

Grade A maintained occupancy rates of 83%, an increase of 6% in comparison with the previous quarter. Lunar New Year might have impacted on expatriate relocations and can explain the increase in occupancy. Meanwhile, Grade B’s occupancy rate stood at 79%, a decrease of 12% in comparison with that in Q4 2012 due to additional supply entering the market.

OUTLOOK Conversion of Residential Sales units to serviced apartments or apartments available for lease is set to continue in the medium term as owners try different strategies to dispose of their stock.

In the next 3-5 years, nearly 1,200 serviced apartments are forecasted to reach the market. There are four districts which will see the most significant new supply: Ba Dinh, Tay Ho, Cau Giay and Tu Liem.

STATS ON THE GO

RENTAL VALUES AS OF Q1 2013

SUBMARKET AVERAGE RENT

VND/SQM/MTH

% CHANGE SHORT TERM OUTLOOK Q-O-Q Y-O-Y

GRADE A CBD 660,000 3% -6% Non – CBD 684,000 -2% 0%

GRADE B CBD 357,000 -12% -12% Non - CBD 453,000 -5% 1%

Grade A & B Overall Rental Vs. Occupancy Rate Q1 2013

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

VND

/sqm

/mon

th

Grade A - Rent Grade B - Rent

Grade A - Occupancy Grade B - Occupancy


For more information, contact: Minh Nguyen, Senior Manager Research & Consultancy Tel: (84-4) 39381786 [email protected]


2

CURRENT SUPPLY BY GRADE IN Q1 2013

GRADE NO. OF BUILDINGS NO. OF UNITS

A B C

13 18 17

1,750 957 257

SIGNIFICANT PROJECTS UNDER CONSTRUCTION

BUILDING LOCATION DEVELOPER EST. NUMBER OF UNITS EXPECTED COMPLETION

Candeo Hotel Viet Tower

Ba Dinh District Dong Da District

Nhan Nghia Co. Hoa Binh Corp.

70 50

Q2 2013 Q4 2013

Elegant Tay Ho Lotte Center Hanoi

Tay Ho District Ba Dinh District

Duy Hoang Minh Lotte Coralis

96 240

2014 2014

Vietinbank Tower

Le Roi du Soleil HD Westlake

Tay Ho District

Tu Liem District Tay Ho District

Vietinbank

Tan Hoang Minh Corp. HD Group

N/A

N/A N/A

2015

Onward Onward

-200 400 600 800

1,000 1,200 1,400 1,600 1,800 2,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F

No. o

f uni

ts

Accumulated Supply by Year - Grade A&B

Grade A Grade B

Unit 602, Asia Tower 6 Nha Tho Str., Hoan Kiem Dist Hanoi Tel: +(84-4) 3938 1786 www.cushmanwakefield.com

For more information, contact: Minh Nguyen, Senior Manager Tel: +(84-4) 3938 1786 [email protected]


1


RESIDENTIAL FOR SALE

MARKETBEAT


ECONOMIC OVERVIEW CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% compared with Q1 2012. However, inflation may still accelerate. In regard to GDP, this quarter grew by 4.89% as compared with the same


Total new registered and additional FDI in this quarter reached around US$6.0 billion, increasing 63.6% Y-o-Y. The property sector still ranks second in total FDI, after manufacturing, with nearly US$250 million, accounting for approximately 4.1% of total investment. This figure has reduced significantly compared to Q1 2012. Japan remains the leading investor in Vietnam, contributing more than 50% of total investment in Vietnam; followed by Singapore, then Korea. INCREASING SUPPLY CONCERNS Q1 2013 witnessed several mid-end and low-end projects launching new apartments into the market, with sale price from VND14 million/sqm (VAT included). Accordingly, Grade C primary supply went up considerably to around 5,000 units. Grade B continued occupying the highest market share, with over 50% of the total primary supply for all grades. Grade A primary supply stayed the same as Q4 2012.

POOR PERFORMANCE CONTINUES

After the Lunar New Year holidays, developers of many projects started offering incentives for buyers such as gifts (cars, ipad, saving book, etc.) or reducing the price directly. However there was little positive impact on sales volumes.

Average asking prices for Grade A condominiums are roughly VND48 million/sqm (equivalent to US$2,286/sqm), Grade B around VND30 million/sqm (equivalent to US$1,429/sqm) and circa VND16million/sqm (equivalent to US$762/sqm) for Grade C apartments. These asking prices include VAT. It is common for developers to include furniture packages in deals now and this would show an increase of VND5-10 million/sqm.

OUTLOOK 2013 is expected to see a more common trend in converting commercial houses into social houses and dividing large apartments into smaller ones. Hanoi People’s Committee put in place a residential development moratorium preventing the approval of more commercial residential development until December 2014 aimed at cooling the market.

With the Resolution 02/NQ-CP dated 7th January 2013 and the current surplus supply, condominium market continues seeing further cutting price trend. Buyers, particularly low and middle income ones will have more opportunities to approach.

ECONOMIC INDICATORS

NATIONAL 2011 2012 2013F

GDP Growth 5.89% 5.03% 5.9%

CPI Growth 18.13% 9.21% 6.2%

ASKING PRICE OF ALL SEGMENTS Q1 2013

PRIMARY MARKET PERFORMANCE Q1 2013

0

10

20

30

40

50

60

70

Grade A Grade B Grade C

mil VND/sqm

Lowest primary asking price (VAT incl.)

Highest primary asking price (VAT incl.)

0

1000

2000

3000

4000

5000

6000

7000


Units

Primary supply No. of units sold

MARKETBEAT


For more information, contact: Minh Nguyen, Senior Manager Tel: +(84-4) 3938 1786 [email protected]


2

STATES ON THE GO

Significant Residential Projects Launched in Q1 2013 Ha Do Park View

LOCATION Cau Giay

COMPLETION YEAR 2014

UNITS LAUNCHED

50

SALE PRICE ((VND MILLION, VAT EXCL.)

22.7

Phuc Thinh Tower Tu Liem 2014 400 12-13

OCT2 Tu Liem 2014 204 13

CT3C Hoang Quoc Viet Residential

Cau Giay

2014

84 24-25

Significant Projects Under Construction LOCATION DEVELOPER EST. NUMBER OF UNITS EXPECTED COMPLETION Mandarin Garden

D’.Palais de Louis

Cau Giay

Cau Giay

Hoa Phat Group

Tan Hoang Minh

Group

1,008

2014

2013

2014

Mulberry Lane

Golden Land Building

Ha Dong

Thanh Xuan

Capital Land – Hoang

Thanh

Hoang Huy Group

1,478

730

2014

2014

Golden Palace Me Tri Tu Liem

Mai Linh Group

1,000

2014

Significant Q1 2013 Construction Completions LOCATION DEVELOPER EST. NUMBER OF UNITS UNIT SIZE (SQM) Song Hong Park View Dong Da Song Hong Land 336 60-165


For more information, contact: Minh Nguyen Tel: +(84-4) 3938 1786 minh,[email protected]



INDUSTRIAL SNAPSHOT

MARKETBEAT


ECONOMY CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% compared with Q1 2012. However, inflation may still accelerate. In regard to GDP, this quarter grew by 4.89% as compared with the same


Total new registered and additional FDI in this quarter reached around US$6.0 billion, increasing 63.6% Y-o-Y. The property sector still ranks second in total FDI, after manufacturing, with nearly US$250 million, accounting for approximately 4.1% of total investment. This figure has reduced significantly compared to Q1 2012. Japan remains the leading investor in Vietnam, contributing more than 50% of total investment in Vietnam; followed by Singapore, then Korea. MARKET OVERVIEW

No new industrial supply was launched into the market in Q1 2013. Total land area of industrial parks in Hanoi remained at around 1,389 hectares. However, land available for lease was limited to approximately 182 hectares, coming from three industrial parks (IPs), namely Hoa Lac Hi-tech Park, Phu Nghia IP and Noi Bai IP Phase II. Almost all IPs in Hanoi have been fully occupied.

Up to now, Hoa Lac Hi-tech Park has the lowest occupancy rate among industrial parks operating in Hanoi (around 60%). According to the Management Board of Hoa Lac Hi-tech Park, they have licensed 68 projects with a total registered investment capital of 52,241 billion, of which 20 projects have been put into operation and13 projects are in the construction process. In 2012, seven projects have been licensed for investment to this Hi-tech park with total registered investment capital of VND 20,809 billion.

STABLE RENTAL RATE Q1 2013 witnessed no change in rental rate in comparison with Q4 2012, remaining at around US$109/sqm/period (equivalent to nearly VND2.3 million/sqm/period), VAT excluded.

The average asking rent of IPs in Hanoi is still much higher than that in neighboured provinces like Hung Yen, Bac Ninh and Hai Phong.

The occupancy rate of all IPs in Hanoi is estimated to reach 87%.

OUTLOOK By 2020, the industrial market in Hanoi is expected to see an additional supply of roughly 3,000 hectares from eight identified projects.

Hanoi city will actively establish and expand industrial parks and clusters to ensure the industrial growth target at 7.5% - 7.8% in 2013. In addition, the city will continue focusing on improving the infrastructure and site clearance as well as implementing programs to promote industrial development.

MARKET STATISTICS

SUBMARKET TOTAL AREA (HA)

LEASABLE AREA (HA) NO. OF IPS

Gia Lam 97 78 1

Long Bien 40 32 1

Soc Son 100 70 1

Me Linh 344 240 1

Tu Liem 30 24 1

Chuong My 170 111 1

Dong Anh 274 206 1

Thach That & Quoc Oai 705 619 2

SIGNIFICANT FUTURE PROJECTS IP NAME Hanssip

DISTRICT Phu xuyen

AREA (HA)

640

STATUS

Ground breaking Phung Hiep Chuong My 401 Site clearance

North Thuong Tin Thuong Tin 470 Site clearance

Dong Anh Dong Anh 470 Planning

PERFORMANCE BY DISTRICT

0%

20%

40%

60%

80%

100%

120%

$0 $20 $40 $60 $80

$100 $120 $140 $160 $180

US

$/sq

m/te

rm

Rent Occupancy

Cushman & Wakefield Viet Nam Level 14, Vincom Center Building 72 Le Thanh Ton, District 1, HCMC www.cushmanwakefield.com

For more information, contact: Christopher Brown, General Manager +(84) 90 343 8000 [email protected]


ECONOMIC OVERVIEW CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% Y-o-Y. However, inflation may still accelerate. In regard to GDP, this quarter grew by 4.89% as compared with the

same period in 2012 (according to General Statistics Office of Vietnam – GSO)

Total new registered and additional FDI in this quarter reached around US$6.0 billion, increasing 63.6% Y-o-Y. The property sector still ranks second in total FDI, after manufacturing, with nearly US$250 million, accounting for approximately 4.1% of total investment. This figure has reduced significantly compared to Q1 2012. Japan remains the leading investor in Vietnam, contributing more than 50% of total investment in Vietnam; followed by Singapore, then Korea.

GRADE B SUPPLY INCREASED Four Grade B office buildings entered the market this quarter, of which, one is returning to the market after it temporarily stopped leasing. This pushed the total stock of Grade B spaces up to approximately 618,000 sqm from 46 buildings, an increase of 7% quarter-on-quarter.

No new Grade A office buildings came online this quarter. Currently, there are 9 Grade A office buildings, supplying approximately 157,000 sq m of office space to the market.

RENT CONTINUED ITS DOWNWARD TREND While average rent for Grade A remained stable, standing at around 1,027,000VND/Sqm/Month (equivalent to 49 US$ /Sqm /Month (*)), Grade B rent continued its downward trend, decreasing by nearly 1% Q-o-Q and by some 2.5% Y-o-Y, standing at 544,000 VND/Sqm/Month (26US$ /Sqm/Month (*))

Grade A occupancy rate increased slightly by nearly 1% Q-o-Q, at around 83%, but decreased by some 1% Y-o-Y. Grade B decreased by some 2% Q-o-Q but increased approximately 3% Y-o-Y, to around 86.5%. The main reason was the overall low occupancy of the new buildings.

Total net absorption of both grades increased 118% Q-o-Q, standing at 50,400 sqm. Net absorption of Grade A space stands near 9,700 sqm, accounting for around 19% of total space absorbed in Q1 and Grade B was approximately 40,700 sqm, accounting for 81% of the total space absorbed. (*)SERVICE CHARGE INCLUDED, VAT EXCLUDED

OUTLOOK Substantial increases in the supply of Grade A and B office space has been forecast in the short to medium term, in and surrounding the CBD. However, many office development sites are suffering from construction delays and in some cases construction has stopped altogether due to financing problems.

During the past 12 months multinational tenants have gradually been migrating back to the CBD, taking advantage of the favourable market conditions and the superior build quality of the new office supply. This trend is predicted to continue for the time being.

Headline rents look to be stabilizing, although improved lease incentives continue to be offered to tenants. The HCMC office market is expected to remain a tenant’s market for 2013 but some market recovery is predicted in 2014 as the economy recuperates and competition in the office market grows.

STATS ON THE GO 1Q13 Q-O-Q

CHANGE Y-O-Y

CHANGE 12 MONTH OUTLOOK

Overall Vacancy 16.8% -0.8% 1.2% Grade A Overall Rents $49 -0.5% -0.4% Absorption (sqm) 9,720 15% 20 %

ECONOMIC INDICATORS VIETNAM 2011 2012 2013F GDP Growth 5.89% 5.6% 5.9% CPI Growth 18.58% 10% 6.2% Unemployment 5% 5% 4.5% SOURCE: GSO, World bank

GRADE A OVERALL RENTAL VS. VACANCY RATES

0%

10%

20%

30%

40%

0

20

40

60

80

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Q4 Q1

2010 2011 2012 2013

US

$/sq

.m/m

th

Grade A overall rent Vacancy

Q1 2013 HO CHI MINH CITY, VIETNAM

OFFICE SNAPSHOT MARKETBEAT





SUBMARKET INVENTORY OVERALL

VACANCY RATE

UNDER CONSTRUC

TION

YTD CONSTRUCTION

COMPLETIONS

OVERALL DIRECT NET

ABSORPTION

GRADE A & B AVERAGE GROSS (SERVICE

CHARGED INCL., VAT EXCLUDED)

(US/SQM/MTH)

US$ SF/YR

EURO SF/YR

CBD A - Grade 157,000 16.8% 281,000 0 9,720 $49 $54.6 €42 CBD B - Grade 387,800 16% 126,600 14,400 5,310 $30.13 $33.6 €25.8 Non - CBD B - Grade

230,200 10% 200,300 23,000 35,340 $17.5 $19.5 €15

TOTALS 775,000 14% 607,900 37,400 50,400 $31 $34.5 €26.5

MARKET HIGHLIGHTS

Significant Q1 2013 Lease Transactions SUBMARKET TENANT BUILDING CLASS SQUARE METER

President Place CBD Canon A 1,100

President Place CBD Microsoft A 774

Bitexco Financial Tower CBD Murphy Oil A 800

An Phu Plaza Non CBD PPF B 2,500

Empress Tower CBD Shinhan Bank B 3,000

Saigon Airport Plaza Non-CBD DHL B 2,000

Significant Q1 2013 Construction Completions

SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE METER

Empress Tower CBD Shinhan Bank Q1 2013 14,400

Pico Plaza Non CBD N/A Q1 2013 9,000

Saigon Airport Plaza Non CBD KFC Q1 2013 14,000

Significant Projects Under Construction SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE METER

Lim Tower CBD N/A Q2/2013 33,000

Le Meridien CBD N/A Q2 2013 9,000

Vietcombank Tower CBD N/A Q4 2014 55,000

DB Tower Non CBD N/A Q2 2013 18,860

HO CHI MINH, VIETNAM

* RENTAL RATES REFLECT ASKING $PSQM/MONTH


This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ©2012 Cushman & Wakefield, Inc. All rights reserved..

ECONOMY

CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% Y-o-Y. However, inflation may still accelerate. In regard to GDP, this quarter grew by 4.89% as compared with the same period in

2012 (according to General Statistics Office of Vietnam – GSO)


SUPPLY

Currently, there are eight Retail podiums, seven Department stores, 21 shopping centres, 60 supermarkets and three wholesale centres in the city with a total area of approximately 791,000 sq m.

One shopping centre and one supermarket joined the market this quarter, supplying an additional 27,000 sq m of retail space to the market. Both are located in the suburban area.

District 1 always has the most crowded retail market in the city and currently accounts for 24% of the total supply.

MARKET PERFORMANCE

The CBD area always performs well, with the highest occupancy rate at 90%, despite it having the highest rent at VND2,235,000 per sqm per month (equivalent to US$107 per sqm per month).This rent is considered 1.6 times higher than in the secondary area, at VND1,430,000 per sqm per month (equivalent to US$69 per sqm per month) with average occupancy of 89%; and 3 times higher than in the suburban area, at VND749,000 per sqm per month (equivalent to US$36 per sqm per month), and 83% occupied.

In terms of retail type; Department Stores achieved the highest average asking rent, at VND1,410,000 per sqm per month (equivalent to US$67 per sqm per month), followed by Shopping Centres at VND1,392,000 per sqm per month (equivalent to US$66 per sqm per month) and finally Retail Podiums at VND1,020,000 per sqm per month (equivalent to US$49 per sqm per month). Occupancy rates are 89%, 86%, and 97%, respectively.

OUTLOOK

In 2012, Vietnam went off the list of 30 most attractive retail markets in the world (A.T Kearney). However, the Vietnam retail market is still considered to be appealing to foreign retailers with a population of about 90 million people, more than 60% of whom are in the high-consuming age category from 20 to 59.

In HCMC, demand for retail space in the CBD is expected to remain high in at least the short to medium term. However, due to the land limitation and high land price, the majority of future stock will be concentrated in the suburban area.

Over the next 5-7 years, approximately 1.5 million sq m of new supply will enter the market. This represents nearly a 200% increase in retail supply between now and then.

ECONOMIC INDICATORS

NATIONAL 2011 2012 2013 GDP Growth 5.89% 5.03% 5.9%

CPI Growth 18.6% 9.2% 6.2%

Retail Turnover 24.2% 16% 18%

SOURCE: GSO, World bank

PRIME RETAIL RENTS – Q12013

MAINSTREETS MIL VND SQM/MTH

EURO SF/MTH

US$ SF/MTH


Dong Khoi 1.9 6.8 8.8 - -

Nguyen Hue 2 6.9 8.9 - -

Le Loi 1.9 6.8 8.8 - -

MALLS MIL VND SQM/MTH

EURO SF/YR

US$ SF/YR


Vincom Center A Parkson Saigon Tourist

3.4

2.2

139

90

181

117

-

-

-

-

Diamond Plaza Rex Arcade Tax Plaza

3.1 2.1 1.8

128 86 73

162 112 94

- - -

- - -

SIGNIFICANT PROJECTS UNDER CONSTRUCTION PROPERTY LOCATION SQUARE

METERS COMPLETION

DATE Time Square CBD 9,000 2013

Leman CT Plaza Secondary Area 12,000 2013

Aeon Celadon City Suburban 82,000 2014

HO CHI MINH CITY/VIETNAM

MANCHESTER

MANCHESTER

RETAIL SNAPSHOT

RETAIL SNAPSHOT

MARKETBEAT


Q1 2013




Q1 2013 HO CHI MINH, VIETNAM

INDUSTRIAL SNAPSHOT

MARKETBEAT


ECONOMY CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% Y-o-Y. However, inflation may still accelerate. In regard to GDP, this quarter

grew by 4.89% as compared with the same period in 2012 (according to General Statistics Office of Vietnam – GSO)


SUPPLY REMAINED UNCHANGED No new supply came online this quarter. Currently there are 18 operating IPs providing a total area of more than 3,600 hectares. The leasable area is estimated to be about 62% of the total industrial land scale, or more than 2,200 hectares.

The remaining LUR years range from 27 - 44 years, with the average number being 36.

Most IPs are located in suburban districts, and are mainly focused toward the western districts. Cu Chi and Hoc Mon are the two districts/ new locations for IPs as there are large available tracks of land.

AVERAGE RENTS KEEP GOING DOWN Average asking rent in Q1 2013 decreased by 3% Q-o-Q, at VND 2,620,000 per sqm per term (equivalent to US$125 per sqm per term). The rental rate is about two times higher than Long An and Binh Duong, and nearly three times higher than Dong Nai and Ba Ria-Vung Tau.

Majority of the IPs in HCMC report occupancy rates at above 90% as they are established and have been operating for some 11 - 21 years. IPs in Binh Chanh and Cu Chi District that have just started to operate report occupancy rates under 50% which results in the average HCMC occupancy rate to be about 72%, unchanged q-o-q.

The industrialization process has created air and water pollution. This provides practical reasoning for Industrial zones in the city to recently re-focus to attract hi – tech and environment friendly enterprises.

Currently, developers are turning from long term land lease to factory construction for lease with areas of about 2,000 – 3,000 sqm. Continuing issue is that industrial parks need supporting and policies from government authorities to attract investment must continue.

OUTLOOK It is predicted that the total increase in industrial land in HCMC up to 2020 will be approximately 2,700 hectares, increasing some 75% from 1Q 2013. In terms of the number of IPs, it is forecasted that 29 IPs will operate by 2020, which equates to an additional 11 IPs between now and then.

Majority of the future projects are in clearance and compensation progress and waiting for government approval.

MARKET STATISTICS SUBMARKET TOTAL

AREA (HA) LEASABLE AREA (HA)

NUMBER OF IPS

District 2 112 79 1

District 7 300 195 1

District 12 29 22 1

Binh Tan District 584 321 2

Tan Phu District 134 92 2

Thu Duc District 151 110 3

Nha Be District 908 506 2

Binh Chanh District 260 190 2

Cu Chi District 1,137 719 4

SIGNIFICANT FUTURE PROJECTS IPS AREA (HA) STATUS Phong Phu 148 Under construction

Phu Huu 114 Under construction

MARKET FORECAST

0

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VND 0

VND 1,000,000

VND 2,000,000

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VND 5,000,000

VND 6,000,000sqm/term %

Rent Occupancy




1

Q1 2013

HO CHI MINH, VIETNAM

SERVICED APARTMENT

MARKETBEAT


ECONOMY

CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% Y-o-Y. However, inflation may still accelerate. In regard to GDP, this quarter there was growth of 4.89%


Total new registered and additional FDI in Q1 reached around US$6.0 billion, increasing 63.6% Y-o-Y. The property sector still ranks second in total FDI, after manufacturing, with nearly US$250 million, accounting for approximately 4.1% of total investment. This figure has reduced significantly compared to Q1 2012. Japan remains the leading investor in Vietnam, contributing more than 50% of total investment in Vietnam; followed by Singapore, then Korea.

SUPPLY

64 new Grade B apartments from one active project entered the market this quarter. Grade B stock increased around 3.5% Q-o-Q and 21% Y-o-Y.

Total supply is recorded at approximately 2,630 apartments from 28 buildings. More than 700 are Grade A and 1,920 units Grade B, accounting for 27% and 73% of the market share respectively. District 1 makes up 47% of all total supply.

The serviced apartment market is facing competition from some projects that are transferring their use/purpose from apartments for sale, to apartments for lease and this trend is forecast to continue in 2013.

RENTS OF GRADE A WAS STABLE

There was a slight decrease in occupancy rate for Grade A by 1% Q-o-Q and 2%Y-o-Y, achieving 89%. Grade B occupancy decreased nearly 1.5% Q-o-Q and 6%Y-o-Y, standing at 82%.

Average asking rent for Grade A remained unchanged Q-o-Q and decreased by approximately 1% Y-o-Y, standing at VND 630,000 per sqm per month(equivalent to US$30 per sqm per month). Grade B is quoted at VND 473,500 per sqm per month (equivalent to US$22.6 per sqm per month), increasing by some 1.5%Q-o-Q and decreasing around 10% Y-o-Y.

Grade A and B serviced apartments in District 1 always perform well with a high occupancy rate at nearly 90% despite

having the highest rents at VND 593,500 per sqm per month (equivalent to US$28.3 per sqm per month) (service charge included and VAT excluded).

OUTLOOK

Huge supply from approximately more than 280 serviced apartment units is expected to enter the market this year - along with stagnation in the apartment for sale market causing many developers to transfer the use/ purpose into apartment for lease - there will be expected pressure on serviced apartment rents.

Due to poor economic performance, many multi-national companies have cut costs on staff accommodation. Hence, occupancy rate is expected to decrease in the short to medium term.

Serviced apartment tenants are service orientated and the quality of management is a critical driver in this sector.

RENTAL VALUES AS OF 1Q 2013 LOCATION AVERAGE

RENT SQM/MTH

%CHANGE SHORT TERM

OUTLOOK MTH AGO

YEAR AGO

GRADE A CBD 664,800 -0.04% -0.2%

Non - CBD 413,250 -0.9% -11%

GRADE B

CBD 524,300 -0.5% -14%

Non - CBD 472,000 8% -0.5%

GRADE A & B OVERALL RENTAL VS. OCCUPANCY RATE 1Q 2013

50%55%60%65%70%75%80%85%90%95%100%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13

VND/sqm/month

Grade A- Rent Grade B- Rent Grade A- Occupancy Grade B- Occupancy




2

STATES ON THE GO

Significant Projects Under Construction LOCATION DEVELOPER EST. NUMBER OF UNITS

EXPECTED COMPLETION

Time Square 22-36 Nguyen Hue, District 1

Quang Truong Thoi Dai JSC

100 2013

Saigon Plaza 24 Le Thanh Ton Viet Lien A JSC N/A 2014

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS




1

Q1 2013 HO CHI MINH, VIETNAM

RESIDENTIAL SNAPSHOT

MARKETBEAT


ECONOMY CPI in Q1 2013 was recorded at a relatively low level, increasing by 6.91% Y-o-Y. However, inflation may still accelerate. In regard to GDP, this quarter there was growth of 4.89%


Total new registered and additional FDI in Q1 reached around US$6.0 billion, increasing 63.6% Y-o-Y. The property sector still ranks second in total FDI, after manufacturing, with nearly US$250 million, accounting for approximately 4.1% of total investment. This figure has reduced significantly compared to Q1 2012. Japan remains the leading investor in Vietnam, contributing more than 50% of total investment in Vietnam; followed by Singapore, then Korea.

GRADE C STOCK DOMINATES Total primary supply recorded an increase of about 8.5% q-o-q but suffered a decrease of more than 21% y-o-y. This quarter witnessed an entrance of 740 new Grade A units from three projects, 355 grade B units from one active project and 500 Grade C units from three projects. Grade C remained the core product, accounting for 61% of total stock.

Nearly 90% of total primary stock is concentrated in the outer districts. Districts 7, Binh Tan, Tan Phu are the three largest accounting for some 51% of the total stock.

PRICE OF GRADES A DECREASED SIGNIFICANTLY The residential market is still experiencing low levels of activity with poor sales performance occurring mostly in the high-end segment.

Amongst the three segments, Grade C recorded the most transactions with an absorption rate of 8%, with average prices at approximately 15,500,000VND per sqm (equivalent to 740US$ per sqm)* a fall of nearly 1% q-o-q. Approximately 63% of all units absorbed this quarter were Grade C.

Grade A and B had absorption rates of circa 2% and 13%, respectively. Average price of Grade A was at 38,200,000 VND per sqm (equivalent to US$1,825 per sqm)*, which is a significant 7% reduction q-o-q. The main reason for this was the overall low pricing of the new units. Grade B was at 31,600,000VND per sqm (1,510US$ per sqm)*, a decrease of nearly 2% q-o-q.

(*): All prices are VAT excluded

OUTLOOK According to government circular 02/2013, 30,000 billion VND will be used for lending to home buyers, with a low 6% interest rate. This is aimed at warming up the apartment market in 2013.

The apartment market has been overcast for a long time, and some developers have subdivided large scale units into smaller units in order to attract low and average income earners. Substantial increases in supply have been forecast in the short to medium term. While current supply is still very high, this will put strong pressures on price.

2013 is expected to remain a buyer’s market and the downward pricing trend is predicted to continue.

ECONOMIC INDICATORS

NATIONAL 2011 2012 2013F GDP Growth 5.89% 5.6% 5.9%

CPI Growth 18.58% 10% 6.2%



0102030405060708090

100


mil VND/sqm

Lower asking price Upper asking price

-

1,000

2,000

3,000

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5,000

6,000

7,000

Grade A Grade B Grade CAccumulated Primary supply Unit sold

Units




2

STATES ON THE GO

Significant Residential Projects Launched in Q1 2013

LOCATION EXPECTED COMPLETION

UNITS LAUNCHED SALE PRICE (VND/SQ M)

Sunrise City – North Tower District 7 2013 297 30,300,000

Happy Valley District 7 2013 163 29,500,000

Dragon Hill District 7 2013 355 27,255,000

The Prince Residence Phu Nhuan 2013 277 46,700,000

Nhat Lan 3 Binh Tan 2013 240 12,500,000

Screc II Metro Apartment District 2 2013 104 17,400,000

Tanibuilding Son Ky 2 Tan Phu 2013 150 12,000,000

Significant Projects Under Construction LOCATION EXPECTED COMPLETION

EST. NUMBER OF UNITS

EXPECTED COMPLETION

Star Hill District 7 Phu My Hung 175 2014

Thai Binh Plaza District 2 Binh Duong Ltd 364 2014

Happy Valley District 7 Phu My Hung 163 2013

Khang Thong District 7 Khang Thong Group 2014 2014

The Prince Residence Phu Nhuan Novaland 277 2014

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS

MARKETBEAT

A Cushman & Wakefield Alliance Research Publication

Publication

Q1 2013

HANOI OFFICE: Room 602, Asia Tower, 6 Nha Tho Street, Hoan Kiem District, Hanoi, Vietnam Tel: (84) 4 3938 1786

Fax: (84) 4 3938 1781

HO CHI MINH CITY OFFICE: Unit 16, 14 FI, Vincom Centre, 72 Le Thanh Ton Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam Tel: (84-8) 3823 7968 Fax: (84-8) 3823 7969

q.1 2013 cushman & wakefield market beat report

Real Estate