QUARTERLY MARKET REVIEWHANOI Q4/2016

QUARTERLY MARKET REVIEWHCMC Q1/2017

2

$1.9Bil

In Q1’17

~5%Highest in 3 years

~26,480Increased 11% YoY

$40.4bil

growth 6% YoY

5.1%(0.4) ppts

}

11%1ppt YoY

Exchange rate

22,8004% YoY

~3.2mil

Increased 29% YoY

ECONOMIC OVERVIEW

GDP: lowest Q1 rate in 3 years Retail Sales: lowest Q1 real growth in 3 years Exchange rate

FDI: impressive growth of registered capitalTrade deficit CPI

International visitors Mortgage rate

73% YoYregistered

capital

3% YoYFDI

disbursement

Newly established businesses

3.7%Real Estate

Korea48% contribution

Supply

Opened: 1 shopping centre and 3 supermarkets

One supermarket closed.

Total stock: ~1.1 million m2, stable QoQ, 10% YoY

Market performance

Avg. occupancy: 94%, stable QoQ, YoY

Avg. gross rent: US$53/m2/mth, 1% QoQ, stable YoY

• Shopping centre: US$51/m2/mth, 2% QoQ, 1% YoY

• Department store: US$63/m2/mth, 2% QoQ, 7% YoY

• Retail podium: US$37/m2/mth, 1% QoQ, 7% YoY

Outlook

2017: ~170,000 m2

2018-2020: ~610,000 m2

3

RETAIL

Crescent MallSaigon CentreCrescent MallSaigon CentreSaigon Centre

Supply

1 new Grade C project (~4,400 m2)

2 Grade C buildings closed (~7,300 m2)

Total stock: ~1.6 million m2, stable QoQ, 1% YoY

Market performance

Avg. occupancy: 97%, stable QoQ, 2 ppts YoY

Avg. gross rent:

• Grade A: US$49/m2/mth, 2% QoQ, 7% YoY

• Grade B: US$28/m2/mth, stable QoQ and YoY

• Grade C: US$19/m2/mth, stable QoQ, 2% YoY

Office Index: 87, 1 ppt QoQ, 3 ppts YoY

Outlook

9M/2017: ~123,000 m2

Q2/2017 – 2019: ~390,000 m2

4

OFFICE

Saigon Centre

Supply

One new Grade C project (65 units)

Two existing Grade B projects adjusted supply

Total stock: >4,600 units, 2% QoQ, 6% YoY

Grade A (7), Grade B (25) and Grade C (52)

Market performance

Avg. occupancy: 87%, stable QoQ, 5 ppts YoY

Avg. gross rent:

• Grade A: US$32/m2/mth, stable QoQ, 4% YoY

• Grade B: US$26/m2/mth, 1% QoQ, 3% YoY

• Grade C: US$17/m2/mth, 1% QoQ, 7% YoY

Outlook

9M/2017: >540 units

Q2/2017-2019: ~ 1,800 units

5

SERVICED APARTMENT

Ibis Saigon Airport

Supply

Opening: one 3-star and one 4-star (303 rooms)

Closure of one 3-star (50 rooms)

Total stock: ~16,200 units, 2% QoQ, 8% YoY

5-star (20), 4-star (24), 3-star (87)

Market performance

Average occupancy: 68%, 1ppt QoQ, stable YoY

Average room rate by grade:

• 5-star: US$121/room/night, 3% QoQ and YoY

• 4-star: US$69/room/night, stable QoQ and YoY

• 3-star: US$47/room/night, stable QoQ, 7% YoY

Outlook

Q2/2017-2018: ~2,000 rooms

6

HOTEL

Central Palace Saigon

Supply

Twelve new projects and next phase of one active project

(~5,200 units)

Primary stock: ~42,500 units, 6% QoQ, 14% YoY

Secondary stock: ~145,000 units, 6% QoQ

Market performance

Transaction volume: ~8,800 units, 13% QoQ, 40%YoY

Absorption rate: 21% 1 ppt QoQ, 4 ppts YoY

Transaction volume by grade:

• Grade A: 50% QoQ, 10% YoY

• Grade B: 35% QoQ, 1% YoY

• Grade C: 10% QoQ, 78% YoY

Apartment Index: 92 unchanged QoQ, 1 points YoY

Outlook

Q2/2017-2019: 62,200 units

7

APARTMENT

Serenity

Mid-Town

Villas & townhouses

7 new projects (~590 dwellings)

Primary stock: ~2,600 units, 14% QoQ, 25% YoY

Absorption rate: 34%, 1 ppt QoQ, 12 ppts YoY

Transaction volume: ~880 units, 11% QoQ, 94% YoY

Land plot

Six new projects plus launch of 1 active project

(~710 plots)

Primary stock: ~2,100 plots, 13% QoQ, 53% YoY

Absorption rate: 44%, 1 ppt QoQ, 17 ppts YoY

Transaction volume: ~910 plots, 12% QoQ, 23% YoY

Outlook

Q2/2017-2019: ~ 14,100 dwellings/plots

8

VILLA | TOWNHOUSE

Merita

Valora Kikyo

QUARTERLY MARKET REVIEWHANOI Q4/2016

TOURISM AND HOSPITALITY

10

Competitiveness index:

• Ranked 6th in ASEAN

• Government spending prioritization: marketing

campaigns and National branding

• Less international openness: Visa exemption

policy, VN (23) vs. Thailand (58)

• Air transport & Tourist service infrastructure

International arrivals:

• Ranked 5th in ASEAN

• Strong potential: 26% growth0

1

2

3

4

5

6

7

Business

enviroment

Safety &

security

Health &

hygiene

Human

resources

ICT readiness

Prioritization of

tourism

International

openess

Price

competitiveness

Environmental

sustainability

Air transport

Ground & port

infrastructure

Tourist service

infrastructure

Natural

resources

Cultural

resources &

business travel

ASEAN Vietnam

Source: Weforum, 2016

Tourism competitiveness, 2015

0%

10%

20%

30%

0

5

10

15

20

25

30

35

Thailand Malaysia Singapore Indonesia Viet Nam Phillipines Cambodia

Number of arrivals (mil)-LHS Tourism growth (%)-RHS

International arrivals, 2016

Source: Statistics agencies of surveyed countries

VIET NAM COMPETITIVENESS

11

China:

• 1st source market: 2.7 mil arrivals

• Middle class high affordable demand

• Strong fluctuating growth (50% YoY)

Russia:

• Ruble depreciation driving destination choice

• Stable growth, nearly 30% pa

Domestic tourism:

• Booming demand: affluent class to double;

middle class increase by half by 2020

• Low-cost airlines growth

0%

20%

40%

60%

0

1

2

3

East Asia

(other than

China)

China Europe Asean Russia Others

Tourist (mil)-LHS Growth rate (%)-RHS

Source markets, 2016

Source: VNAT

0

10

20

30

40

50

60

70

2011 2012 2013 2014 2015 2016

Airline passengers Domestic trips

Airline capacity and domestic (million trips)

Source: GSO and VNAT

SOURCE MARKETS

12

HCMC & HN: highest arrivals

• Economic hubs: MICE and business travelers

• Gateways to Sapa, Ha Long Bay, Mekong

delta

Coastal cities: outperforming growth

• International airports

• Nha Trang: tops supply and performance

• Da Nang leads arrivals volume

• Phu Quoc: Early-development stage (40%

YoY)

• LOS: Nha Trang 3.5 days vs Da Nang 2.8 days

vs Phu Quoc 2.6 days

0%

10%

20%

30%

40%

50%

60%

0

1

2

3

4

5

6

HCMC Ha Noi Da Nang Nha Trang Phu Quoc

International arrival (million trips)-LHS Growth rate (%)-RHS

Source: Provincial tourism departments

International arrivals to major cities, 2016

50%

60%

70%

80%

90%

0

5,000

10,000

15,000

20,000

HCMC Ha Noi Da Nang Nha Trang Phu Quoc

Hotel supply (rooms)-LHS Occupancy (%)-RHS

Hotel market performance, 2016

Source: Savills Research & Consultancy

SUB-MARKETS

13

Airports under pressure:

• HCMC 130%, Nha Trang 320%, Da

Nang 113%

Government efforts:

• TSN airport: upgrading 25 to 38 mill

pax/year

• Da Nang airport: an additional 4-6 mill

pax/year

• Cam Ranh airport: 1.5 to 2.5 mill

pax/year.

US$5.6 bill required to 2020

• Government budget?

• HCMC, Da Nang and Nha Trang supply

increases 30% pa in three years

• Hospitality development evaluation?

0%

50%

100%

150%

200%

250%

300%

350%

0

5

10

15

20

25

30

35

HCMC Ha Noi Da Nang Nha Trang Phu Quoc

Airport capacity (million passengers)-LHS Operating capacity (%)-RHS

Airport capacity

Source: ACV and other sources

AIRPORT CAPACITY

14

Vietnam has come a long way in only 7 years

Then (2010) Now (2016)

5 MillionInternational tourist arrivals

10 MillionInternational tourist arrivals

28 MillionDomestic tourist arrivals

62 MillionDomestic tourist arrivals

35.5 Million passengersTotal capacity of 5 main airports

60 Million passengersTotal capacity of the same 5 main airports

40 International direct flight routesOperated by 3 domestic carriers

70 International direct flight routesOperated by the same 3 domestic carriers

5 International airportsHCMC Hanoi Danang

Cam Ranh Hai Phong

9 International airportsHCMC Hanoi Danang Hue Phu Quoc

Cam Ranh Hai Phong Can Tho Vinh

Restrictive visa policy- Visa exemptions: 15 countries

- Onerous and expensive visa application

Relaxed visa policy- Visa exemptions: 22 countries

- e-visa system: 40 countries eligible

- Visa fee reduction of 40% compared to 2010

15

Hospitality Development – Proceed with caution

0

5,000

10,000

15,000

20,000

25,000

2015 2016 2017 2018 2019

Su

pp

ly (

Ro

om

s)

Nha Trang & Cam Ranh Hotel & Resort Supply

(Midscale to Luxury Segment)

Existing Supply Future Supply

-20

-10

0

10

20

30

40

50

Jan

-14

Feb

-14

Mar-

14

Ap

r-14

May-1

4

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec-

14

Jan

-15

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec-

15

Gro

wth

Rate

y-o

-y (

%)

International Tourist Arrivals Growth Rate (Month on Month)

The Hospitality Market is Volatile

Demand & Supply Dynamics: Very strong supply growth but is demand keeping up?

Source: Vietnam Tourism Department

Arrivals CAGR ▲15%(2013 – 2016)

0

5,000

10,000

15,000

20,000

25,000

2015 2016 2017 2018 2019

Su

pp

ly (

Ro

om

s)

Da Nang Hotel & Resort Supply

(Midscale to Luxury Segment)

Existing Supply Future Supply

18%

14%

42%

36%

16%

57%

0

5,000

10,000

15,000

20,000

25,000

2015 2016 2017 2018 2019

Su

pp

ly (

Ro

om

s)

Phu Quoc Hotel & Resort Supply

(Midscale to Luxury Segment)

Existing Supply Future Supply

65%15%

7%

Arrivals CAGR ▲21%(2013 – 2016)

Arrivals CAGR ▲33%(2013 – 2016)

16

Hospitality Development – Proceed with caution

(*) Coastal Destinations include: Da Nang, Khanh Hoa, Phu Quoc, Ho Tram, Ha Long & Quang Nam.

56%

44%

Second Home vs Hotel and Resort Future Supply

Coastal Destinations (2017 - 2019)

Second Home Hotel & Resort

0

5,000

10,000

15,000

20,000

25,000

30,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Second Home Supply in Coastal Destinations

(Launched vs Completed Units)

Accumulated Launched Units Accumulated Completed Units

65%17%

3%

15%

Second Home Supply

Coastal Destinations by Type (Forecast 2019)

Condotel Second Home Condominium

Branded Villa Non-Branded Villa

17

Hospitality Development – Proceed with caution

-5

0

5

10

15

20

25

1 2 3 4 5 6 7 8 9 10

-10

-5

0

5

10

15

20

1 2 3 4 5 6 7 8 9 10

Lo

ss

The false perception many condotel developers have of project GOP

Typical Guaranteed Returns:

• Vietnam: 10% for 5 - 10 years

• Phuket: 7% for 3 - 5 years

• Bali: 7% for 2 - 3 years

Operational Year

Beak even with guarantee return

The likely reality of project Gross Operational Profit (GOP)

Beak even0

P

rofi

t

Beak even with guarantee return

Beak even

Operational Year

Lo

ss0

P

rofi

t

18

Everyone wants a piece of Vietnam Hospitality

Notable Hotel M&A Transactions in 2016

Deal S

ize

2010 2016

30 Branded Properties 57 Branded Properties

(27 additional properties with

many new brands)

Hotel Operators Investors

World Leaders Kong

US$ 1

00M

US$ 7

4.9

M

US$ 4

9M

US$ 4

8.7

M

US$ 4

6.7

M