vietnam research & forecast report | q1 2015

Q1 2015 | HCMC OVERVIEW

KNOWLEDGE REPORTHO CHI MINH CITY

www.colliers.com/vietnam

The highest y-o-y real GDP growth rate over the last six years

Despite improving domestic demand, external

conditions were relatively weak. Exports in 1Q 2015

increased at a slower rate than the same period

last year. This will possibly put pressure on the

foreign exchange. The slower rise of Purchasing

Manager Index (PMI) published by HSBC in March

has raised concerns about the sustainability of

the manufacturing momentum. Recent decline in

international arrivals is another issue, which would

negatively impact the retail and services turnover.

Some concerns

P.1 | Colliers International

Vietnam at a Glance

KNOWLEDGE REPORT | Q1 2015 | HCMC | ECONOMIC OVERVIEW

KEY INDICATORS Vietnam HCMCReal GDP Growth (y-o-y change) 6.0% 8.0%Total Registered FDI (y-o-y change) -40.6% -33.0%Exports (y-o-y change) 6.9% 7.3%Imports (y-o-y change) 16.3% -0.2%CPI (y-o-y change) -0.7% 0.5%Total retail sales (y-o-y change) 10.0% 11.5%International Arrivals (y-o-y change) -13.7% N/A

Y-O-Y REAL GDP GROWTH RATE

Source: Vietnam, HCMC Statistics Offi ce , Colliers International

The Vietnamese economy started 2015 on a strong

note. The real GDP growth rate expanded by 6.0%

y-o-y in 1Q 2015, the highest ever seen during the last

six years. This positive result was largely contributed

by the expanding manufacturing and construction

(8.4% y-o-y, double the pace in 1Q 2014). The forecast

of Vietnam’s GDP growth rate was revised upwards,

reaching 6.5% in 2015.

In line with the country’s improving economy, HCMC

recorded a y-o-y growth of 8.0%, 0.3 percentage

points higher than the same period last year.

Inflation rate (CPI) has been reined back. March’s

CPI increased by 0.2% m-o-m, sending the CPI in the

review quarter of 0.7% y-o-y, the lowest pace during

the last ten years. The slow increase CPI will allow

the SBV room to further cut the interest rates. This is

expected to support the real estate market.

Impressive economic growth

Y-O-Y CONSUMER PRICE INDEX (CPI)

Source: Vietnam, HCMC Statistics Offi ce, Colliers International

Two shopping centres came online

HCMC welcomed two new shopping centres including

Vincom Thu Duc in Thu Duc District and Saigon Square

3 in District 3. The projects have added to the retail

market nearly 32,000 sqm GFA. Although they have just

been opened, the occupancy rate reached 70%.

MARKET PERFORMANCE BY AREA, Q1 2015

Source: Colliers International

Best performance was the retail podium

The retail podium in Q1 2015 proved positive

performance in terms of both occupancy rate and

rental rate as this retail type is located in mix-used

developments. Consequently, it gets benefit from to

high consumption from residents and employees of

in those buildings. The occupancy rate of the retail

podium increased from 86.4% in Q4 2014 to 90.7% in

Q1 2015 while the asking rent slightly rose to US$54.5/

sqm/month.

The shopping centre reviewed a different story. Both

occupancy and rents slightly declined compared to

the same period last year. The new open of Vincom

Thu Duc partly contributed to the reducing rents as

the project is located in the outlying district. This

translated into the average rent of US$39.4/sqm/month

and the occupancy of 91.3%.

Department store maintained its asking rent of US$52/

sqm/month but showed a rising vacant space in non-

CBD’s retail development in the review quarter.

The market has recently observed some retail operators

utilized spaces along the entrance, elevators to lease to

tenants with low rents. This helped increase revenue

but contributed to the falling average rents.

Good performance recorded at retail podium

While international retailers bought some local retail

developments in districts like 5, 10, 11, Tan Binh and

Phu Nhuan, the others have restructured floor layout

to draw attentions of F&B, entertainment as well as

English centres. Among the others are Satra Pham

Hung and Saigon Superbowl.

Restructure fl oor layouts / tenant mix


KNOWLEDGE REPORT | Q1 2015 | HCMC | ECONOMIC OVERVIEW

Retail Market Snapshot

Key Indicators Shopping centre Retail podium Department store Total

New supply (Net Leaseble Area - NLA) 25,400 0 0 25,400Average asking rent (US$/m2/month) 39.0 55.0 52.0 44.3 Q-o-q change (%) -4.0% 1.9% 0.0% Y-o-y change (%) -2.5% -5.0% -5.0%Occupancy rate (%) 91.0% 91.0% 90.0% 91.0% Q-o-q change (%) -5.0% 5.0% -1.0% Y-o-y change (%) 12.0% 12.0% 13.0%

KNOWLEDGE REPORT | Q1 2015 | HCMC | RETAIL

MARKET PERFORMANCE BY QUARTER, Q1 2015



Colliers View

Although the retail podium performed positively in Q1 2015, it is anticipated that landlords / developers of retail developments

in District 2 need to adjust their the rental rates to attract new tenants and to keep the old tenants because of huge supply from

mixed use projects which will be launched in the coming years.

SC Vivo City by Mapletree and its partner will be opened in District 7 in Q2 2015. Although the development has not been

officially launched, the occupancy rate has reached nearly 70%.

Although the current occupancy rate are relatively high, further adjustments to the rents are expected to compete with the regional

cities like Bangkok, Manila, Phnom Penh. This will allow the HCMC retail market a promising destination.

No Name of Project /Building* Address Location Comple-

tion YearNLA

(sq m)Average Rental

(US$/sq m/month) Occupancy Rate

1 Hotel Continental Saigon 132-134 Dong Khoi District 1 2000 200 90 100%2 Caravelle Hotel 19 Lam Son Square District 1 2000 150 90 100%3 New World Hotel 79 Le Lai District 1 2000 1,000 60 100%4 Sheraton Saigon 88 Dong Khoi District 1 2002 750 125 100%5 Opera View Lam Son Square District 1 2006 1,260 85 94%6 Kumho Asiana Plaza 35 Le Duan District 1 2009 6,830 35 100%7 Rex Arcade 141 Nguyen Hue District 1 2010 2,000 120 100%8 ICON 68 45 Ngo Duc Ke District 1 2011 8,000 45 90%9 President Place 93 Nguyen Du District 1 2012 800 70 71%10 Times Square 22-36 Nguyen Hue District 1 2013 9,000 90 100%

Retail Podium (citywide) 29,990 66.6 97%1 Diamond Plaza 34 Le Duan District 1 1999 9,000 83 100%2 Zen Plaza 54-56 Nguyen Trai District 1 2001 6,817 50 90%3 Parkson Saigon Tourist 35 Le Thanh Ton District 1 2002 17,000 90 100%

Department Store (citywide) 30,200 82.4 99%1 Saigon Center 65 Le Loi District 1 1996 3,500 75 100%2 City Plaza 230 Nguyen Trai District 1 2000 5,250 25 100%3 Saigon Square 1 77-89 Nam Ky Khoi Nghia District 1 2006 1,300 167 100%4 Nowzone Nguyen Van Cu District 1 2008 9,000 55 100%5 Saigon Square 2 7-9 Ton Duc Thang District 1 2009 1,400 90 30%6 Vincom Center B 72 Le Thanh Ton District 1 2010 45,000 75 95%7 Taka Plaza 102 Nam Ky Khoi Nghia District 1 2011 1,000 90 100%8 Union Square Dong Khoi District 1 2012 38,000 65 60%9 Lucky Plaza Dong Khoi District 1 2013 1,000 160 77%

Shopping Centre (citywide) 105,450 69.4 82%


* Projects in the CBD as at the end of March 2015


Demand still looks positive

Th e demand for offi ce space is expected to increase

steadily considering prospective economic growth in the

coming quarters. Whilst there will have no major changes

in rental rate at the existing buildings in city centre, leasing

conditions will be fl exible due to an asking rent of newly

buildings as well as requirements on between current

tenants and new clients.

GRADE A OFFICE PERFORMANCE, Q1 2015

Grade B showed a some improvements while Grade A was quite steady

In general, the offi ce market did not show signifi cant

changes in both CBD and non-CBD districts in the review

quarter due to the lack of leasing activities caused by the

end of the fi scal year.

However, slight increase in asking rents were recorded

at Grade B offi ce building thanks to the rising newly

established companies. Most of these companies are local

small-medium enterprises who cannot afford rents of

Grade A buildings but require good locations in the city

centre. Rents of some Grade B buildings which have good

locations in the city centre and have the rent of US$20-25/

sqm/month were full occupied.

Meanwhile Grade A offi ce buildings remained fragile.

Some Grade A buildings are facing fi erce competition

from lately quality buildings. Although the project has not

been offi cially opened yet, Le Meridien was fully occupied.

Similarly, thanks to a reasonable rent, Vietcombank Tower

which will come online in Q2 2015, has attracted many new

international companies, over 60% of the offi ce space was

leased.


Improvements were seen in Grade B offi ce buildings


Offi ce Market Snapshot

Key Indicators Grade A Grade B Total

New supply (Net Leasble Area - NLA) 0.0 0.0 0.0Average asking rent (US$/m2/month) 40.2 19.6 23.1 Q-o-q change (%) -1.5% 3.0% Y-o-y change (%) -0.7% 0.5%Occupancy rate (%) 92.1% 92.7% 92.6% Q-o-q change (%) -0.3% -1.3% Y-o-y change (%) 1.8% 2.1%

KNOWLEDGE REPORT | Q1 2015 | HCMC | OFFICE

OFFICE PERFORMANCE BY DISTRICT, Q1 2015



Colliers ViewOfficetel from residential projects will become more popular in 2015. And this will have certain impacts on the office market in

decentralized districts as it is suitable for small-, medium-companies as well as representative office with small budget.

Rents in mature office buildings are likely to be stable while newly completed office buildings will offer competative rents to

attract occupiers.

No Name AddressCom-pletion Year

NLA (sq m)

Service Charges (*)

Occupancy rate

NFA asking rent (*)

1 Saigon Centre 65 Le Loi 1996 11,650 6.5 95% 37.02 Saigon Tower 29 Le Duan 1997 13,950 6.0 90% 37.03 Sunwah Tower 115 Nguyen Hue 1997 20,800 6.0 96% 47.04 The Metropolitan 235 Dong Khoi 1997 15,200 6.0 91% 42.05 Diamond Plaza 34 Le Duan 1999 15,936 8.0 100% 37.06 Kumho Asiana Plaza 39 Le Duan 2009 26,000 7.5 88% 46.07 Bitexco Financial Tower 45 Ngo Duc Ke 2010 37,710 8.0 91% 35.08 President Place 93 Nguyen Du 2012 8,330 6.0 96% 31.09 Times Square 22-36 Nguyen Hue 2012 9,000 7.0 86% 45.0

Grade A 158,576 7.0 92% 40.0

1 OSIC 8 Nguyen Hue 1993 6,500 6.0 100% 18.02 Yoco Building 41 Nguyen Thi Minh Khai 1995 5,000 4.0 100% 22.03 Somerset Chancellor Court 21-23 Nguyen Thi Minh Khai 1996 3,200 5.0 100% 21.04 Central Plaza 17 Le Duan 1997 6,094 5.0 100% 24.05 Saigon Riverside Office 2A-4A Ton Duc Thang 1997 10,000 5.0 97% 20.06 Saigon Trade Center 37 Ton Duc Thang 1997 31,416 6.0 78% 23.07 Harbour View Tower 35 Nguyen Hue 1997 8,000 5.0 91% 17.58 MeLinh Point Tower 02 Ngo Duc Ke 1999 17,600 6.0 99% 22.09 Zen Plaza 54-56 Nguyen Trai 2001 11,037 5.0 94% 21.010 Bitexco Office Building 19-25 Nguyen Hue 2003 6,000 5.0 95% 25.011 The Landmark 5B Ton Duc Thang 2005 8,000 5.0 92% 19.012 Opera View 161-167 Dong Khoi 2006 3,100 7.0 85% 27.013 Petro Tower 1-5 Le Duan 2007 13,304 5.0 98% 30.014 City Light 45 Vo Thi Sau 2007 10,000 5.0 100% 15.015 The Landcaster 22Bis Le Thanh Ton 2007 7,000 5.0 90% 25.016 Gemadept Tower 5 Le Thanh Ton 2008 14,000 7.0 97% 24.017 Fideco Tower 81-85 Ham Nghi 2008 15,000 6.0 100% 22.018 Havana Tower 132 Ham Nghi 2008 7,326 6.0 100% 19.019 Sailing Tower 51 Nguyen Thi Minh Khai 2008 16,910 6.0 99% 26.020 Royal Center 235 Nguyen Van Cu 2008 14,320 5.0 100% 23.021 TMS 172 Hai Ba Trung 2009 4,000 4.0 100% 23.022 Bao Viet Tower 233 Dong Khoi 2010 10,650 6.0 100% 21.023 Green Power Tower 35 Ton Duc Thang 2010 15,600 6.0 96% 23.024 Vincom Center 68-70-72 Le Thanh Ton 2010 56,600 5.0 95% 23.025 Saigon Royal 91 Pasteur 2010 5,340 4.0 100% 20.026 A&B Tower 76 Le Lai 2010 17,120 6.0 91% 29.027 Maritime Bank Tower 192 Nguyen Cong Tru 2010 19.596 5.0 97% 22.028 Empress Tower 138 Hai Ba Trung 2012 19,538 6.0 100% 30.029 Lim Tower 9-11 Ton Duc Thang 2013 29,265 6.0 100% 28.030 Sunny MB Tower 259 Tran Hung Dao 2013 13,200 5.5 97% 25.0

Grade B 399,596 6.0 95% 22.9


* US$/ sq m/ month (on net area)The information is updated as at the end of March 2015



Steady improvements in pricesSupported by the fast sales rate and recovering market,

both primary and secondary prices increased slightly

on both q-o-q and y-o-y basis. The high-end segment

recorded the strongest growth as most of new high-end

projects have strategic locations where the accessibility

is easy and there are high potential for leasing and

reselling.

PRIMARY ASKING PRICE

Source: Colliers InternationalThe high-end segment continued to dominate new launches

New launches remained strong run on a y-o-y basis

Q-O-Q LAUNCHED UNITS

New launches in Q1 2015 declined by 36.3% q-o-q to

4,545 units in light of the long traditional year-end lull.

However, the figure showed a y-o-y growth of 98.6%. Many

of these projects were cleared years ago without launch

until January 2015. These signals obviously indicated

developers’ strong confidence in the recovering market.

The high-end segment remained the largest proportion

(61.1%) and was followed by the affordable segment.

Continued increase in sales volume

On the back of the improving market confi dence and

acceptable prices, Q1 2015 recorded approximately 4,360

transactions, increasing by 82.2% y-o-y. Most of transactions

recorded at newly launched projects. Compared to Q4 2014,

sales volume witnessed subdued activities as the lack of new

launches driven by holiday season which almost kicked off

the second half of February.

Despite the overall sales volume decrease on a q-o-q basis,

the high-end segment continued to increase in sold units

thanks to the strong return of investors.

Codominium Market Snapshot


Key Indicators Luxury High-end Mid-end Low-end Total

New launch (unit) 0 2,775 344 1,426 4,545Average primary price (US$/m2) 4,447 1,627 1,045 728 Q-o-q change (%) 1.8% 0.3% 0.4% -0.4% Y-o-y change (%) 1.7% 5.2% 10.9% 0.9%Average secondary price (US$/m2) 4,374 1,625 1,065 695 Q-o-q change (%) 2.7% 0.6% 0.2% 0.1% Y-o-y change (%) 2.7% 0.6% 0.2% 0.1%

KNOWLEDGE REPORT | Q1 2015 | HCMC | CONDOMINIUM

LAUNCHED UNIT BY SEGMENT, Q1 2015



No Name of Project Developer Location Number of unit

Asking Price (US$/sqm) Grade

1 Masteri Thao Dien - T4 Vingroup, Techcombank, Thao Dien Investment District 2 132 1,500 High-end

2 The Ascent Hoa Binh House District 2 280 1,556 High-end3 The Estella Heights Tien Phuoc Co & Keppel Land District 2 878 1,853 High-end4 The Sun Avenue Novaland District 2 270 1,350 High-end5 Scenic Valley - H, C Phu My Hung District 7 1,449 1,500 High-end6 Scenic Valley - B, F Phu My Hung Binh Thanh 105 1,533 High-end7 Botanica Residence Novaland District 2 207 1,450 High-end8 Sky Center WASECO --> Hung Thinh District 7 365 1,585 High-end9 The Krista Khang Dien Co. & CapitaLand District 2 344 1,300 Mid-end

10 Hung Ngan Garden - B1 Hung Ngan JSC District 12 374 690 Low-end

11 The Eastern City Quoc Cuong Gia Lai Binh Chanh 572 764 Low-end

12 An Gia Garden An Gia JSC Binh Tan 480 657 Low-end

New launches in Q1 2015 4,545

1 Riviera Point Phase 1A Keppel Land + Tan Truong District 7 549 1,600 High-end

2 Him Lam Cho Lon - P1 Him Lam JSC District 6 396 1,032 Mid-end3 The Hyco 4 Thuy Loi 4A Real Estate Binh Thanh 330 1,100 Mid-end4 91 Pham Văn Hai Tamexim and Hung Thinh Tan Binh 168 1,115 Mid-end5 4S Riverside Linh Dong Block B Thanh Truong Loc Co. Thu Duc 336 620 Low-end

New completions in Q1 2015 1,779

* Excluding all kinds of tax, promotions and management feeThe information is updated as at the end of 2015

Colliers ViewAlthough the condominium market in Q1 2015 was relatively less buoyant than the preceding quarter in terms of newly

launched projects and sales volume, these two indicators remained positive growth compared to the same period last year.

This subdued activities could be mainly due to seasonal factor i.e. the year-end festive (Tet) period. It is expected that busy

activities will be back in Q2 2015 with the rise of launched units and transactions.

The high-end segment remained a large a proportion of both new launches and sold units thanks to the return of buyers

especially investors. The improving infrastructure, legal frame and product quality and prices will continue to support the

recovering residential market.

While developers of high-end projects will focus on project locations, design and in-bound facilities, developers in the

affordable segment will try to offer price below VND15 million per sqm and to obtain the credit package of VND30,000

billion (US$1.42 billion) to support their potential home buyers.




HCMC | MARCH 2015 | KNOWLEDGE REPORT

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vietnam research & forecast report | q1 2015

Real Estate

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international arrivals

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