CBRE MARKET UPDATEDa Nang Q1/2012Presented by:THAO LE Da Nang ResearchOpening Remarks from:TIEN CAO Da Nang ResearchADAM BURY Senior ManagerCB Richard Ellis (Vietnam) Co., Ltd. Friday, April 20th, 2012.OPENING WORDSDa Nang 2012 – Continued S pptx

CBRE MARKET UPDATE

Da Nang Q1/2012
Presented by:

THAO LE
Da Nang Research
Opening Remarks from:

ADAM BURY
Senior Manager
CB Richard Ellis (Vietnam) Co., Ltd.
Friday, April 20th, 2012

TIEN CAO
Da Nang Research


OPENING WORDS
Da Nang 2012 – Continued
Signs of Growth

Hyatt Regency Da Nang

Da Nang International Airport

The Summit

Harmony Tower

All Pictures – Source: CBRE Vietnam. Date 19th April, 2012

2 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


VIETNAM ECONOMIC OVERVIEW
Q1/2012 PERFORMANCE
3.5
3.0

Inflation surged

20

Monetary controls took effect

2.5

15

2.0

10

1.5

CPI (% m-o-m)

CPI (% y-o-y) / Interest rates (%)

25

CPI, VN (% y-o-y))
CPI, VN (% m-o-m)
Refinancing rate (%)
Rediscounting rate (%)

1.0
5
0
Jan-10

Monetary controls
on interest rates
Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

0.5

0.0
Sep-11

Nov-11

Jan-12

Mar-12

Q1/2012

Q4/2011

GDP (% y-o-y)

4%

6.1%

CPI (% y-o-y, e-o-p)

14.15%

18.13%

Exchange rate (e-o-p)

20,828

20,828

Export (US$ Bn)

24.52 (23.6% y-o-y)

26.23 (31.7% y-o-y)

Import (US$ Bn)

24.77 (6.9% y-o-y)

28.9 (23.4% y-o-y)

FDI Implemented (US$ Bn)

2.5 (-0.8% y-o-y)

2.8 (-5.1% y-o-y)

International Arrivals (million arrivals)

1.9 (24.5% y-o-y)

1.7 (29.3% y-o-y)

Retail and Services Turnover (trillion dong)

569.7 (21.8% y-o-y)

611.5 (47.2% y-o-y)

Source: General Statistics Office

3 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


VIETNAM ECONOMIC OVERVIEW
INFLATION

Time
9-Aug-10
24-Feb-11
29-Mar-11
26-Aug-11
29-Mar-12

A95
A92
Chg
Pct. Chg
16,900 16,400
410 2.56%
19,800 19,300 2,900 17.68%

21,800 21,300 2,000 10.36%
21,300 20,800
(500) -2.35%
23,400 22,900 2,100 10.10%

 Inflation continuing to trend down, possibility of
upward revisions remain;

 Petroleum prices increased 10.1% compared to
the previous adjustment, leaving more pressure
on CPI in the second quarter;
• March CPI recorded the lowest m-o-m
increase since January 2011 at 0.16% m-o-m,
(or 14.15% y-o-y).
• Bounce back in the stock market, in part a
reflection of decreasing inflation.

Stock Index and Inflation
550

3,000

700

600

VNIndex

1,500

400

1,000

350

500

300

0
4-Jan 1-Feb 1-Mar 29-Mar 26-Apr 24-May 21-Jun 19-Jul 16-Aug 13-Sep 11-Oct 8-Nov 6-Dec 3-Jan 31-Jan 28-Feb 27-Mar
Trading value

VNIndex 2011

VNIndex

2,000

450

Trading Value (Billions VND)

2,500

500

25

20

500

15

400

10

300

5

200
Dec-08 Mar-09 Jun-09 Sep-09
VNIndex

CPI (%)

Petroleum Price Adjustments

0

Dec-09 Mar-10 Jun-10
CPI

Sep-10

Dec-10 Mar-11 Jun-11

Sep-11

Dec-11 Mar-12

VNIndex Q1/2012

4 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


VIETNAM ECONOMIC OVERVIEW
MONETARY CONTROLS
Base rate
Re-financing rate

Re-discounting rate

20

 Positive signs with the downward adjustments

15

of key interest rates.
• By 1% during the first quarter (March) –
refinancing adjusting to 14%, Rediscount
Rate to 12% and the deposit cap to 13%.

10
5
0
2008

2009

2010

2011

2012

• A further 1% reduction to each measure
was announced in the second week of April.

 Lower interest rate mortgage loans still scarce
• Still only limited signs of commercial loans
being reduced to reflect the revised interest
rates. Slight decreases of approx. 0.5% in
the beginning of 2012.
• 20% - 25% for non-productive sector and
16.5% - 20% for productive sector (SBV).

 More stable USD/VND exchange rate, strict
controls on USD/gold trading remain.
5 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012

VIETNAM ECONOMIC OVERVIEW
BUSINESS ENVIRONMENT
World Bank
Ranking

2011

2012

 The 4% y-o-y GDP growth rate is the lowest
recorded since Q2/2009

 Imports saw their lowest growth since Q4/2009

Ease of doing business
Vietnam

78

98

(6.9% y-o-y) resulting in low trade deficit in
Q1/2012

Singapore

1

1

 Real estate ranked first in FDI attraction,

Malaysia

21

18

Thailand

19

17

Indonesia

121

129

 Bank restructuring continues to be a key topic
• VietinBank to issue first dollar-bond in July;
received a B+/B credit rating from S&P.

Protecting investors
Vietnam

173

166

Singapore

2

2

Malaysia

4

4

Thailand

12

13

Indonesia

44

uncertain if that will be disbursed in the longterm
of conversation;

46

6 CBRE RESEARCH & CONSULTING

• Changes in top management at a couple
of banks
• Bank shareholders’ conflict

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


HOTEL
MARKET SNAPSHOT

5 STAR

4 STAR

3 STAR

TOTAL

7

3

31

41

Total supply (room)

1,452

563

1,874

3,889

New supply (room)

0

0

0

0

Average occupancy rate (%)

43.5%

45.9%

Q-o-q change (%)

9.4pp

12.7pp

Y-o-y change (%)

5.3pp

-13.9pp

Average daily rate (US$/room/night)

104.00

55.73

Q-o-q change (%)

-5.3%

1.5%

Y-o-y change (%)

-6.9%

-26.1%

Number of hotels

Source: CBRE Vietnam

7 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012

HOTEL
HIGHLIGHTS

5 star

Average Daily Rate(US$)

4 star

•

Achieved Room Rate (US$/room/night)

150
120
90

•

60
30

•

0
Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12
5-star

4-star

•

5 star

Occupancy (%)

•

4 star

80%

Occupancy Rate

70%
60%

•

50%
40%

30%
Q1/08

Q3/08

Q1/09

Q3/09
5-star

8 CBRE RESEARCH & CONSULTING

Q1/10

Q3/10
4-star

Q1/11

Q3/11

Q1/12

•

In Q1/2012, Da Nang welcomed almost 590,000
visitors - a 31.9% q-o-q increase and 35.0% y-o-y
increase.
The opening of Da Nang International Airport led to
the number of visitors arriving increasing by 94.3% yo-y.
In addition, arrivals by sea increased by 260.8% y-oy, thanks to the arrival of famous cruise ships such as
the Superstar Aquarius (Star Cruises).
First charter flights between Russia and Da Nang
will be opened in May 2012.
The ‘Lao Farmtrip’, which came to Da Nang in March,
appears to be a first step in a new tourism

relationship between the two countries. It is though
noted that at the current time there is no charter flight
between the two countries.
On a y-o-y basis it is noted that ADR’s at both 4 and
5-star hotels decreased – though this was not
unexpected as the new hotels are aiming to establish
themselves for the longer term.
Occupancy in the 5-star hotel sector increased on a
y-o-y basis, reflecting new tourism arrivals, whilst 4star occupancy decreased y-o-y as new supply took
effect.
MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


HOTEL
OUTLOOK

 Upcoming festivals and the high-season will
put new supply, which came on line in 2011,
through its first full test.
 There appears to be a growing trend of
MICE travelers combining business with
pleasure and thus the city may become a
more rounded destination.
 Travelers from China, Korea, Japan,
America, Australia, Germany and Russia
are expected to grow throughout the year.
 A second hotel operated by Intercontinental
Hotel Group is expected to become
operational in Q2/2012.
 It is expected that over 1,000 rooms of

additional supply will be launched in 2012;
launched by Melia, Pullman,
InterContinental, Novotel and Dragon Vinh
Trung.

9 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


CONDOMINIUM FOR SALE
MARKET SNAPSHOT

LUXURY

HIGH-END

MID-END

TOTAL

3

5

5

13

New launch (units)

307
2

1,046
0

1,132
28

2,485
30

Average asking price (US$ psm)

2,972

1,786

937

Q-o-q change (%)

-2.0%

0.0%

2.0%

Y-o-y change (%)

-0.5%

-0.1%

8.7%

Total supply (projects)
Total supply (units)

Source: CBRE Vietnam

•“Existing supply”: is the total number of units that have been handed over for occupation.
•“New launch”: the number of units that were released to the market by developers (official start of sales for a project) in the review quarter.
All units in each development are included in the calculations, however, the developer may divide sales into numerous phases and thus not
all units may come online at launch date.

10 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


CONDOMINIUM FOR SALE
Condominium Supply (units)

MARKET SNAPSHOT

Opening supply
Change in quarter

3,000



DN welcomed 28 units of additional new supply from one midend condo project, La Paz Tower.



In total there were over 30 units sold in the condo sector, more
than 70% of these were in the mid-end sector;



2,500

Developers in Da Nang are keeping in line with the trend seen
in HCMC, of keeping asking prices relatively stable but offering
discounts/incentives during negotiation.

2,000
1,500
1,000
500
0
2009

2010

Q1/11

Q2/11

Q3/11

Q4/11

Q1/12



Luxury projects saw prices decrease to US$ 2,972 psm, a
2.0% q-o-q decrease, while the price of mid-end segment went
up to US$ 937 psm, a 2% q-o-q increase due to new supply
joining the sector.

Luxury

Asking Price (US$ psm)

High-end
Mid-end

3,500



3,000
2,500

The high-end projects saw prices remain stable.

2,000

1,500
1,000
500
0
Q1/09

Q3/09

Q1/10

Q3/10

11 CBRE RESEARCH & CONSULTING

Q1/11

Q3/11

Q1/12

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


CONDOMINIUM FOR SALE
OUTLOOK

Azura, VinaCapital



All Pictures – Source: CBRE Vietnam. Date 19th April, 2012

In Q1, majority of condo units transacted are in the price range of VND 0,75 – 3,0 billion.




La Paz Tower, DHI

The majority of sales in Q1/2012 were at projects which were nearing or completed.

In 2012, DN market is expected to welcome an addition of 217 units which have prices in the
range of US$ 700 – 1,500 psm.



Construction progress has been pushed forward sharply in some condo projects.

 It appears that there has been a slight increase in enquiries since interest rates were dropped.
 With the macro economy showing some positive signs for the real estate market, and some
developers showing an increase in enquiries, it is hoped that the number of sales will increase in
the coming months.

12 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012

SECOND-HOME VILLA FOR SALE
MARKET SNAPSHOT
TOTAL
Total supply (projects)

12

Total supply (units)

572

New launch (units)

0

Percentage of total units sold (%)

52.5%

Q-o-q change (pts)

-0.5pp

Y-o-y change (pts)

1.1pp

Source: CBRE Vietnam
All prices are quoted exclusive of VAT and service charges.

•“Total supply”: is the total number of units available for sale – both primary and secondary market.
•“New launch”: the number of units that were released to the market by developers (official start of sales for a project) in the review quarter.
All units in each development are included in the calculations, however, the developer may divide sales into numerous phases and thus not
all units may come online at launch date.

13 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


VILLA FOR SALE
HIGHLIGHTS

2nd Home Villa Supply (units)
700

Number of units

600

 In Q1, DN market witnessed no new supply.

500

 Although there were 10 units sold in Q1, the average sale rate

400

dropped to 52.5%, a 0.9pp decrease due to the rescission of
some deals.

300
200

 Only 2 of the villa 12 projects reduced asking price in Q1. The

100
0
2009 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11
Change in supply

Openning supply

OUTLOOK
OUTLOOK

Sales rate (%)

 In 2012, DN market is expected to welcome additional 133

85.0

55.0

units of new supply from 3 new projects. The majority of them
will priced from US$ 500,000 to US$800,000 and sized from
400 – 700 sqm per unit.

40.0

 Despite tight monetary policy over previous quarters it is

70.0

Sold rate (%)

decrease was from 17 – 20%. Other projects chose to leave
headline pricing stable.

25.0
10.0
Q1/09

Q3/09

Q1/10

Q3/10

Q1/11

Q3/11

Q1/12

apparent that some activity has remained in the second home
market – showing the wealth and disposable income that still
exists in some portions in society;

 It would be hoped that as monetary policy eases greater levels

of liquidity may be created within the market;

14 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


LAND PLOT
MARKET SNAPSHOT

Northwest

East

South

Total

Number of projects

14

7

7

28

Total supply (plots)

6,980

1,445

3,813

12,238

New supply (plot)

0

0

0

0

VND3.1 -18.5mil

VND8.5 – 40mil

VND5.0 -43mil

- 0 – 5%

- 1 – 5%

-0–7%

Average price (VND per sm)
Q-o-Q Change (%)
Source: CBRE Vietnam

15 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


LAND PLOT
HIGHLIGHTS
Opening supply
Change in quarter

Land Plot Supply



18,000

In Q1, the unchanged supply showed
that developers hesitated in launching
new land plots and reflected the reduced
sentiment for this market.

16,000
Plots

14,000
12,000

10,000
8,000

 Price were flat ,or down, owing to the

6,000
4,000
2,000
0
2009 Q1/10Q2/10Q3/10Q4/10Q1/11Q2/11Q3/11Q4/11Q1/12 Est
2013
Maximum price

48,000,000
42,000,000
36,000,000
30,000,000
24,000,000
18,000,000
12,000,000
6,000,000
0

Average price



The coastal, southern and Thuy Tu
areas saw greatest price declines –
these were also the areas that saw the

largest price increases.

16 CBRE RESEARCH & CONSULTING

Cam Le

Ngu Hanh Son

My An

Son Tra

Man Quang …

Thanh Khe

Lien Chieu



Thuy Tu

VND

Price range by submarkets (VND mil psm)

selling of land plots by speculators
having difficulties who want to mobilise
cash.

The secondary market is more active
whilst primary market appears to be in
hibernation.



Land plots priced less than 1,5 billion
VND are more attractive buyers in
current market.

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


LAND PLOT
OUTLOOK



The recent market brings good opportunities for end-user
buyers and long-term investors with strong financial abilities.



DN market is expected to see positive signs from the
upcoming festivals (International Firework
Competition/International Paramotor Competition), held in
April and May.





17 CBRE RESEARCH & CONSULTING

DN Land plot market is expected to have a slight recovery in
the second half of 2012 as transactions increase with
interest reductions.
Some developers are considering breaking larger land plots
into smaller, 65 – 90sm plots, in order to counter the slow
down in the land plot market. It is hoped this will draw endusers to purchase.

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


OFFICE
MARKET SNAPSHOT
GRADE A

GRADE B

GRADE C

TOTAL

1

6

20

27

NLA (sm)

6,314

35,823

41,756

83,893

Vacancy rate (%)

8.8%

26.1%

34.8%

29.1%

Q-o-q change (pts)

-4.8 pp

2.9pp

-0.2pp

0.8 pp

Y-o-y change (pts)

-18.2 pp

-17.7pp

-4.7 pp

-11.5 pp

Average asking rent (US$ psm per month)

$19.00

$13.75

$10.84

$12.70

Q-o-q change (%)

0.0%

-0.4%

-6.4 %

0.4%

Y-o-y change (%)

0.0 %

1.0 %

8.5%

1.2%

Number of buildings

Source: CBRE Vietnam
All rents are quoted on NLA. Rents are quoted including service charges and excluding VAT.

18 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


OFFICE
HEADLINE STORIES

Average Rental Price (US$/m2)

Asking Rents (US$ psm per month)



Grade A
Grade B
Grade C

20



15

The average rent remained stable in Grade A properties and
insignificant changes were seen in both Grade B and
Grade C properties;

The office market witnessed no new supply in the first quarter of 2012.



10

The total vacancy of this quarter was up to 29.1% from 28.3% in
Q4/2011, an increase of 0.8 pts q-o-q.

5

•

Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/11

Grade A and C saw good take-up with decreasing vacancy;

•

Vacancy rate(%)

The majority of Grade B projects saw good performance during Q1/2012,
however one Grade B building saw a dramatic increase in vacancy as two
companies withdrew leaving large empty space that affected headline numbers;

Grade A
Grade B
Grade C

OUTLOOK

80

Vacancy (%)

70
60



50
40
30

Two grade B buildings, with a total 19,200 sm, likely to come online

by the end of 2012 . Will put pressure on vacancy rate.

 In the next two quarters it is likely that the market will remain flat,
 By the end of 2015 the total supply may reach 236.747 sm NLA,

20
10
0
Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12

19 CBRE RESEARCH & CONSULTING

though this is dependent on all projects being completed
– this is unlikely.

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012


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THANK YOU
© 2012 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CB Richard Ellis (Vietnam) Co., Ltd. We obtained some of the
information above from sources we believe to be reliable. However, we have not verified the accuracy of the information which we obtained from other sources and make no
guarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us for
example only, and they may not represent current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be
reproduced without prior written permission of CB Richard Ellis.

20 CBRE RESEARCH & CONSULTING

MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012