market insights from cbre’s hanoi quarterly report q2/2012€¦ · deposit cap rate adjusted 3...

Market Insights from CBRE’s

Hanoi Quarterly Report Q2/2012

Presented by:

Richard Leech – Executive Director

CB Richard Ellis (Vietnam) Co., Ltd.

Thursday, June 28, 2012

2 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HANOI QUARTERLY REPORT | JULY 2012

ECONOMIC OVERVIEW

INFRASTRUCTURE

CONDOMINIUM FOR SALE

LANDED PROPERTY (in NUAs)

OFFICE

RETAIL

SERVICED APARTMENT

3-5 STAR HOTEL

AGENDA


VIETNAM ECONOMIC OVERVIEW

Q2/2012 PERFORMANCE

Source: General Statistics Office

Q1/2012 5M/2012

GDP (% y-o-y) 4% 4.3% (esti. H1/2012)

CPI (% y-o-y, e-o-p) 14.1% 8.3%

Exchange rate (e-o-p) 20,828 20,828

Export (US$ Bn) 24.52 (23.6% y-o-y) 42.9 (24.1% y-o-y)

Import (US$ Bn) 24.77 (6.9% y-o-y) 43.5 (6.6% y-o-y)

FDI Implemented (US$ Bn) 2.5 (0.8% y-o-y) 4.5 (0.2% y-o-y)

International Arrivals (million arrivals) 1.9 (24.5% y-o-y) 2.9 (17.5 % y-o-y)

Retail & Services Turnover (trillion dong) 569.7 (21.8% y-o-y) 952.2 (20.8% y-o-y)

CPI, VN (% y-o-y)

CPI, VN (% m-o-m)

Refinancing rate (%)

Rediscounting rate (%)

00

01

01

02

02

03

03

04

0

5

10

15

20

25

Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12

CPI (%

m-o-m

)

CPI

(% y

-o-y

) /

Inte

rest

rate

s (%

)

Monetary controls took effect

Monetary controls

on interest rates

Inflation surged


Inflation continuing to trend down & crucially is now

in single digit territory (6.9% y-o-y in June).

• Petroleum prices adjusted 3 times downward in

May/June (8%), reducing supply chain pressures

• Dampened demand coupled with dropping petroleum

prices supporting inflation controls .

• Gold prices soften

• in interest rates & inflation

• in trading value on the stock market


INFLATION

Petroleum Price Adjustments

Stock Index and Inflation

0

500

1,000

1,500

2,000

2,500

3,000

300

350

400

450

500

550

Tradin

g V

alu

e (Billions VN

D)

VN

Index

Trading value VNIndex 2011 VNIndex 1H/2012

0

5

10

15

20

25

200.00

300.00

400.00

500.00

600.00

700.00

Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12

CPI (%

y-o-y)

VN

Index

VNIndex CPI

Time A95 A92 Chg Pct. Chg

29-Mar-12 23,400 22,900 2,100 10.10%

20-Apr-12 24,300 23,800 900 3.93%

9-May-12 23,800 23,300 (500) -2.10%

23-May-12 23,200 22,700 (600) -2.58%

7-Jun-12 22,400 21,900 (800) -3.52%


Deposit cap rate adjusted 3 times from 13% in March (12% in April, 11% in May) to 9%

in June (for terms of less than a year).

• Removal of the cap rate for terms of over a year, in an attempt to ensure banks have

enough long term capital.

• The deposit rate for 12-month term is currently observed to range from 10% - 12% at

commercial banks.

Low inflation rate should keep real rate positive => continue attract capital inflows

• Vietnam’s BoP as well as the dong will still be supported

More stable USD/VND exchange rate, strict controls on USD/gold trading remain.


MONETARY CONTROLS

0

2

4

6

8

10

12

14

16

Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12

SB

V I

nte

rest R

ate

s (

%)

Base rate

Refinancing rate

Rediscounting rate


Vietnam Trade Deficit (US$ Billions)

Source: Vietnamese General Statistics Office

-15

-10

-5

0

5

Jan Mar May Jul Sep Nov

2010 2011 2012

Vietnam Trade Deficit Index, Jan 10=100

Source: Vietnamese General Statistics Office

0

50

100

150

200

250

2010 2011 2012

Exports Imports

Imports growth finds a new bottom (6.6% y-

o-y)

• Dampening demand slowing imports;

• Exports growing; 24.1% y-o-y;

• Accumulated Trade deficit in first five months

90% y-o-y

S&P revised the outlook on Vietnam to

stable from negative & affirmed the “BB-”

long term” & “B” short term sovereign credit

ratings;


BUSINESS ENVIRONMENT


Negative CPI growth in April & June ‘12: 0.03% &

0.17% m-o-m (10-year record low); May: 0.16%

• Group of ‘Housing - Construction Material’ 1.86% in

June ‘12

GDP growth in H1/2012: 7.6% y-o-y (Q1/12: 7.4%)

• Industry & Construction sector 8.1%

• Service sector 8.5%

International trade of H1/2012 activities:

• Export turnover 7.2% y-o-y

• Import turnover 8.6% y-o-y

• Mainly from the groups supporting industrial manufacture

(material, fuel & equipments)

FDI of the first half year of $450mil, 49.5% y-o-y

• Newly registered projects had capital under US$1

million & did not involve intensive land use.

HANOI ECONOMIC OVERVIEW

HIGHLIGHT Real GDP (y-o-y % change)

Source: Hanoi Statistics Office

0%

2%

4%

6%

8%

10%

12%

2009 2010 2011 2012

CPI (% m-o-m change)

Source: Hanoi Statistics Office

-1%

0%

1%

2%

3%

4%

2010 2011 2012


North Linh Dam -

Thanh Xuan Elevated Highway

20 km to Cau Gie –

Ninh Binh Highway

16 km

Nam Hong

Overpass

][ Opened overpasses

][ Under-construction overpasses

][ Proposed overpasses

Gamuda NUA


Cau Gie – Ninh Binh Highway

56 km, to open on 30 Jun 2012

INFRASTRUCTURE North Linh Dam - Thanh Xuan Elevated Highway

3.3 km; to open on 30 Jun 2012

Nhat Tan Bridge

8.9 km, to open in 2014


Overpasses

• 2 opened: Lang Ha-Thai Ha & Thai Ha-Chua Boc

• 3 start construction: Nguyen Chi Thanh-Tran Duy

Hung (Q1/13) & Le Van Luong-Lang Ha (Q4/12);

Nam Hong

• 8 proposed: Chua Boc-Pham Ngoc Thach, Dai Co

Viet-Tran Khat Chan, Bach Mai-Le Thanh Nghi,

Nguyen Chi Thanh-Kim Ma, etc

Bus Rapid Transit: Lang Ha-Giang Vo (17.4 km) &

Giai Phong (10.9km) to start construction in July

2012 & to be completed in 2013

Metro Line No. 2A (Cat Linh - Ha Dong):

construction at good progress (completed by 2015)

Monorail is proposed by MOT

Approval to build parking lots

• Underground: In Co Tan park & Trung Hoa-Nhan

Chinh relocation area (construction starts in 2013)

• Above-ground: In Thong Nhat park (3,000 sm &

1,509 sm)

INFRASTRUCTURE

HIGHLIGHTS Lang Ha - Thai Ha Overpass

189 m, opened on 26 Apr 2012

Metro Line No. 2A: Cat Linh - Ha Dong

13.5 km, to open in 2015



MARKET SNAPSHOT, Q2/2012

CONDOMINIUM LUXURY HIGH-END MID-END LOW-END TOTAL

Total launch supply (units) 2,460 22,350 66,030 18,070 108,910

New launch (units) 0 350 600 780 1,730

Primary market – New avg. asking

price (US$ psm) N/A $1,440 $1,170 $700 $1,100

Y-o-y change (%) N/A -16.6% -4.9% -16.8% -12.8%

Secondary market – Avg. asking price

(US$ psm) $2,990 $1,760 $1,320 $960 $1,760

Q-o-q change (%) -6.7% -3.9% -3.7% -2.4% -4.2%

Y-o-y change (%) -13.8% -13.0% -10.1% -8.4% -11.3%

* All prices are VAT exclusive

* All figures are preliminary & subject to revisions by EOQ


In anticipation of improved market sentiment

following int. rate cuts

• 14% -> 9% in 3 months

Mostly in fringe districts

• Esp. in attractive sub-market such as the West (Ha Dong

66%, Tu Liem 21%,) & The East (Long Bien 9%)

• Ha Dong regains its dominance after being inactive in

Q1/2012

100% < US$1,500 psm; 50% < US$1,000 psm

HIGH-END developers adopt NEW strategies:

• Offer bare shell/basic finishing options to lower unit

price by up to 30%

• Proved to work: increasing inquiries & improved sales

• More developers are considering this technique

• Preferential mortgage lending rate

• Incentive period (until unit handover): mortgage lending

rate as low as 6%-7% (market rate: 15%)


New launches slightly picked up

Primary Prices continued at a low level Primary Price of Newly-launched Projects (psm)

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2008 2009 2010 2011 2012YTD

Luxury High-end

Mid-end Low-end

Units Launched

0

5,000

10,000

15,000

20,000

25,000

2005 2006 2007 2008 2009 2010 2011 2012YTD

Q1 Q2 Q3 Q4 Whole year

1,700

1,100


Past: First-time launches @ < $1,000 psm are highly

interested

• Many projects turn out to have slow construction progress

Now: Launches @ ~ $1,500 psm are accepted

• These usually come with visible construction progress =>

lower risks involved

Prices: straight fall from Q2/2011, hit the hardest in

Q2/2012:

• 2011-2012 crisis worse than 2008 crisis in terms of both

length & magnitude

• Can this be the bottom?


Buyers: Balance Price vs. Risk

After 1.5 years of construction After 1.5 years of construction

Secondary price: Largest q-o-q drop Secondary Price Change - exclude New Projects

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

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

2008 2009 2010 2011 2012


No. of inquiries is increasing:

• Real estate becomes more attractive as interest rate’s

declining

• Mortgage lending rate is back to 2010 level (15%) from

mid-2011 peak (23%);

There are positive signals, but NOT yet conclusive that market will soon pick up

Developers

• Should remain watchful of the market to enjoy the advantage of the first mover

• Price vs. Quality competition?: Finding competitive edge instead

Buyers

• Time to look for / buy right apartment (Deal closing takes time)

• Price vs. Quality?: Give both due attention


Buyers’ interests seem to be back Annual Mortgage Rate

Source: CBRE Vietnam

0%

10%

20%

30%

2010 2011 2012

Outlook


Secondary prices still on the wane q-o-q

• Occurred in projects across different districts

• West: Cầu Giấy, Từ Liêm, Hoài Đức (5%-25%)

• South-West: Hà Đông (~20%)

• East: Long Biên (~10%)

• North: Mê Linh (~30%)

• Down by 10%-30% q-o-q

Demand side

• Rate cuts & easing credit policy encouraged more

house purchase

• However, effect is only intial as many still waiting for

more signs of market / economic recovery

• Many speculators are still looking to cut loss, further

pushing secondary prices down

• Few end-users are interested in under-development

projects as many among these have become too risky

to put capital in

• Construction progress is key to getting end-users

interested


Liquidity Issue Further Pushing Prices An Hưng NUA

Hillstate Villas


Việt Hưng NUA

Supply

• Developers started looking longer term, making more efforts

in branding / marketing & project quality

• Sudico recently announced to “build before launching for sale”

• Splendora broke ground Phase 2 (900 villas in Jun 2012)

• An Hưng NUA: Handover Phase 1 in May 2012; full handover

of 770 units expected in Q3/2012

Outlook

• Year 2012 expects a large number of units to complete

(~9,400 units vs. ~11,300 units completed b/w 2004-2011).

• 30%-40% won’t be completed on schedule

• Those completed will be empty for a while

• Infrastructures, amenities & services are key to making a new NUA

become a livable residence

• By end of H1/2012 ~3,000-4,000 units have been completed

• Projects might need to be completed first before seeing a real

flow of buyers’ interest return.

• West West Lake NUA announced to commence construction

in Sep '12


Developers Adapting to New Situation


OFFICE


* We don’t track data on Grade C office space due to lack of transparency in the market. Most Grade C buildings are developed,

owned, & operated by small local developers.

* All office rents are calculated on net floor area, excluding VAT, including service charge.

GRADE A GRADE B GRADE C TOTAL

Number of Buildings 15 47 59 121

NLA (sm) 254,332 508,282 251,907 1,014,521

New Supply (sm) 0 30,200 0 30,200

Vacancy Rate (%) 27.51% 20.00% - -

Q-o-q change (pps) -8.07 -1.16 - -

Y-o-y change (pps) 22.51 3.01 - -

Average asking rents (US$/sm/month) $33.62 $22.31 - -

Q-o-q change (%) -6.45% -6.00% - -

Y-o-y change (%) -10.23% -16.98% - -


Total Supply (sm)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2009 2010 2011 2012

Grade A Grade B Grade C

Vacancy Rate (%)

0%

10%

20%

30%

40%

50%

2009 2010 2011 2012

Grade A Grade B

New Grade B completions: DETECH Tower

(10,200 sm); ICON4 Tower (20,000 sm)

New launch: Hapro Cat Linh (9,000 sm) @

US$2,000 psm

Vacancy rate: 3.7 pps q-o-q, mainly thanks to

Keangnam’s take-up ( 24 pps q-o-q)

• Grade A: CBD ( 0.6 pps), Midtown ( 2.2 pps),

West ( 16.5 pps)

• Grade B: CBD ( 1.5 pps), Midtown ( 0.5 pps),

West ( 3.6 pps), Others ( 4.9 pps)

Asking rents: q-o-q downward trend dominated

• Grade A: West ( 14.4%)

• Grade B: West ( 8.7%) & Midtown ( 7.2%)

OFFICE

SUPPLY

MARKET PERFORMANCE

Asking Rents (US$/sm/month)

$0

$10

$20

$30

$40

$50

$60

2009 2010 2011 2012

Grade A Grade B


Strong net absorption at nearly 37,000 sm (nearly

tripled Q1/12)

• Keangnam (≈ 20,000 sm)

• ICON4 Tower (11,000 sm)

Enquiries for office space:

• Most popular: 50-100 sm

• Start to pick up: 400-700 sm (mostly in the West)

Expected completion in Q3/2012 (40,000 sm)

• Indochina Plaza Hanoi (Grade A; 14,000 sm)

• Hapro Cat Linh (Grade B; 9,000 sm)

Demand outlook

• Some CBD areas are temporarily vacant, but will soon

be re-filled up thanks to strong demand

• West: along with tenants’ relocation, vacancy will be

gradually reduced

OFFICE

DEMAND

OUTLOOK Indochina Plaza Hanoi

Future Supply (sm)

0

200,000

400,000

600,000

800,000

1,000,000

2012f 2013f 2014f 2015f

Grade A Grade B


RETAIL


DEPARTMENT

STORE

SHOPPING

CENTRE

RETAIL

LOBBY TOTAL

Total supply Q2 /12 (NLA, sm) 46,000 198,091 10,310 254,401

New supply (NLA, sm) 0 0 0 0

Vacancy rate (%) 9.8% 15.6% 2.9% 14.1%

Average ground floor asking rents

(US$ psm per month) $63.9 $34.0 $78.5 $41.8

•CBD - $59.4 $153.6 $70.4

Q-o-q change (%) - 3.1% 7.5% 4.2%

Y-o-y change (%) - 2.1% 2.8% 0.6%

•Non-CBD $63.9 $27.9 $24.6 $36.0

Q-o-q change (%) 0.1% -3.3% 0.0% -1.8%

Y-o-y change (%) 18.3% -17.0% 10.5% 0.1%


THE GLOBAL RETAIL DEVELOPMENT INDEX

WINDOW-OF-OPPORTUNITY

Vietnam’s Ranking

• 2008: No. 1

• 2009: No. 6

• 2010: No. 14

• 2011: No. 23

• 2012: out of the list 30

emerging countries

Nguôn: A.T Kearney Analysis

CBRE’s ranking:

• •#3 for new market entries, tied with

Ukraine

• •#55 Vietnam is the fifty-fifth most

attractive country, up four places

from 2011

• •#146 HCMC the one hundred

forty-sixth most attractive city, up 12

places from 2011


No additional supply

• Market remains at 244,091 sm (NLA) in

department stores & shopping centres

Retail Lobbies in CBD locations continue to

be attractive (premium of US$200 psm)

Shopping Centres in Non-CBD locations

• continue to be challenging (aver. ground asking

rents 3.3% q-o-q)

Consumers are still tightening their budget

for shopping. Malls are busy only when events

take place

RETAIL

HIGHLIGHTS

0

50,000

100,000

150,000

200,000

250,000

300,000

2008 2009 2010 2011 2012

Total area (sm NLA) Leased area (sm NLA)


Total area vs. leased area (sm NLA)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2008 2009 2010 2011 2012

CBD non-CBD

Vacancy rate by location (%)

17.06.12 – “The Mechnimals” Robot Cars Challenge -

one of many events at Pico Mall


In shopping centres

• 132 tenant/brand changes in Q2 (≈ Q1/12)

• Opened: 56 (42%)

• Refurbishment/ fitting out: 4 (3%)

• Closed: 72 (55%)

• By industry

• F&B in highest (+1,490sm) & Electronics in

lowest demand (-590sm) among tenants

• Apparel: few openings of larger shops cover

closure of smaller shops

Street-front stores

• Few openings, the majority is for CLOSURE or

SUB-LEASE

RETAIL

TENANT/ BRAND MOVEMENTS

TXT=Textiles, SH=Shoes& Handbags, HHF=Household & Furniture, COS=Cosmetics,

JEW=Jewelry, F&B=Food & Beverage, ELE=Electronics, OT=Others

Q2/12 Data analysed from Retail Lobbies (3), Shopping Centres (11), Department Stores (1)

-30

-40

-30

-20

-10

0

10

20

30

1-20sm 21-50sm 51-100sm 101-250sm 251-500sm 501-1,000sm

opened/fitting out/refurbishment closed

≈ 50% textile brands

No. of Shops opened/closed in Q2/12 by size

Retail space opened/closed in Q2/12 by sector

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

COS ELE HHF JEW TXT SH F&B OT

closed opened


Major expected openings (Q3/12)

• Indochina Plaza Hanoi (IPH) – 35,000 sm (GFA)

• Hapulico – 20,000 sm (GFA)

Major expected completion

• 2012: 200,000 sm (GFA)

• 2013: 700,000 sm (GFA)

RETAIL

OUTLOOK

Indochina Plaza Hanoi (IPH) Hapulico

Eurowindow

Multicomplex Vincom Royal City Lotte Center

Photos taken in mid Jun ‘12

The Pride Habico Tower New Skyline

Good construction progress in midtown…

…& construction slows down at the city edge


Regional Comparisions

GRDI Thailand Indonesia Malaysia Phillipines Vietnam

2008 24 15 13 26 1

2009 26 22 10 25 6

2010 - 16 17 22 14

2011 - 16 21 18 23

2012 - 16 11 29 -

ENT is remains an unclear challenge to foreign

retailers;

Unstable economy, most specifically in terms of

GDP growth & inflation after the economic crisis;

Modern retailing well represented in HCMC and

Hanoi but very little in second tier cities such as

Hai Phong, Da Nang, Nha Trang and Can Tho;

The QUANTITY of modern retail space increases

regularly but not yet the QUALITY;

Poor distribution/logistics infrastructure, which

is important to a company for deciding where to

locate an investment, build a factory, or establish an

outlet;

Expensive retail space

• E.g: at prime locations in Hanoi, the rents usually are

from US$100-$200/sm/month;

RETAIL OUTLOOK

ISSUES STILL TO BE SOLVED

Vietnam, Global Retail Development Index

Source: A.T Kearney Analysis

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010 2011 2012


SERVICED APARTMENT


INTERNATIONAL

OPERATOR

SELF-

MANAGED TOTAL

Total Supply (units) 887 1,890 2,777

New Supply (units) 0 0 0

Vacancy Rate (%) market-wide (Q2) 15.45% 35.50% 29.10%

Vacancy Rate (%) (excl. Keangnam Landmark 72) 15.45% 22.02% 19.59%

Average asking rents (US$ psm per month) $39.28 $29.21 $32.13

Q-o-q change (%) 2.71% -0.19% 0.73%

Y-o-y change (%) 6.00% 2.90% 2.62%

• Rents include service charges & VAT


No new supply

Asking rents almost the same q-o-q

• Projects with international operators, slightly increased

in a few projects: ~$39 psm

• Self-managed projects: ~$29 psm

Vacancy still at high level: ~29% marketwide

• Mostly due to recently opened projects such as

Keangnam

• Projects under renovation (Hanoi Lake View, Somerset

Grand)

• A few projects struggling, esp those located further

away from the city (Me Linh Plaza)

• Occupancy among projects with int’l operators

improved, while self-managed decreased

SERVICED APARTMENT

High Vacancy Due to New Projects

Asking Rents (US$/sm/month)


$,0

$20,0

$40,0

$60,0

2007 2008 2009 2010 2011 2012

International Operator Self-managed

Vacancy Rate (%)


0%

10%

20%

30%

40%

50%

2008 2009 2010 2011 2012

International Operator Self-managed

Average


Demand

• Enquiries remained stable with a little higher budget

(~$2,000).

• Demand still strong in CBD & West Lake area

• Demand for serviced apartments in the West still low in

comparison but on the rise as more offices are located in the

West

Outlook

• 2012 initially expects 270 new serviced apartments from 3

projects but 2/3 projects likely delayed till next year

• Candeo Hotels to open in Q3/2012

• A few condo projects are considering reserving certain units

for serviced apartments

• Older projects in the CBD will face more competition with

new projects in the West, esp. as more offices are

relocating in the West.

SERVICED APARTMENT

DEMAND & OUTLOOK Crowne Plaza West Hanoi

Serviced Apartment

Keangnam Landmark 72

Serviced Apartment


1 - Including all trackable 3-5 star hotels in Hanoi (offcially & not yet ranked by VNAT) with room capacity of above 40 rooms/hotel

2 - Average daily rates are quoted exclusive of service charges & VAT

3-5 STAR HOTEL


5-star 4-star 3-star 3-5 STAR

Number of hotels 1 12 13 40 65

Total supply (rooms) 3,880 1,945 2,828 8,653

Change in supply (rooms) 0 115 71 186

Average occupancy rate (%) 60.64% 52.48% 52.52% 56.68%

q-o-q change 1.4 pp -0.4 pp -3.1 pp -0.2 pp

y-o-y change 6.2 pp -0.4 pp -0.7 pp 2.9 pp

Average daily rate (US$/room/night) 2 $104.67 $62.39 $34.93 $76.77

q-o-q change -1.9% -4.2% 0.6% -2.8%

y-o-y change -6.8% -15.9% -1.0% -6.5%

RevPAR (US$/room/night) $63.47 $32.74 $18.35 $43.51

q-o-q change 0.5% -4.8% -4.9% -3.1%

y-o-y change 3.7% -16.5% -2.2% -1.4%


Future Supply by Grade

Historical Supply by Grade

Supply by District/Grade (Q2/2012)

Current supply (8,653 rooms)

• New supply: Authentic hotel & Lan Vien hotel

• Over half of supply in each segment are in just 2 districts

Hoan Kiem & Ba Dinh

Future supply

• H2/2012

• Last 68 rooms of 5-star Grand Plaza Hanoi

• 3-star Hilton Garden Inn (86 rooms) in Tran Hung Dao St

• 4-star Candeo Hotels Hanoi (68 rooms) in Doi Can St

• 5-star InterContinental Hanoi Landmark (359 rooms)

• 2013-2014

• 2013: 5-star JW Marriott (450 rooms)

• 2014: 5-star Lotte Hotel (300 rooms)

3-5 STAR HOTEL

SUPPLY

Garden Inn Candeo Hotels Lotte Hotel

0

10

20

30

40

50

60

70

0

2,000

4,000

6,000

8,000

10,000

1995 2000 2005 2010 2011 YTD'12

No. of hote

ls

Supply

(ro

om

s)

5-star 4-star 3-star No. of hotels

0

500

1,000

1,500

2,000

2,500

3,000

Hoan

Kiem

Ba Dinh Dong Da Tay Ho Hai Ba

Trung

Cau Giay Others

5-star 4-star 3-star

0

1

2

3

4

5

0

150

300

450

600

750

H2/2012 2013 2014

No. of pro

jects

Futu

re S

upply

(ro

om

s)

5-star 4-star 3-star No. of projects


Y-o-Y Changes by Grade (Q2/2012)

Q-o-Q & Y-o-Y performance

• By segment: 5-star > 3-star > 4-star

• Whole market is generally under-performing (mostly due to fall

in ADR)

• Low-season for 4-5 star segments

• 5-star still managed to have better occupancy with a reasonable

reduction in ADR probably thanks to int’l brand

• 4-star’s ADR reduction is more apparent (very few int’l brands with

overpriced ADR)

• High-season for 3-star segment but still worsening performance

Increasing tourist arrivals

• Staying in 1-5 star hotels, homestay, etc.

• Korean & Japanese visitors 46% & 24% y-o-y (H1/12),

respectively

3-5 STAR HOTEL

MARKET PERFORMANCE

Arrivals Q2 ‘12 Q-o-Q Y-o-Y (Q2) Y-o-Y (H1)

Int’l 389,649 +12% +31% 20%

Domestic 2,350,000 +5% +48% 24%

DEMAND

Arrivals to Hanoi (Millions)

Market Performance (Q2/2012)

0.00

0.50

1.00

1.50

2.00

2.50

2010 2011 2012

International Domestic

10%

20%

30%

40%

50%

60%

70%

$0

$20

$40

$60

$80

$100

$120


ADR RevPAR Occupancy (%)

-20%

-15%

-10%

-5%

0%

5%

10%


Occupancy ADR RevPAR


Thin demand

• Visa hassles, High air ticket prices, Lack of tourism promotion,

Service transparency issues

Short-term

• Seasonal factor: Q3 is Low season for luxury hotels & High

season for local budget hotels & vice versa in Q4

• ADR is on the decline, esp in the 4-5 star hotels

• New 5-star supply in the West will make competition in the

segment more severe

• New supply (3-4 star) & many new budget / mini quality hotels

in the CBD are coming

• => competing with existing 3-star hotels

Long-term

• Flat market (ADR + Supply + little Demand)

=> Capital Value

• Potential to develope int’l standard budget hotels

• Hotel acquisition by Local firms from Foreign partners

• Local Hoteliers: more aggressive in expanding market share,

but not in refurbishment/ renovation

• New International Brands

3-5 STAR HOTEL

OUTLOOK


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Q2/2012 released

Friday, July 20, 2012

© 2012 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith & 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 & 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, & they may not represent current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, & cannot be reproduced without prior written permission of CB Richard Ellis.

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market insights from cbre’s hanoi quarterly report q2/2012€¦ · deposit cap rate adjusted 3...

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