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Property Sector Overview

RESEARCH & FORECAST REPORT

VIETNAM REAL ESTATE MARKET

2Q 2012 |

▪ The Vietnamese economy has shown signs of recovery over the second quarter.

▪ The first recorded negative CPI growth rate in two years for Ho Chi Minh City and ten years for Hanoi.

▪ The Vietnamese property market has seen negligible movement despite introduction of positive supporting monetary and fiscal policies.

▪ Real estate developers are still facing challenges in ac-cessing funds to advance their projects.

▪ New grade A office buildings in Hanoi and Ho Chi Minh City have achieved better lease performance, especially office buildings in non-CBD area of Hanoi.

▪ The majority of residential developers are now targeting the Mid-tier and Low-end apartment market.

▪ Sale prices of apartments on the secondary market have continued to decline.

▪ Vietnam retail market is still seen by a number of interna-tional retailers as an attractive one in terms of market size, demographic and consumption potential. However infrastructure constraints, legislative restrictions and ENT barriers serve to limit rate of growth.

www.colliers.com/vietnam

MARKET INDICATORS ECONOMY OFFICE RETAIL APARTMENT

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HO CHI MINH CITY | 1Q 2012 | ECONOMIC UPDATE


Source: General Statistics Office of Vietnam

VIETNAM | 2Q 2012 | ECONOMIC UPDATE

INCREASED GDP GROWTH RATE IN 2Q 2012

Vietnam GDP growth rate has reached 4.66% in 2Q 2012 ie. 0.7 percentage points higher than last quarter. According to the World Bank’s forecast, Vietnam’s GDP growth could achieve 5.7% within 2012, 6.3% and 6.5% in the following years. Viet-nam was ranked 22nd among the 29 fastest growing economies in the world. Principle exports remain textiles, crude oil, rice and machinery products.

DEFLATION IN JUNE 2012

CPI growth rate began to slow down from mid 2011 and has dropped dramatically in the recent months. Remarkably, CPI in June dropped 0.26% month-on-month after 38 months of con-secutive increases. This indicator only increased slightly by 2.52% compared with December 2011 and 6.9% y-o-y. The mi-nor increases in CPI and reduction of interest rate are expected to support businesses and stimulate consumer expenditure.

CUTTING DEPOSIT INTEREST RATE

The State Bank of Vietnam (SBV) has reduced deposit interest rate in three occasions within 1H 2012 from 14% pa to 9% pa, according to the circular of 19/2012/TT-NHNN. The annual lend-ing interest rate for VND is at 13% pa in some prioritized eco-nomic areas, comprising agricultural and rural development, ex-port, supporting industry and small and medium-sized enter-prises. All commercial banks followed SBV’s interest rate deduc-tion by lowering their interest rates by 2% to 4% pa for personal and real estate loans.

US$1.57bn POURED INTO REAL ESTATE

Vietnam’s total FDI capital recorded at US$6.38 billion in 1H 2012, equivalent to 72.3% of the previous year period. Total fig-ure for newly registered capital and additional capital across 575 projects is recorded at US$6.38 billion. Real estate sector attracted US$1.57 billion FDI capital for the existing projects and 4 new projects, this equivalent to 24.7% of the total registered capital in Vietnam. The high risks in current real estate industry have already been recognized by foreign investors; however potential profits are foreseen for the long term.

NOTABLE POLICIES

The recent release of Resolution 13/NQ-CP outlines a series of measures to ease difficulties against businesses and support the market in the wake of economic slowdown which resulted in a 30% cut of corporate and personal income taxes in 2012. The Government has considered and is expected to unlock approxi-mately VND29 trillion support package for small and medium businesses.

VIETNAM’S GDP GROWTH RATE

VIETNAM’ S CPI MONTH-ON-MONTH

EXPORT & IMPORT TURNOVER

FDI CAPITAL IN VIETNAM

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1Q 2

008

2Q 2

008

3Q 2

008

4Q 2

008

1Q 2

009

2Q 2

009

3Q 2

009

4Q 2

009

1Q 2

010

2Q 2

010

3Q 2

010

4Q 2

010

1Q 2

011

2Q 2

011

3Q 2

011

4Q 2

011

1Q 2

012

2Q 2

012

-1%

0%

1%

1%

2%

2%

3%

3%

4%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2010 2011 2012

02468

101214161820

1Q 2010

2Q 2010

3Q 2010

4Q 2010

1Q 2011

2Q 2011

3Q 2011

4Q 2011

1Q 2012

2Q 2011

US$ billion

Registered capital Disbursed capital

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

-20

0

20

40

60

80

100

120

1Q 2010

2Q 2010

3Q 2010

4Q 2010

1Q 2011

2Q 2011

3Q 2011

4Q 2011

1Q 2012

2Q 2011

US$ billion

Export turnover Import turnover

Trade balance Growth rate of export turnover

Growth rate of import turnover

2

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HO CHI MINH CITY | 1Q 2012 | ECONOMIC UPDATE


RETAIL SALES GROWTH RATE

FOREIGN INVESTMENT CAPITAL

GDP GROWTH RATE

Source: General Statistics Office of Vietnam

HO CHI MINH CITY & HANOI | 2Q 2012 | ECONOMIC UPDATE

CPI MONTH-ON-MONTH

HO CHI MINH CITY ECONOMIC UPDATE

Hanoi and Ho Chi Minh City are amongst the 140 most competi-tive cities in the world, according to the Global City Competitive-ness Report by The Economist Intelligence Unit.

In 2Q 2012, total GDP of HCMC increased 8.1% y-o-y to VND287.162 trillion. Trades and services industry was the major GDP contributor and accounted for 54.9% of the total.

HCMC granted 178 new FDI projects with a total registered capital of US$248.1 million in 1H 2012, including US$209.1 mil-lion in 2Q 2012, rising dramatically in comparison with US$39 million of the previous quarter. Currently there are 4,243 FDI projects in HCMC with a total invested capital of US$30.92 bil-lion. Real estate industry accounted for 38% of total investment and reported as the highest portion of FDI within the five main sectors.

CPI for HCMC in June 2012 fell by 0.43% month-on-month, the first reduction in 21 months.

In 1H 2012, retail sales of goods and services achieved VND260.94 trillion (+21.3% y-o-y). Discounting the price inflation factor, the underlying growth rate was 8.9% y-o-y.

HANOI ECONOMIC UPDATE

In 1H 2012, Hanoi’s GDP growth reached 7.6% y-o-y with agri-culture and fishery sectors decreased by 2.9% whereas indus-trial and construction increased by 8.1%, and services up by 8.5%.

Hanoi’s CPI in June 2012 dropped by 0.17% month-on-month, dragged down by the decrease in prices of housing and con-struction materials, traffic and food & restaurant services. This is the first negative month-on-month CPI in the last 10 years, as business activities slowed down, high inventory accumulated, and credit growth rate fell.

Hanoi granted a total of 150 FDI projects, including both new projects and supplement capital of existing projects, a total reg-istered capital of US$450 million in 2Q 2012. The number of pro-jects and total registered capital decreased by 7.4% and 49.5% y-o-y, respectively.

In 1H 2012, retail sales of goods & services increased 20.7% y-o-y, particularly retail revenue rose by 20.3%. If the fluctuated price factors were excluded, the underlying growth rate was 8% y-o-y.

0%

2%

4%

6%

8%

10%

12%

1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012

HCMC Hanoi

‐1.0%

‐0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Jan

Feb

Mar

Apr

May Jun Jul

Aug Sep

Oct

Nov

Dec Jan

Feb

Mar

Apr

May Jun

2011 2012

HCMC Hanoi

0%

5%

10%

15%

20%

25%

30%

1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012

Tp Hồ Chí Minh Hà Nội

0

500

1,000

1,500

2,000

2,500

3,000

1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012

US$ million

HCMC Hanoi

3


HO CHI MINH CITY & HANOI | 2Q 2012 | INFRASTRUCTURE

HO CHI MINH CITY

Highway project for HCMC - Dau Giay intersection: Compul-sory acquisition of land and site clearance for highway expan-sion along District 2 are currently in progress.

Rach Chiec Bridge project: Rach Chiec Bridge officially opened on 11th July 2012. This new 735- meter bridge improves the connection between the eastern districts and central busi-ness districts.

Metro Line No.1 Ben Thanh - Suoi Tien and Hanoi Highway Widening projects: The construction schedule is pending on the process for compulsory land acquisition and compensation for some property owners in District 9 and Thu Duc District.

Tan Son Nhat to Binh Loi Ring Road project: Slow construc-tion progress as a result of the ongoing site clearance. The road network will be put into operation in phases. It is expected that section Nguyen Thai Son-Le Lai (Go Vap District) will be opened in September 2012.

The section from Phan Van Tri (Binh Thanh District) to Rach Lang Bridge (Thu Duc District) is considered a critical route, pro-viding direct link from Binh Duong and Dong Nai to Tan Son Nhat Airport, and is scheduled for opening in June 2013.

HANOI

Cau Gie - Ninh Binh Highway: A four lane highway permitting vehicle speeds of 100km/h - 120km/h, connecting Hanoi and Ninh Binh province and was officially opened in June 2012 .

Hanoi Ring Road No.3 - Phase 2 project: North section of Linh Dam-Thanh Xuan road of 3.3 km was completed in June 2012. This link road is designed to relieve traffic congestion from South to West of Hanoi. It starts from the North of Linh Dam lake to Mai Dich through Hoang Mai District, Thanh Xuan District and Cau Giay District.

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

The Cat Linh-Ha Dong line is one of eight urban rail projects proposed in Hanoi’s transport development plan. This is a 13km railway with 12 stations, starting from Cat Linh in Dong Da Dis-trict to Yen Nghia in Ha Dong District. The depot area is located in Phu Luong ward in Ha Dong District. The project is scheduled for completion in 2015.

RACH CHIEC BRIDGE

TAN SON NHAT - BINH LOI RING ROAD

HANOI RING ROAD NO.3 (PHASE 2)

CAU GIE - NINH BINH HIGHWAY

4

P2 | COLLIERS INTERNATIONAL

HO CHI MINH CITY | 2Q 2012 | OFFICE


MARKET OVERVIEW

The total office supply in HCMC was approximately 1.3 million sq m NFA from 164 office buildings. The downward trend in rental rate is continuing to create more pressure for the devel-opers. Most office buildings in the CBD and non-CBD offered promotions, free rent for the first two or three months of new leasing contracts, flexible leasing term, concessions on parking, signage provisions and services in order to attract tenants.

MARKET OPERATION

The average rents across all grades, exclusive of service charge and VAT tax, was US$20/ sq m/ month in 2Q 2012. The average occupancy was recorded at 88.2%, a decrease by 2 percentage points q-o-q.

The average occupancy rates in grade B and C office buildings were higher than grade A buildings as their rents are considered more competitive. Moreover many enterprises, both local and foreign, are seeking to cut costs amid financial troubles in Europe, the USA and Vietnam.

Grade B and C office buildings achieved average occupancy rates of 88% and 89%, respectively. The average rents were at US$20 & US$16.3/ sq m/ month for grade B and C respectively.

GRADE A MARKET MOVEMENT

The occupancy rate of all grade A buildings averaged 87% and average rents was US$33.7/ sq m/ month. There was approxi-mately 18,600 sq m of vacant office space.

Grade A buildings, with exception of Bitexco Financial Tower which remains in lease up phase, had a generally stable occu-pancy rate at 97%.

It is recorded that a ‘flight to quality’ is starting to take hold with new Grade A buildings like Bitexco Financial Tower welcoming both new businesses to Vietnam and established companies looking to upgrade their accommodation.

OUTLOOK

In the second half of 2012, HCMC’s market will realize approxi-mately 65,000 sq m GFA of office space from 6 projects within 2h 2012, which could continue to put pressure on the occupancy rate and rents.

The new supply is expected from The President Place, Times Square, Le Meridien and HMTC. District 1 accounts for 45% of total future supply in HCMC up to the period of 2016.

The construction of some projects is put on-hold or delayed due to difficulties in obtaining finance support, while multiple devel-opers are reviewing the market positioning of their projects.

Source: Colliers International

(*) From 2Q 2012, Colliers re-graded office buildings and update the office space based on net floor area (NFA)

SUPPLY BY GRADE, 2Q 2012

AVERAGE OCCUPANCY AND RENTS

PERFORMANCE BY GRADE, 2Q 2012

ESTIMATED FUTURE SUPPLY

0%

20%

40%

60%

80%

100%

10

15

20

25

30

35

40

2006 2007 2008 2009 2010 2011 1Q 2012 2Q 2012

US$/ sq m/ month

Average asking rent Average occupancy rate

70%

75%

80%

85%

90%

95%

100%

0

10

20

30

40

Grade A Grade B Grade C

USD/ sq m/ month

Average asking rent Average occupancy rate

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2012 2013 2014 2015 2016

sq m

5

9%

49%

42%



HANOI | 2Q 2012 | OFFICE


MARKET OVERVIEW

The total supply of Hanoi’s office market currently stands at 1.15 million sq m, increased by 24% y-o-y. The Western area of Ha-noi, including Cau Giay and Tu Liem districts accounted for 47% of grade A and 29% of Grade B office stock.

There are two Grade B office buildings, namely Detech Tower (Cau Giay District) and ICON 4 Tower (Dong Da District) came into the market, adding 32,300 sq m to the current stock and created a marginal impact of 2.9% q-o-q.

GRADE A IMPROVES PERFORMANCE

Grade A’s average occupancy rate in Hanoi remarkably im-proved by 2.95 percentage points, reaching 75.40% in 1H 2012 while experiencing a slight decrease in rent at US$41.23/ sq m/ month. The net absorption was recorded impressively at 14,900 sq m during 2Q 2012 as a result of the recent lettings in Keang-nam Landmark Hanoi Tower.

The market witnessed tenant movement from CBD to the west-ern Hanoi. Though the CBD is still enjoying a healthy occupancy of 93.7%, this is a drop of 1 percentage point q-o-q as several prominent tenants have relocated towards the West to take ad-vantage of lower rent.

A TOUGH PERIOD FOR GRADE B

The average occupancy rate in grade B buildings decreased approximately by 4 percentage points q-o-q, despite the average rental fell from US$22.9 to US$22.4/ sq m/ month. The large amount of new supply and competition from grade A has cre-ated a negative performance for grade B office buildings .

New office stock faces the challenge of filling up the vacancies. Tenants are being offered flexible options in the prime buildings with lower rent.

OUTLOOK

According the published completion dates, total supply up to 2014 is expected to double the current stock; however, based on the current construction progress, up to 30% of projects would be delayed to post 2014. Future projects are mostly lo-cated in non-CBD areas, especially from Cau Giay, Thanh Xuan and Tu Liem districts, accounting for 68% of total future supply.

Several buildings will be introduced within this year, including Indochina Plaza Hanoi, EVN Tower, Apex Tower and Corner-stone Building, adding 132,200 sq m onto the market. Average rents and occupancy will continue to drop, especially in the non-CBD areas due to highly competitive offers from offices in the prime locations.


SUPPLY BY GRADE, 2Q 2012

OPERATION OF GRADE A OFFICES

30

32

34

36

38

40

42

44

0%

20%

40%

60%

80%

100%

Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12

Average Occupancy Average Rent (US$/sqm/month)

OPERATION OF GRADE B OFFICES

20

22

24

26

28

0%

20%

40%

60%

80%

100%

Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12


EXPECTED COMPLETION IN 2H 2012 Project District NLA (sqm)

Indochina Plaza Hanoi Cau Giay 17,700

EVN Tower Ba Dinh 45,600

Cornerstone Hoan Kiem 25,900

Trico Building Long Bien 13,000

Apex Tower Tu Liem 17,000

Tuan Duc Building Hoan Kiem 13,000

Total 132,200

6

25.8%

56.0%

18.2%



HO CHI MINH CITY | 2Q 2012 | RETAIL


MARKET OVERVIEW

In 2Q 2012, the total retail supply is recorded at 727,900 sq m, up 12% q-o-q. The leading suppliers are shopping centres and supermarkets.

Primary areas for large scale retail development in Ho Chi Minh City are District 1, District 7 and Tan Binh District which will in-troduce approximately 320,000 sq m to the market. Also, there are new and planning projects located in District 2.

MARKET OPERATION

HCMC’s retail market is facing competitive pressure to attract tenants. Some developers are now offering lower rents and more incentives to attract tenants.

The average occupancy rate in 2Q 2012 was approximately 84%, down by 7 percentage points q-o-q. The highest occu-pancy rate is recorded for department store at 99%, an increase of 1 percentage point q-o-q. Retail podiums overall reached only a 68% occupancy rate.

The average rents for shopping centres, retail podiums and de-partment stores are recorded at US$64/sq m/month, a signifi-cant decrease of approximately 9% y-o-y due to the lower rents of retail centres in the non-CBD districts. However, retail spaces in prime locations still command rents over US$100/sq m/ month. Some developers are reviewing the development of their retail projects while some developers offered their projects for sale.

Many retailers have offered promotions such as discounted pric-ing, additional promotional products, etc in order to encourage consumers. However, the purchasing power is yet to improve as the consumers are to balance between their demand and in-creased necessary costs while maintaining the level of savings. Total retail sales of goods and services of Ho Chi Minh City only increased by 8.9% y-o-y.

OUTLOOK

In 2H 2012, approximately 150,000 sq m of retail space is ex-pected to enter the market, equivalent to 20% of total current supply. New retail project development located in fringe areas of CBD such as Pico Plaza (Tan Binh District) and Pandora City (Tan Phu District) will provide 94,000 sq m, accounting for 62% total new supply of 2012.

Vietnam has dropped out of the top 30 in the Global Real Estate Development Index produced by A.T.Kearney due to inadequate infrastructure and high rentals. However, Vietnam still has a cer-tain attractiveness owing to the current size of market as well as growth potential, especially among the large young population.


SUPPLY BY RETAIL TYPES, 2Q 2012

AVERAGE OCCUPANCY AND RENTS

AVERAGE RENT BY TYPES

ESTIMATED FUTURE SUPPLY

15%

40%

6%

7%

32%

Department store Shopping center Podium

Wholesales Supermarket

75%

80%

85%

90%

95%

100%

0

20

40

60

80

100

2007 2008 2009 2010 2011 1Q 2012 2Q 2012

US$/ sq m/ month

Average occupancy rate Average Rent

0

50

100

150

200

Retail Podium Department Store Shopping Centre

US$/ sq m/ month

Min average asking rent Max average asking rent

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2012F 2013F 2014F 2015F 2016F Onwards

sq m

7


HANOI | 2Q 2012 | RETAIL


MARKET OVERVIEW

There was no additional supply coming on stream in 2Q 2012, as the total stock of retail space in Hanoi market remained un-changed at 433,700 sq m.

The retail market witnessed consolidation in terms of both aver-age asking rent and occupancy. The impact of tightening retail spending and conservative approach by retailers seems to in-tensify the pressure upon retail developers in Hanoi.

BUSY LEASING ACTIVITIES

Developers are pushing up their leasing programs to secure leases before the massive supply expected to flow in 2H 2012. In the non-CBD districts, Indochina Plaza Hanoi, Me Linh Plaza Ha Dong and HiWay Supercenter would invade the market with total 74,000 sq m GFA.

Hanoi’s Heritage retail landmark, namely Trang Tien Plaza, is also offering prime spaces for lease. This might be the only pro-ject in the CBD that would come online within 2012.

MORE PRESSURES ON RETAIL CENTRES

The average rent of shopping centres decreased US$1.75/ sq m against 1Q 2012 to US$68.21/ sq m/ month. A downward trend in the average asking rent occurred in either inner districts, the East or the West of Hanoi.

Some new department stores in the West had reduced asking rents, contributing to a 4.24% reduction in average rent of de-partment store, down to US$65.83/ sq m/ month.

All the retail centres witnessed unchanged or minor improve-ment in occupancy, except for Pico Mall where the tenants are continuously vacating to other locations. The market average occupancy decreased to 87.82%.

OUTLOOK

An additional retail space of approximately 200,000 sq m GFA would populate the market in 2H 2012, accounting for approxi-mately 46% of total current stock.

The arrival of large supply will introduce additional pressure on retail developers. The average rent and occupancy are fore-casted to decline further, especially in the West area submarket.

The retail market is currently driven by retailers and consumers, developers are forced to find solutions coping with tough chal-lenges and competition pressure.

MARKET AVERAGE RENT & OCCUPANCY

SOME COMPLETE PROJECTS IN 2H 2012

RENTS BY TYPE (US$/ SQ M/ MONTH)

SUPPLY BY YEAR (SQ M)


0

500,000

1,000,000

1,500,000

2,000,000

2007 2008 2009 2010 2011 2012f 2013f 2014f

Existing Supply Additional Supply

30

50

70

90

110

Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12

Retail Podium Department Store Shopping Center

66

68

70

72

74

76

78

80

0%

20%

40%

60%

80%

100%

Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12


Project District GFA (sqm)

Indochina Plaza Hanoi Cau Giay 18,000

Me Linh Plaza Ha Dong Ha Dong 44,000

Trang Tien Plaza Hoan Kiem 14,000

HiWay Supercenter Ha Dong 12,000

N05 Square Cau Giay 19,000

Hapulico Complex Thanh Xuan 36,000

Total 143,000

8


HO CHI MINH CITY | 2Q 2012 | APARTMENT FOR SALE


MARKET OVERVIEW

HCMC’s total supply of primary and secondary apartment mar-ket reached approximately 84,000 units. Supply from District 7, District 2, District 4, Binh Thanh and Tan Phu districts reflects 62% of the total supply.

The average asking price recorded at US$1,210/ sq m and US$1,090/ sq m for primary and secondary apartments respec-tively.

Many forms of developers’ promotion such as lucky draw events, special gifts such as gold-bar, jewelry, furniture package etc., were offered to attract property buyers along with positive monetary and fiscal policies introduced by the Vietnamese gov-ernment.

2Q 2012 witnessed the launching of approximately 2,000 apart-ments from 9 high density residential projects while recording the average successful sale of 30%.

THE PRIMARY MARKET

The total primary supply added up to 27,000 units from 60 pro-jects with 90% of new launching units belong to mid-tier and af-fordable apartments. Asking price are ranging from US$600/ sq m to US$1,000/ sq m.

The market experienced a development trend of shop house and lofthouse styles that met a variety of customers’ demand. The asking prices are ranging from US$650 - US$1,000/ sq m.

THE SECONDARY MARKET

The total secondary supply in HCMC currently stands at ap-proximately 57,000 apartments from 190 complexes. District 7 is still the leading supplier at 30% market share.

The asking price in CBD is seeing a slight increase with the av-erage asking price at US$2,940/ sq m due to lack new supply.

MARKET OUTLOOK

Looking ahead, HCMC’s apartment market might expect ap-proximately 60,000 units from 120 projects, including projects that are currently in planning stage or under construction. It is noted that there is approximately 10% of total future supply from pending projects as the developers are facing obstacles such as slow construction progress, lack of capital and limited demand.

Lower interest rates together with financial aid packages for indi-viduals and enterprises from Government and banks will have a positive impact on the apartment market in 2H 2012.

PRIMARY MARKET, 2Q 2012


MARKET OVERVIEW, 2Q 2012

SECONDARY MARKET, 2Q 2012

FUTURE SUPPLY

0

200

400

600

800

1,000

1,200

1,400

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Primary Secondary

US$/sq mUnits

Total units Average asking price

0

5,000

10,000

15,000

20,000

25,000

0%

20%

40%

60%

80%

100%

> U

S$2,

500

US$

1,80

0-2,

500

US$

1,10

0-1,

800

< U

S$1,

100

Units

Total units % Sold out

0

4,000

8,000

12,000

16,000

20,000

0

500

1,000

1,500

2,000

2,500

3,000

1 2 3 4 5 6 7 8 9 10 11 12G

o Va

pPh

u N

huan

Binh

Tha

nhTh

u D

ucTa

n Bi

nhBi

nh T

anTa

n Ph

uBi

nh C

hanh

Nha

Be

UnitsUS$/ sq m

Average Asking Price No. of units

10%

67%

11%

11%

On-hold Planning Under construction Vacant land

9


HA NOI | 2Q 2012 | APARTMENT FOR SALE


MARKET OVERVIEW

The apartment market in 2Q 2012 showed signs of improve-ment in term of number of transactions-beneficiary from lower interest rates, sluggish stock market and range of incentives being offered by the developers.

Asking prices of apartments continued to drop across all seg-ments. The market recorded more transactions while numerous new projects coming on line with incentives such as free bikes, interior packages and discounts.

SUPPLY

Hanoi market embraced approximately 4,550 apartments in 2Q 2012 with 80% represents for mid-tier segment. Ha Dong Dis-trict emerged as a primary location of new projects, followed by Thanh Xuan and Tu Liem districts. There is no new supply in the inner districts.

Future supply up to 2014 is estimated to furnish 20,300 units, mostly located in Ha Dong and Cau Giay districts, where the infrastructure is under extensive redevelopment.

MARKET OPERATION

Owner-occupiers are adopting a wait-and-see attitude with an-ticipation of further price drops . Some issues have arisen in the context of operating apartment complexes such as over use of common space, the issuance of red books, and service fee levels with the result that owner-occupiers have become more prudent in choosing their homes.

Most transactions were recorded in mid-tier and low-end seg-ments. The market is witnessing an underlying demand towards small sized apartments of 50-70 sq m at US$75,000 - US$125,000/ unit, excluding VAT tax.

Average price of all segments followed the general downtrend with a decline rate of 8% q-o-q. A significant drop was recorded within low-end and high-end segments.

OUTLOOK

Apartment market in Hanoi is expected to bear an additional of more than 12,000 units in 2H 2012 with low-end segment repre-sents 50% of the total new supply. High-end segment will domi-nate the market in the next two years, accounting for 48% of the new supply. Majority of the new stock will come from Ha Dong, Cau Giay, Long Bien and other emerging districts such as Hoai Duc, Dan Phuong.


ASKING PRICE BY GRADE

NEW SUPPLY BY SEGMENT, 2Q 2012

SUPPLY BY DISTRICT, 2Q 2012

0

500

1,000

1,500

2,000

2,500

3,000

0

400

800

1,200

1,600

2,000

Cau Giay

Thanh Xuan

Ha Dong

Hai Ba Trung

Long Bien

Tu Liem

Hoang Mai

Dong Da

Ba Dinh

Tay Ho

Additional Supply (Units) Asking Price (US$/sqm)

10

9%

80%

12%

High-end Mid-end Low-end

522 offices in

62 countries on

6 continents United States : 147

Canada : 39

Latin America : 19

Asia Pacific: 201

EMEA : 118

This document/email has been prepared by Colliers International for advertising

COLLIERS INTERNATIONAL HOCHIMINH Bitexco Building, 7th Fl, 19-25 Nguyen Hue, District 1, HCM City, Vietnam Tel: + 84 8 3821 8777 HANOI Capital Tower, 10th Fl, 109 Tran Hung Dao Street, Hoan Kiem District, Hanoi, Vietnam Tel: 84 4 2220 5888

For further details, please contact:

Renee Kha National Associate Director

Research & Advisory Services

Tel + 84 8 3821 8777

Mobile: +84 903 039 419

Email: [email protected]

With more than 100 professionals in 2 offices in Vietnam, the Team is market driven and has proven and successful track record with both international and local experience.

From Hanoi to Ho Chi Minh City, we provide a full range of real estate services

• Research

> Market research across all sectors and geographical locations

> Market analysis, development recommendation, pricing and marketing strategy

• Valuation & Advisory Services

> Valuations for land, existing property or development sites

> Feasibility study to determine NPV, IRR and highest & best use

• Office Services

> Tenant Representation

> Landlord Representation

• Residential Sales & Leasing

• Retail Services

• Investment Services

• Real Estate Management Services

• Corporate Services

• Industrial Leasing

The foundation of our services is the strength and depth of our experience.

RESEARCH & FORECAST REPORT | 2Q 2012 | VIETNAM


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