VIETNAM | DECEMBER 2013 2014: For reports, join our group: bit.ly/investVN or visit us at

slideshare.net/ColliersVietnam The Top 7 Real Estate Trends It’s the time of year to review your asset strategy

going into the New Year as developed economies show signs of recovery. While recovery is on the horizon and

the Fed will begin tapering as of January 2014, strong forward guidance of low rates reduces risk and helps to

temper near-term volatility. Expect rates to stay low for 2014 and into 2015. With this in mind, when you’re

allocating your assets and reconsidering your strategy look to Asia’s emerging and frontier markets for higher

return opportunities. Asia will continue to lead the world in growth - 6% in 2014 and 5.5% in 2013. However,

expectations for Asia should be revised downwards. As a rule, expect returns to shrink over the next several

years across all markets and asset classes in emerging markets as they continue to converge with developed

economies. 2013 was a stabilizing year for Vietnam and the risk reward environment is beginning to gain clarity.

It has been a clean sweep across the board in 2013 as GDP, inflation, interest rates, forex reserves, having of

NPLs, restructuring of the finance sector have all made gains. FDI continues to pour into Vietnam as the

investment environment is improved and foreign firms can leverage industry experience to capture leads in the

market. This will continue to strengthen exports, develop the support industries, buttress the currency, and lead to

a rise in M&A deals. While the indicators are encouraging, there are still uncertainties that lie ahead such as the

progress of financial restructuring, NPLs, forex stability, domestic demand, and the recovery of developed

economies that will dampen foreign investments in the short term. The Eurozone is expected to expand by 1%-

2%, US by 2%-3%, China by 7%-8%, and Japan by 1.5%. Colliers International | Accelerating success |

www.colliers.com/vietnam

As we turn the corner into 2014, here are 7 trends to follow: 1. The economy is growing once again and

GDP is forecasted 90% within 1.5 years. Both grades A and B will experience to grow by 5.7% in 2014

compared to 5.34% in 2013 and increased demand in the year ahead and should represent 5.03% in 2012. The

services and industrial sectors are the left-tail of future demand riding on GDP and performance expected to

expand payrolls and capital investments driving of the service sector. up the appetite for credit. Credit appetite

and general economic expansion will push inflation up to 7.5% from 6.4% in 2013. Expect interest rate to follow

suit across the board. 5. 2013 saw residential finally begin to thaw. Social housing has shown the most

movement as demand outstrips supply. As confidence re-enters the market and home loans are gaining

momentum, the mid-income segment has also 2. The VND will lose value to the dollar. VND will devalue

seen an uptick in both Q3 and Q4. Both supply and demand further by 1-5% due to the rebound of major markets

such for mid-income will be healthy in 2014 and we expect a as the US, China, and Japan. As foreign markets

recover, thawing of the luxury sector by the end of 2014. their return-to-risk ratios improve beyond that of

Vietnam and result in a net withdrawal of dollars. Strong foreign trade balance, FDI, and overseas remittances

support the VND and help cushion the drop. 6. Finance reform will make significant gains in 2014 as the

framework is clearly laid out. The VAMC, which has already made strides in acquiring NPLs worth close to

US$900 million from 21 lenders, will be further supported by a legal Vietnam must focus on reducing country

risk as well as framework to set up a debt trading market. Cross-ownership increasing the number of products to

fill in a risk-return of financial institutions will be assessed via more stringent spectrum that currently has many

gaps. There are many auditing and further consolidation will occur. ways to achieve these goals, such as

securitization of Circular 02, delayed until June 1st, will cast light on the lending institutions, real estate (such as

creating a market for non performing loans and setting up REITs of properties, mortgages, and loans), raising the

ownership cap of protected sectors, and tackling the ease of doing business in Vietnam among other things. The

VND will devalue steadily over the next several years until these are addressed unless leading markets struggle.

3. Property prices have begun to firm up and have shown strong downward resistance. Prices will continue

to firm, and in certain classes, such as commercial retail, prices have already begun to rise. Strong demand for

retail has kicked in 3Q and 4Q 2013 nudging rents up in prime locations with wide frontages and corner real

estate. 4. Commercial office demand rises in the second half of the year and will apply upward pressure on

rents and occupancy with relatively little new supply. The Vietcombank Tower will be the major source of

supply in 2014, approximately 50,000 sqm NFA, and we expect occupancy to stabilize at KYNAM DOAN

Investment Manager kynam.doan@colliers.com +84 1223 128 032 real balance sheets ++as it lays the guidelines

in classifying assets and provisioning for risk. While driving forward reform, it will be an additional source of

volatility. 7. There will be a proliferation of products such as corporate bonds and securitization of real estate

that will be further supported by an increase in ownership cap, credit rating agencies, and improved oversight.

Such a proliferation will encourage the country to convert savings into GDPproducing investments 2013 was

year of stabilization. 2014 will a year of early growth and major reform. However, market fundamentals are still

weak and the country must show strong commitment to economic reform or else risk falling into prolonged

stagnation. We hope you prosperity in the New Year and let us know your expectations and how you plan to

prepare for it. Happy New Year! COLLIERS INTERNATIONAL HO CHI MINH OFFICE Bitexco Office

Building, Level 7 19-25 Nguyen Hue,District 1, Tel +84 (8) 3827 5665 Fax +84 (8) 3827 5667 Accelerating

success