An Industry Overview - CBRE · PDF fileVIETNAM RETAIL REAL ESTATE INDUSTRY OVERVIEW ... No. 1...

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Retail Real Estate in VietnamAn Industry Overview

Richard LeechExecutive Director

CBRE |

AGENDA

VIETNAM RETAIL REAL ESTATE INDUSTRY OVERVIEW

• Economic Overview• Retail Real Estate Highlights• Retail Real Estate Outlook

Economic Overview

CBRE |

8% 11%20%

11%

26%

12%20%

37%

52%45%

34%

39%

37%

40%

38%

29% 27%

36%

23%

34%26%

14% 4% 4%13%

3%11% 7%

0%

20%

40%

60%

80%

100%

Hanoi Hai Phong Da Nang Ho Chi Minh Can Tho Total 5 cities Vietnam

<VND1.5 mil. VND1.5 mil. - <3 mil. VND3 mil. - <4.5 mil.VND4.5 mil. - <7.5 mil. VND7.5 mil. - <15 mil. VND15 mil. - <30 mil.VND30 mil. - 150 mil. or higher

GDP growth by country (% y-o-y)

Source: Oxford Economics

T H E E C O N O M I C “ B R I G H T S P O T ”

GDP growth in 2013 is forecasted the 3th highest

Higher than the average of Asia Pacific and South-East Asia

16% - 17% has the income higher than VND 15 million

Asia almost certain to benefit first and most from any global upturn

Chart of household income

Source: AC Nielsen

VIETNAM ECONOMIC OVERVIEW

CBRE |

VIETNAM ECONOMIC OVERVIEW2 0 1 2 P E R F O R M A N C E

Source: General Statistics Office

2011 11M/2012

GDP (% y-o-y) 5.9% 4.7 (9M/2012)CPI (% y-o-y, average) 18.58% 9.43%Exchange rate (e-o-p) 20,828 20,828Export (US$ Bn) 96.9 (34.2% y-o-y) 104 (18.4% y-o-y)Import (US$ Bn) 106.7 (25.8% y-o-y) 103.9 (6.8% y-o-y)FDI Implemented (US$ Bn) 11 (0% y-o-y) 10 (-0.5% y-o-y)International Arrivals (million arrivals) 6 (19.1% y-o-y) 6 (11.2 % y-o-y)Retail and Services Turnover (USD) 95 billion (24.2% y-o-y) 100 billion (16.4% y-o-y)

CPI, VN (% y-o-y))CPI, VN (% m-o-m)

Refinancing rate (%)Rediscounting rate (%)

-1.0-0.50.00.51.01.52.02.53.03.54.0

0

5

10

15

20

25

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

CPI (%

m-o

-m)

CPI (

% y-

o-y) /

Inter

est r

ates (

%)

Monetary contraction

Inflation surged

Monetary expansion

CBRE |

Interest rates:

• Interest rates have been lowered by a total of 5% since the beginning of the year – it is widely considered

that further cuts in 2012 are unlikely.

• The Governor of the State Bank of Vietnam has re-enforced this point highlighting that extreme caution

must be taken if interest rates were to be reduced further.

Improvement in trade balance thanks to low imports:

• For 11M/2012, export is almost equivalent to import

• Import growth rate in the 11M/12 was 6.8%, which is a notable decrease y-o-y (11M/2011: 26.4%)

VIETNAM ECONOMIC OVERVIEWK E Y E C O N O M I C D R I V E R S

SBV Interest rates (%)

Source: State Bank of Vietnam

0

5

10

15

20

2009 2010 2011 2012

Base rate Re-discounting rateRe-financing rate

Vietnam Trade Deficit (US$ Billions)

Source: Vietnamese General Statistics Office

-15

-10

-5

0

5

January April July OctoberUS

$ bill

ion

2012 2011

CBRE |

Inflation:

• Increased at the end of the third quarter end with rising costs in healthcare, education, transports costs and food prices.

• M-o-m inflation in September was the highest since May 2011, with interests rates recently softened the situation must be carefully managed.

• The inflation has been controlled again in November (0.47% m-o-m; 7.08% y-o-y)

VIETNAM ECONOMIC OVERVIEWK E Y E C O N O M I C D R I V E R S

-1

0

1

2

3

4

0

5

10

15

20

25

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

CPI (%

m-o

-m)

CPI (%

y-o-

y) CPI (y-o-y, Vietnam) CPI (m-o-m, Vietnam)

Source: Vietnamese General Statistics Office

Vietnam Regional and International Comparisons

CBRE |

Vietnam’s Ranking in A.T Kearney Retail Survey

• 2008: No. 1• 2009: No. 6

• 2010: No. 14• 2011: No. 23

• 2012: Not included on the list

THE GLOBAL RETAIL DEVELOPMENT INDEX

WINDOW-OF-OPPORTUNITY analysis

Source: 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

CBRE |

0.34 0.34

0.52

0.38

0.53

0.37

0.59

0.04 0.07

0.0

0.2

0.4

0.6

0.8

Beijing Shanghai Jakarta Seoul Kuala Lumpur(Klang Valley)

Taipei Bangkok Hanoi HCMC

China Indonesia Korea Malaysia Taiwan Thailand Vietnam

Reta

il st

ock

per c

apita

sm

VIETNAM RETAIL REAL ESTATE MARKET

In comparison with other key markets in Asia, HCMC retail market is still untapped and has considerable potential for growth, which also requires a compatible growth in the economy and income per capita

F&B, entertainment and essential goods are driving the retail industry in terms of the number of enquires.

Limited quality supply of large space (over 1,000 sm) while there is demand from foreign companies for such.

Retail space per capita in key Asian market

Source: CBRE

CBRE |

VIETNAM RETAIL REAL ESTATE MARKET

There is still scope to develop modern trade in Vietnam when benchmarked against other Asian countries

Expansion from digital retailer is witnessed from FPT, Sony, Blackberry, and HTC.

Many new foreign brands entered the Vietnam market for the first time (Sisley, Christian Dior, Banana Republic, Burger King)

CBD rents remain stable

Landlords become more flexible with commercial terms

64%

88%

53%

63%

46%

70%

43%

66%

13% 16%

37%

China Malaysia Thailand Indonesia Vietnam

Source: AC Nielsen

China Sh

angh

ai

Malay

sia

Kuala

Lump

ur

Thail

and

Bang

kok

Indon

esia

Jaka

rta G

reate

r

Vietn

am

Hano

i HCMC

Share of modern trade

Vietnam Retail Real Estate Market

CBRE |

HCMC RETAIL REAL ESTATE MARKET

2 0 1 2 Y T D S N A P S H O T

* All rents are quoted on NLA, exclusive of VAT and service charges

Source: CBRE

Continued occupier

demand from both domestic

and international retail brands.

DEPARTMENT STORES

SHOPPING CENTRES

TOTAL

Total supply (GFA, sm) 115,820 422,911 538,731

Vacancy rate (%) 2.3% 15.4% 12.3%

CBD average asking rents (US$ psm per month)

$103.06 $105.40

Q-o-q change (%) 0.0% -3.4%

Y-o-y change (%) -5.8% -11.6%

Non-CBD average asking rents (US$ psm per month)

$47.47 $29.93

Q-o-q change (%) -2.5% 0.0%

Y-o-y change (%) -8.2% -9.5%

CBRE |

Shophouses continue to absorb retail demand• Further demand for retail on Le Van Sy, Hai Ba Trung, Ly Tu

Trong, Mac Thi Buoi, as well as outside CBD such as, Cao Thang, Vo Van Tan, Nguyen Trai, Tran Hung Dao

Vincom A and Pandora City increased retail supply in 2012• Only 2 retail centres came online in 2012 but provided a large

supply in terms of retail GFA area.• Both centre supplied over 75,000 sm.• Still enough demand to fill this new supply.

Continued occupier demand from both domestic and international retail brands for commercially viable retail space.


CBRE |

New brands in F&B:

New brands in Fashion

NEW TO MARKET RETAILERSNEW BRAND/NEW ENTRANCE

CATEGORY NAME

Retail centre (Department Store, Shopping centre,

Supermarket/ Hypermarket)

TakashimayaAeon

NTUC FairPriceSC Vivo City

Payless

Convenient StoreUncle Bill

Mini Shop & Go (Trung Nguyen)

F&B

Burger KingPepper Lunch

Baskin RobbinsParis Baguette

The Pizza Company (in HCMC)Banana Leaf

Health, Beauty & Fashion

7 for all mankind Banana Republic

Sisley

Luxury Brands

Hugo BossHermes (in HCMC)

Christian DiorErmenegildo Zegna

CBRE |

38,000 sm of retail GFA;

3 basements and 3 floors;

Opened on 10 Oct 2012;

Successfully attracted flagship stores as well as new luxury brands;

Currently operates at 95% committed occupancy;

Strong evidence to support the need for a high-end shopping experience;

With a good location, proper tenant mix and layout, the market can still

absorb new supply.

HCMC NEW SUPPLY 2012

Anchor tenants:

V I N C O M C E N T E R A

CBRE |

40,000 sm of retail GFA;

1 basement and 5 floors;

Opened November 2012;

Operating at 80% committed occupancy;

Located in Tan Phu District, the project is unique in the surrounding

area.

Anchors: Big C, Nguyen Kim Electronics, Megastar Cinema

HCMC NEW SUPPLY 2012PA N D O R A C I T Y

Anchor tenants:

PowerBowl 388

CBRE |

HCMC MAJOR NEW SUPPLY BY 2015

RETAIL DEVELOPMENT FORWARDING

Aeon Celadon City

Times Square

SC VivoCity

Cantavil Premier

Tokyu BecamexSaigon Centre

Saigon Airport Plaza

Thao Dien Pearl

4,000 smExpected to open in Q1/2013 tenants inc D&G

50,000 smExpected to open in 2015 tenants include Takashimaya Department Store

30,000 smExpected to open in Q3/2013,Tenants include Parkson Department Store

20,000 smExpected to open in Q2/2013 72,000 sm

Under construction but expected to open in 2015, Coopmart JV with FairPrice

Under Planning but expected to open 60,000m2 in phases between 2015 -2020

Under planning 40,000 smUnder planning, expected to open in 2014

CBRE |


CBRE |

Larger pressure on newer projects anticipated as

vacancy increased

HANOI RETAIL REAL ESTATE MARKETQ 3 / 2 0 1 2 S N A P S H O T

Note: All rents are quoted on NLA, in ground floor areas, inclusive of service charges but exclusive of VAT.

Source: CBRE

DEPARTMENT STORES

SHOPPING CENTRES

RETAILLOBBIES

TOTAL

Total supply (NLA, sm) 46,000 217,309 10,310 273,619New supply (NLA, sm) 0 17,209 0 17,209Vacancy rate (%) 7.0% 18.1% 2.9% 15.7%Avg. asking rents(US$/sm/month) $62.8 $37.8 $76.8 $45.9* CBD (US$/sm/month) - $54.2 $145.9 $88.1

Y-o-y change (%) - -4.1% 4.9% -0.1%Q-o-q change (%) - 3.8% 0.0% -0.4%

* Non-CBD (US$/sm/month) $62.8 $34.4 $24.6 $34.5Y-o-y change (%) 16.3% -8.6% 16.9% -1.4%Q-o-q change (%) -1.7% 11.1% 0.0% 9.1%

CBRE |

Supply still increased, although at a slower pace than 2011• Throughout 2011: ~140,000 sm from 5 projects • 2012YTD: ~49,000 sm from 2 projects, including Indochina

Plaza Hanoi (17,209 sm) and Melinh PLAZA Ha Dong (31,700 sm)

• Still reasonable demand: 50% occupancy in 2 newly-opened projects

• Popularity between CBD and non-CBD centre's is drifting further apart

Rental rates generally stabilized y-o-y• CBD: US$88 psm• Non-CBD: US$34.5 psm Consumers still more conservative with their spending -

Retail sales growth rate in 9M/12: 10.2% y-o-y after inflation

HANOI RETAIL REAL ESTATE MARKET

CBRE |

Indochina Plaza Hanoi• Developer : Indochina Land• Concept : Specialty shopping and

entertainment plaza.• NLA: 17,209 sm• Opened Aug 2012• 2 basements, 5 retail floors • Currently 77% committed and 50%

occupied• Successfully attracted famous fashion brands

(Nike Town, Sembonia, Vivi boutique London, etc.), new F&B brands (Burger King, Tous Les Jours) and strong anchors (Citimart, Elite)

• Rents range from US$15 to US$70/m2/mth

HANOI RETAIL REAL ESTATE MARKETNEW SUPPLY IN 2012

CBRE |

Melinh PLAZA Ha Dong• Developer : Eurowindow Holdings• Concept : Big Box Trade Centre• GFA: 45,000 sm• 5 Levels of retail + 1 level basement parking• Opened Oct 2012• Located in Ha Dong Dist., a fast developing

area to the West of Hanoi targeting to mid-and lower-income customers

• Anchors: Metro, Top care, World Games, M2, Lotte Cinema , Hoan My Furniture, KFC

HANOI RETAIL REAL ESTATE MARKETNEW SUPPLY IN 2012

CBRE |

HANOI RETAIL REAL ESTATE MARKETMAJOR SUPPLY IN 2013

Trang Tien PlazaExpected to open Q1/13Approx 12,000 GLALocation : City CentreConcept : High end specialty retail

Vincom Mega MallRoyal CityExpected to open July 2013Approx 230,000 GFALocation : Dong Da DistrictConcept : Underground regional mall

Vincom Mega MallTimes CityApprox 230,000 GFAExpected to open Q4/13Location : Hai Ba Trung DistrictConcept : Regional Mall

CBRE |

HANOI RETAIL REAL ESTATE MARKET

CBRE |

“WHERE ARE ALL THE SHOPPERS”?

Economy remains the top concern for Vietnamese consumers Vietnam consumers confidence has gone flat leading to ‘belt tightening” Wet markets are still important for shoppers but there is an increasing trend toward modern retail

centre. 80% of the shopper change store and brands according to promotion.

4% 6%9%

15%

21%

27%

56%38%

10% 14%

0%

20%

40%

60%

80%

100%

2010 2011

Changes store based on best promotion

Very seldom changes store, but look actively for promotion

Regularly buy different brands because they are on promotion

Only buy promotions if they already like brands

Promotion do not influence on brand choice

Source: AC Nielsen Vietnam

VIETNAMESE CONSUMER TRENDS

Vietnam Retail Outlook

CBRE |

Vietnam Government commits to develop 1,500 trade centres in the next 7 years and phase out the informal sector;

Hanoi has recently awarded Asia Games for 2019, which should see major infrastructure improvements in Hanoi of approximately US$30 billion;

ENT remains an unclear challenge to foreign retailers;

Unstable economy, most specifically in terms of GDP growth rate and inflation during this current 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, important for deciding where to locate, build a factory, or establish an outlet;

Expensive retail space for example at prime locations in HCMC, the rents usually are from US$100 to US$200 psm per month;

VIETNAM RETAIL REAL ESTATEO U T L O O K F O R V I E T N A M

CBRE |

Renovation and improvement of shop house retail will continue to put pressure on rents, especially outside the city centre.

The issues faced by non-CBD retail centres highlights issues of tenant mix. More projects may turn to master leases with professional retailers (department store, mall operator)

More luxury retailers to enter the market as they expand across borders

Continued international-style retailing: fast-food chains set to expand

Conversions of wet markets into formal trade centres.

Growing demand to come from:

Expanding Vietnamese retail chains – nationwide rollout such as FPT, Trung Nguyen Coffee

F&B, daily necessities (C Stores), FMCG and entertainment will continue driving the market

VIETNAM RETAIL REAL ESTATEO U T L O O K F O R V I E T N A M

CBRE |

Global Retail Expansion

Emerging Middle Class

Plateau of development in mature markets – surge of development in emerging markets

Retail Real Estate as an Investment Strategy

Employment Needs

Public Space as the New Anchor Tenant

Shopping Centre’s providing unique roles in society

Social Networking & On Line Shopping

INTERNATIONAL RETAIL REAL ESTATEL E S S O N S F R O M I C S C W O R L D S U M M I T & M I P I M A S I A

PLEASE FILL INTHE EVALUATION/ENQUIRY FORM

CBRE |

CBRE Global Off ice Locat ions

© 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 theinformation 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 noguarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us forexample 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 bereproduced without prior written permission of CB Richard Ellis.

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An Industry Overview - CBRE · PDF fileVIETNAM RETAIL REAL ESTATE INDUSTRY OVERVIEW ... No. 1...

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