CBRE VIETNAM, HCMC MARKET OVERVIEW Q1/2014...20 DESIGN TRENDS Building Criteria for Corporates 1....

CBRE VIETNAM, HCMC MARKET OVERVIEW Q1/2014

PRESENTED BY:

NIGEL SMITH, MANAGING DIRECTOR, LANDLORD AGENCY ASIA

MARCH 11TH

2014

2

MARKET OVERVIEW - HCMC

RISING NEW SUPPLY AND DECREASING OCCUPANCY RATES

ASKING RENT

Average asking rent across Grade A and B increased at end Q4 2013. The asking rent in the Grade A

and Grade B segment has improved by 3.0% q-o-q and 1.7% q-o-q respectively.

2013 was a stable year for office market given improvement for both asking rent and vacancy rate on

y-o-y basis.

VACANCY

Limited supply compounded with continuous demand in the market helped to improve and lower the

vacancy rates. During 2013, Grade A performed better then Grade B in term of vacancy rate.

Compared to the end of 2012, Grade A vacancy rate decreased by 4.2 pps whilst Grade B vacancy

rate went down by 1.1%.

Office Asking Rents Office Vacancy

$0

$10

$20

$30

$40

$50

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

2010 2011 2012 2013

Grade A Grade B

0%

10%

20%

30%

40%

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

2010 2011 2012 2013

Grade A Grade B

3

MARKET OVERVIEW - HANOI

RISING NEW SUPPLY AND DECREASING OCCUPANCY RATES

ASKING RENT : DOWN IN BOTH GRADES, WITH GRADE A PERFORMING BETTER

THAN GRADE B

Q-o-q Grade A: -0.2%, grade B: -4.34%

Y-o-y Grade A: -1.1%, grade B: -15.16%

Market-wide, asking rents continue to face downward pressure as more supply comes online

VACANCY

Grade A vacancy rate continued to decrease 2.77 pp q-o-q to 25.54%

Grade B vacancy also decreased 2.67 pp q-o-q to 34.32% due to positive net absorption rate and no new

Grade B office space entering the market in Q4 2013

On y-o-y basis, Grade A vacancy increased 2.45 pp while Grade B increased sharply 12.58 pp

Office Asking Rents Office Vacancy

$0

$10

$20

$30

$40

$50

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

2009 2010 2011 2012 2013

Grade A Grade B

0%

10%

20%

30%

40%

50%

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

2009 2010 2011 2012 2013

Grade A Grade B

4

Asia Pacific, Office rental cycle, Grade A&B, Q4 2013

Shanghai New Delhi Adelaide

Guangzhou

Hanoi

Shenzhen

Tokyo

Melbourne

Singapore

Manila

Taipei

Auckland

Kuala Lumpur

Brisbane

Beijing

Seoul

Ho Chi Minh City

Jakarta

Hong Kong

Bangkok

Canberra

Perth Sydney

Wellington

Bangalore A

K

M S

H

S G

C

W

A T

M

T

J

B B

S

N

P S

H S

B

H

M

B

Mumbai

HCMC

Landlords TENANTs

Grade A and B vacancy rate: y-o-y

Grade A and B asking rent: slightly –

but watch for Grade B supply

HANOI

TENANTs

Landlords

Grade A vacancy rate:

Grade B vacancy rate:

Grade A and B asking rent: y-o-y

OFFICE MARKET ANALYSIS

THE RENTAL CYCLE

How to design and build a

successful office development

6

CBRE LANDLORD PLATFORM IN ASIA

Experience

ASIA OUTLOOK

8

APAC STILL KEY DRIVER OF GLOBAL GROWTH

Asia still leads Global GDP

United States European Union

Asia Pacific

Latin America

0.9%

4.2% 3.0%

2.9%

GLOBAL GDP TO GROW AT

2.9% in 2014

Source: Oxford Economics (As of Feb 2014)

Note: Size of bubbles represent % of Global GDP

COMPANIES CONTINUE TO EXPAND IN APAC

Expectations improved; more business investment needed

Source: Economist Corporate Network (Asia Business Outlook Survey 2014, January 2014)

Expected Revenue Contribution from APAC

OFFICE NET ABSORPTION IS SET TO RECOVER

Asia office net absorption vs real GDP growth

Source: CBRE Research, Oxford Economics (February 2014)

VACANCY AND DEVELOPMENT PIPELINE, % OF STOCK

Particularly in some emerging markets

Source: CBRE Research (As of Feb 2014)

High Risk of Oversupply Moderate Risk of Oversupply Low Risk of Oversupply S

he

nzh

en

New

De

lhi

Mu

mb

ai

Ba

nga

lore

Sh

an

gh

ai

Gu

an

gzh

ou

VACANCY RATE AT HISTORIC LOW IN SOME MARKETS

Particularly in some emerging markets

Historic low Historic peak

Current level Long term average


Markets above 10-year average Markets below 10-year average

Low risk of oversupply High risk of oversupply

KEY FINDINGS

Demand Recovery Insurance, TMT and energy sectors continue

to be generally active

Banking and legal sectors contracting in

mature markets but seeking opportunities in

emerging locations

Oversupply Risk in Emerging

Markets

Negotiation of better leasing packages

Slippage in development pipeline to better

time the market

Occupiers to Drive Value

from Real Estate

A need to balance cost, growth, and

efficiency

Improvement in space utilization of workplace

Implementation of multi-location strategies


OCCUPIER TRENDS

OCCUPIER TRENDS

Work styles have changed

Technology rapidly changing

our world

Shift work – life balance

From individual to team focus

Changing generations

any time

any place

any device

More complex work

Need for communication

Source: CBRE EMEA Occupier Survey 2013

16

OCCUPIER TRENDS

Optimal work/life balance drivers

EFFECTIVITY

EMOTION

EFFICIENCY

1. Enjoyment at work

2. Flexible workspace

3. Mobile connectivity


17

OCCUPIER TRENDS

New ways of working

1. Corporate branding

2. Sense of belonging

3. Stylish and colourful


18

OCCUPIER TRENDS

New ways of working

20 Fenchurch Street , London

Three floor “sky garden”

Lower / upper floor sizes are counter-intuitive and this

has been successful

1:8m occupational density which allows future

expansion and increases the opportunity to achieve

top rents

Architect Rafael Vinoly

BREEAM Excellent

CBRE Appointed Marketing and Leasing Agent

DESIGN TRENDS

20

DESIGN TRENDS

Building Criteria for Corporates

1. Location - district, accessibility, transport, address, access to clients

2. Pricing - rent per sq ft, incentive packages

4. Building profile - architecture, street presence, identity

5. Design – floor plate, layout, efficiency

6. Specification - design criteria, quality of finishes, technical resilience

7. Arrival experience - size, finishes, level of service, security

8. Building management - efficiently run, service charges, security protocol

9. Landlord - reputation, "customer“ focused or shareholder focused?

3. Lease Flexibility - lease term, expansion / contraction options

10. Sustainability - BREEAM / LEED rating, green credentials


21

BUILDING TRENDS

Building profile

1. Architecture

2. Visibility

3. Lighting

4. Art

ICC, Hong Kong


22

BUILDING TRENDS

Design

1. Main lobby

2. Lift experience

3. Natural light

4. Health, safety and security

CBRE Appointed

Marketing and Leasing

Agent

Cannon Place, London

23

BUILDING TRENDS

Arrival experience

1. Multiple cafes, restaurants and bars

2. Soft seating areas

3. Trendy and expressive lobbies

4. The ‘shopping center experience’

CBRE Appointed

Marketing and Leasing

Agent

TAIPEI 101, Taiwan

24

DESIGN TRENDS

Environment

Hudson Yards, NYC

Over 12 million sq ft of mixed use development

14 acres of open space including areas to hold exhibitions

and events

Hotel, health club, spa, retail destination, restaurants,

school and 5,000 homes, cinema and entertainment

spaces that can be used/rented by tenants

Subway extension links Hudson Yards to every subway line

in NYC ($2.1bn of public investment)


SUCCESSFUL LEASING STRATEGIES

26


Research

1. Design

2. Specifications

3. Facilities

4. Management

5. Environment

6. Accessibility

7. Ownership

• Introduced the “Village Concept”

• Business support services

• Community focused

• Building strategic partnerships

“Our goal is to foster a relationship between

the tenant and landlord based on trust. At

the very least, it’s about giving the tenant

peace of mind, but more than that, we

want tenants to feel valued and have a

genuine sense of belonging”.

CBRE Appointed as Marketing and Leasing Agent

Heron Tower, London

27


Differentiate yourself from the competition

C18 Zone at Two IFC, Hong Kong


28


Tailor to the local market

TAIPEI 101, Taiwan


29


Create a theme and be more visible

China World Tower, Beijing

CBRE Appointed as Marketing Consultant

Global Destination Inspiring Business

30


Increase you marketing budget

1. Traditional:

• Print

• Show suite

• Banners

• Events

2. New :

• Digital

• Social media

• Advertising

31


The results speak for them selves

Floor Plan

Key Differentiators

• Iconic Tower

• 118 stories

• Part of a 10,000,000 sf

mixed use complex

• Quality management and

security

• Designed and specified

for banks

Premium Value Drivers

• 3 minutes from Central

CBD

• Design & Specifications –

10 sm pp

• Facilitates – 1 million sf

mall, 2 hotels, serviced

apartments, residential,

car parks

• Environment – stunning

water front views

32


ICC – “I can see”

Floor Plan

Key Achievements

• Morgan Stanley - 580,000 sf

• Deutche Bank - 450,000 sf

• Credit Suisse - 420,000 sf

• Rents increased 300%

Marketing Strategy

• Branding: Completed before

marketing collateral

• Mediums: Traditional +

Advertising

• Budget: Estimated at

USD4,500,000

SUMMARY

34

SUMMARY

The key to your success

Economic

Social Environment

EFFECTIVITY

EMOTION

EFFICIENCY

2010 2011

2014

35 35

© 2014, CBRE, Group Inc. CBRE Limited confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their

accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This

information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The

Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE

offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development

services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.

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CBRE VIETNAM, HCMC MARKET OVERVIEW Q1/2014...20 DESIGN TRENDS Building Criteria for Corporates 1....

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