Why Vietnam 2007

8/4/2019 Why Vietnam 2007

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2007


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CB Richard Ellis - VIETNAM

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TABLE OF CONTENTS PAGES

1.VIETNAM INTRODUCTION AND ECONOMY.32.HO CHI MINH CITY53.HANOI14MAP OF VIETNAM AND MAJOR CITIES


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1. VIETNAM INTRODUCTION AND ECONOMYVietnam, evaluated by the World Bank and UNDP, has one of the most stable politicalsystems coupled with economic growth ranked amongst the highest in the world. Since2004 and into 2007, Vietnam has been affected by bird flu, droughts, flooding, inflationand rising fuel bills, however the Vietnamese economy has achieved steady andsatisfactory growth results year on year and is ranked as the 2nd fastest growing economyin South East Asia. With WTO accession Vietnam is an attractive emerging market, inparticular the property sector. This report attempts to provide an insight into the growingeconomy and property market in HCMC and Hanoi.

1.1GDP

(Source: General Statistic Department)In 2006, Vietnam recorded a GDP growth rate of 8.17%. With a high GDP growth rate of 7 8% in the past five years, Vietnam has proved to be one of the most attractive destinations inthe region for foreign investors. Besides, Vietnam has certain advantages in workforce,productivity and social structure. For those reasons, Vietnam could develop quickly in mid-termand GDP growth will reach 8 8.5% on average by 2010. Vietnam achieved a GDP percapita of US$720/person in 2006, much higher than that of 2005 (US$640/person). Vietnamcould double its gross domestic product by the end of the decade with GDP per capita

reaching US$1,100 in 2010.

V i e t n a m G D P G ro w t h 1 9 9 5 - 2 0 0 6

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Bill.USD

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

GDP at Current Prices GDP Growth Rate


4/20

1.2 Export Import

(Source: General Statistic Office)

In 2006, Vietnams export turnover reached US$39.6 million, increasing 22% against 2005.Export reached high growth in major markets like US, EU, Japan, China and ASEAN. Mainexport items are garments and textile, footwear, seafood, wood product, coffee, rubber, coal,handicrafts, electric wire and cable and cashew nuts.

Import turnover of Vietnam in 2006 has reached US$44.410 million, increasing 21% against2005. Main import items are still materials, equipment and technology. Imports of gasolineand oil, fertilizer and steel billets will be monitored to reduce dependence on outside suppliers.Import goods are mainly from Switzerland, Australia, France, Finland, Thailand, Philippines,

China, Indonesia, Russia, New Zealand and Canada.

1.3 Inflation rate

(Source: General Statistic Office)

Foreign Trade

(10.0)

-

10.0

20.0

30.0

40.0

50.0

2000 2001 2002 2003 2004 Prel.

2005

Prel.

2006

Bill.USD

Exports Imports Trade Balance

INFLAT ION RATE1 9 9 6 -2 0 0 6

-1.00

1.00

3.00

5.00

7.00

9.00

11.00

13.00

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

%


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In 2005, the high inflation rate of 8.4% resulted from the reduction in production due toimpacts of droughts and bird flu as well as high prices of import commodities including oiland gas, steel ingots and fertilizers. Inflation in 2006 is on a declining trend compared tothat of 2005 (6.6%). According to the forecast of the Asian Development Bank (ADB),

sustained growth in foreign direct investment flow, overseas remittance and tourismreceipts will also propel growth. Vietnams inflation rate is expected to range from 5% to6% in 2007 and 2008.

1.4 PopulationAccording to the year 2005s statistics, (census is taken every five years) Vietnam has apopulation of over 83 million persons with an average population growth rate of 1.7% peryear. Vietnam Commerce and Industry Chambers reports and International LabourOrganisation (ILO)s statistics show that from 2001-2010 Vietnam has been expecting 1.8million people reaching the labour age (18 years-old) and about 350,000 peoplereaching retirement age every year.

Ethnic groups: Vietnamese (85%-90%), Chinese (3%), Hmong, Thai, Khmer, Cham, etc.Religions: Buddhism, Hoa Hao, Cao Dai, Christian (predominantly Roman Catholic, someProtestant), Animism, Islam.

2. HO CHI MINH CITYHo Chi Minh City has long been regarded as an economic hub of Vietnam thanks to itsperceived superior infrastructure, strong business links with the outside world andconvenient geographical position.

Surface area: 2,093 sq km Population 6-7 million 19 Urban Districts, 5 Rural Districts 2006 GDP per capita: US$2,185 2006 GDP growth rate: 12.02%

The Citys economic development orientation; focuses on services such as commerce,finance, banking, tourism, transport and communication, culture, healthcare, high-techprofessional worker training.

As estimated, the population of Ho Chi Minh City by the end of 2006 was between 6-7

million people (comprising 7.7% of the whole nations population of over 83 millionpersons). However, the actual population approaches 7-8 million when population ofoutlying areas and migrants from neighbouring provinces seeking work are taken intoaccount.

Stretching over an area of 2,093 sq km, the City is bordered by Binh Duong Province inthe North, Dong Nai Province in the East, Tay Ninh Province in the West and Long AnProvince in the South. Administratively, the City is divided into 19 districts.


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MAIN DISTRICTS (QUAN)District 1 and District 3 The City centre where most government authorities and foreignbusinesses are located. The current Central Business Districts (CBD) is generally acceptedas areas in District 1 along major thoroughfares such as Le Loi, Nguyen Hue, Le Duan,Dong Khoi streets and/or within the 1-2km radius around the City Hall and Notre DameCathedral.

District 2, located in the North East gate of Ho Chi Minh City. The district is adjoining toDistrict 1, District 4, District 7, District 9, Binh Thanh District, Thu Duc District and DongNai province. District 2 benefits from advantageous transport communication by road andby rail and a new proposed urban centre in Thu Thiem Peninsula, which is situatedopposite to the existing City centre by Saigon River.

District 4, adjacent District 7 and District 8 in the South through Te Canal, District 1 in theNorthwest through Ben Nghe Canal, District 2 in Northeast through Saigon River. Situatedat the South East gateway of Ho Chi Minh City. District 4 is a maritime transport junctionand will be developed as a centre for maritime port commerce, services and for foreigntrade and transport.

District 5, better known as China Town (Cho Lon), hosts the largest Chinese community in Vietnam and maintains often-unofficial business links with Chinese speaking countries.District 5 is adjacent District 1, District 10, District 11, District 6 and District 8.

District 7, located in the southern gateway of HCMC, adjacent to district 4, district 8, BinhChanh and Nha Be. The new urban centre Phu My Hung is located here.

District 9, a new urban centre of Ho Chi Minh City; adjacent District 2 in the south, DongNai Province in the East and Binh Duong Province in the West and Northwest.

Thu Duc District, a new urban centre, located in northern east of HCMC, contiguouslyDistrict 2 and District 9. It is one of important industrial centres in HCMC and is also aneducation centre with many universities in situ.

Binh Chanh, Binh Tan and Nha Be Districts, located in the West - South of the City. Threemajor industrial parks gather here: Tan Tao, Vinh Loc and Le Minh Xuan. The area is thegate to Mekong Delta provinces.


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2.1OFFICE MARKETIn Ho Chi Minh City, there are total 81 medium and high quality office buildings supplying351,727 sqm NLA in Ho Chi Minh City. Most of the buildings are located in District 1, theCitys administrative centre. There are currently 5 Grade A office buildings (NLA of 77,935sqm), 14 Grade B office buildings (NLA of147,907 sqm) and 62 Grade C office buildings(NLA of125,885 sqm).

2.1.1Grade A Office BuildingsMost of the Grade A buildings where constructed before the Asian economic crisis in 1997by Hong Kong and Singaporean investors. Saigon Centre is the first Grade A officebuilding completed in 1996. The rents for Grade office space is around $38.00 per sqm(including service charge, excluding 10% VAT), with occupancy at 100%. Most Grade Abuildings have floor plates of over 1,000 sqm and can accommodate large space userswith lettable areas of more than 10,000 sqm


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2.1.2 Grade B & C Office BuildingsMost of the existing stock was constructed in the mid 1990s, before the Asian financialcrisis. The rents for Grade B buildings is $31.00 per sqm (including service charge,excluding 10% VAT), with occupancy rates of 99%. Most Grade B buildings have a floorplate less than 1,000 sqm, apart from Saigon Trade Centre and Me Linh Point Tower.Grade C buildings have primarily been built by local developers and tend to be no morethan 8 storeys high with a GFA of less than 5,000 sqm. The rents are $25.00 per sqm(including service charge if applicable, excluding 10% VAT), with occupancy rates of 95%.

Leased Area - Occupancy rate

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

sq m

0%

20%

40%

60%

80%

100%

%

Vacancy

(sqm)

0 0 2 ,50 2 18 ,58 4 9 2,10 0 8 3,72 7 76 ,78 5 4 7,8 99 4 3,73 4 4 5,6 96 4 0,153 3 0,9 50 2 5,0 60 14 ,0 69

Leased

(sqm)

14,900 19,426 33,245 47,788 75,354 83,727 125,282 160,358 164,523 194,811 227,532 250,412 288,193 337,658

Occupancy

(%)

100% 100% 93% 72% 45% 50% 62% 77% 79% 81% 85% 89% 92% 96%

Q4 .9 3 Q4 .9 4 Q4 .9 5 Q4 .9 6 Q4 .9 7 Q4 .9 8 Q4 .9 9 Q4 .0 0 Q4 .0 1 Q4 .0 2 Q4 .0 3 Q4 .0 4 Q4 .0 5 Q4 .0 6

(Source CB Richard Ellis)

With a shortage of high quality space and increasing demand rents are expected tomaintain an upward trend with rental rates exceeding $40.00 per sqm until new Grade Astock comes on line during 2009. Demand will be absorbed by Grade B & C buildingscoming on line during 2007 & 2008.

2.2ResidentialAccording to the HCMC Department of Housing and Land Management Services, thereare currently 1.007,000 houses and apartments throughout the City with a total housingarea of over 52.7 million sqm. This results in an average housing area per capita ofaround 10.27 sqm. According to the Citys plan, it is expected that 103 million sqm ofhousing will be needed by 2010 in order to achieve an average housing area of 14.2 sqmper capita.

A Selection of Condominium developments for sale in HCMCName Location Developer Unit Size Price persqmUSD

Sold%Lancaster Dist 1 Trung Thuy

Co Ltd 1bedroom unit size:71-75 sqm2bedroom unit size:86 sqm3bedroom unit size:120-165 sqm 3,600 98%


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(Source: CB Richard Ellis)

Penthouse: 270 sqm

Avalon Dist 1 Phuong NamCo Two bedroom units: 103 sqmPenthouses: 207 sqm 2,800 100%

Cantavil Dist 2 Daewon Coand Thu Duc

HousingDevelopment

Co.

Type A: 150 sqm (3 bedrooms)Type B: 120 sqm (3 bedrooms)Type C: 96 sqm (3 bedrooms)Type D: 79 sqm (3 bedrooms)Type E: 75 sqm (2 bedrooms)

1,029-

1,155 97%

Estella Dist 2 Tien PhuocCo. Unit size: 92-123 sqm 1,000-

1,200 0%PasteurCourt Dist 3 Van ThinhPhat Co Ltd

and An ThaiCo.

2-bedroom unit size: 83 sqm3-bedroom unit size:125-142 sqm 2,200 100%

NamKhang Phu MyHung,

Dist 7

Phu My HungCorp. Unit size: 150 sqm 1,000-

1,100 100%The Grand

View Phu MyHung,Dist 7

Phu My HungCorp. 117-134 sqm (3bedroom) 1,300 100%

GardenPlaza Phu MyHung,

Dist 7Phu My Hung

Corp. 14 shophouses: 133-524 sqm96 apartments: 123-222 sqm 1,300-1,400 100%

PanoramaPhase 1&2 Phu MyHung,

Dist 7Phu My Hung

Corp. Unit size: 122-374 sqm(3-bedroom) 1,300-1,500 100%

The Manor Binh

Thanh

Bitexco 2 bed unit size:100-113 sqm

3 bed unit size:123-164 sqm4 bed unit size:190-260 sqm

1,400-2,300 100%

SaigonPearl

BinhThanh

VN Land SSG 2-bedroom type:78-89 sqm3-bedroom type:132-140 sqm4-bedroom type:203-235 sqm5-bedroom type:290 sqmDuplex & 5 bedroom:290-372 sqm

1,200-

1,500

97%1st

Phase

HungVuongPlaza

Dist 5 Kinh Do Co &Lam Phan Co.

Unit size: 117 128 sqm 900-

1,000100%

Ruby Land Tan PhuDistrict Tan HoangThang Co Unit size (A): 126.3 sqm (3 bed)Unit size (B): 112.2 sqm (2 bed)Unit size (C): 104.2 sqm (2 bed)Unit size (D): 104.9 sqm (2 bed)Unit size (E): 45.6 sqm (1 bed)

550-600 85%

HoangThap Plaza

BinhChanh

Hoang ThapCo.

Unit size: 97-113 sqm530-750 100%


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In 1999, the first type of high-class apartment known in Ho Chi Minh City was thedevelopment of My Canh, constructed in the new residential area of Phu My Hung, SaigonSouth. Since 2004, modern and high-end apartments have been constructed intensively inmost districts; however prices have varied depending on location and quality ofapartments. The Avalon and The Lancaster, both located in District 1 have achieved sellingprices of $2,800-$3,600 per sqm; Binh Thanh District, adjacent to District 1 the Manorand Saigon Pearl have achieved selling prices ranging from $1,200-$2,300 per sqm.District 2 prices range from $530-$1,560 per sqm, in District 7/Phu My Hung area, pricesrange from $900-$1,500 per sqm, in district 3 prices range from $1,150-$2,200 persqm, in outlying districts prices can start upwards of $380 per sqm.

The buyers are predominantly Vietnamese or overseas Vietnamese (Viet Kieu), who canpurchase the apartments on a freehold basis and are either end users or investors. Thissegment comprises high income earners, middle income earners and returnees to Vietnam. Foreigners can purchase property in Vietnam, however only on a 50 yearleasehold basis. Sales take up has varied across districts; however, 53% take up onaverage per annum, although certain developments have achieved 100% sales within aone year period. Foreign investors are also becoming active in this market

2.3 Serviced ApartmentIn Ho Chi Minh City, there are 7 Grade A serviced apartment projects located withinDistrict 1 and 3, a total 521 units, offering one to five bedroom units. There are 11 GradeB serviced apartment projects, a total of 1,200 units and 36 Grade C with 848 units. Theaverage occupancy rate of the serviced apartments in Ho Chi Minh City (both Grade Aand B) is 95%. Achieved rents range from US$28 to US$40 per sqm per month for GradeA buildings, US$24 to US$31 for Grade B buildings and US$15 to US$23 for Grade Cbuildings, (including service charge and 10% VAT).


As supply remains limited and demand remains strong, there will be some pressure toincrease serviced apartment rentals in the short-term (less than 5-year term). However,accommodation budgets are expected to remain low for some expatriates, therebypreventing any significant increases in rents.

2.4 Retail Market At the end of 1995, there were about 10 supermarkets and 2 shopping centres allover Vietnam. At present, the countrys two major cities have more than 105

Monthly Asking Rent per Unit (US$)Grade 1-bedroom 2-bedroom 3-bedroom 4-bedroomGrade

A1,700-2,500 2,500-4,500 3,000-6,700 4,000-9,000

Grade B 1,100-2,300 2,100-3,400 2,800-6,000 3,800-7,000

GradeC

800-1,800 1,300-3,100 2,100-3,000 3,800-4,300


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supermarkets, which account for 75% of the countrys total. Ho Chi Minh City has fivemajor supermarket chains with over 50 outlets. There are currently two department storesand six shopping centres providing 106,000 sqm of leasable retail space. Rental pricesrange from $30.00 to $170.00 depending on the outlet and positioning with averagerents of $80.00 per sqm.

Future SupplyThe supply of shopping centres is expected to improve in the future, providing moreopportunities for international retailers and distributors. Ho Chi Minh City currently hasabout 100,000 sqm of retail area under construction that will come on line over the nextfour years.

HCMC Fu ture Supp ly

4,300

15,000

33,000

2,560

12,367

11,882

6,880

8,292

30,000

Tan Da Court

Dist. 5

Saigon Paragon

Dist. 7

Hung Vuong Plaza

Dist. 5

Sailing Tower

Dist. 1

Times Square

Dist. 1

Happiness Square

Dist. 5

Kumho Asiana

Dist. 1

SJC Tower

Dist. 1

Saigon Pearl

Binh Thanh

2007

2008

2009

2010

( S o u r c e : C B R E )

s qm

Market OutlookThe outlook for the retail market in HCMC City remains positive as it is still very underdeveloped and has attracted interest from many foreign supermarket and retailers alike,known brand names are entering the market and will do so more now Vietnam is the 150 thmember of the WTO. The most interesting fact is, 65% of the population in Vietnam isbelow the age of 35 and therefore is a market full of young consumers.

2.5 Hotel MarketThe Citys tourism has resulted in a good performance with a growth in the hospitalityindustry. 2004 2005 statistics by the City s department of Tourism showed that the roomoccupancy at three to five-star hotels had reached 80 90% in the peak season, while theaverage rate in the whole year recorded 73.92% for five star hotels, 77.43% for four-starand 83.33% for three star hotels.


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Hotel Rates for 5, 4 and 3 Star HotelsThere are 10 5, star hotels in Ho Chi Minh City. The majority were constructed before1999, except for the Legend Hotel in 2001, Sheraton Hotel in 2003, Windsor Hotel 2004and Park Hyatt 2005. There are 8, 4 star hotels most of them were built before 1999.There are 23, 3 star hotels, operated individually or by state owned companies.

HOTELS FROM FIVE TO THREE STARS 2006

(Source: CB Richard Ellis)At present HCMC could support another 3-4, 5 star hotels, along with 4 and 3 star hotelsdue to the increasing growth in tourism as well as business travellers. Apart from someproposed mixed-use developments with a hotel component and extension to existing hotelsthere remains a shortage for quality hotels in this sector. According to the department oftourism, HCMC needs another 10,000 rooms across all grades in the next 5 years toaccommodate the growing tourism and business travellers for both the domestic and

international markets.2.6 Town house and Villas MarketTownhouses are commonly known as a front house/shop house, which is owned by anindividual. In the inner districts townhouses are found as a row of houses. Generally, thesehouses are 4-6 metres wide, 1-4 storeys and built in a tube shape and the ground flooraccommodates either a retail shop or office.

Villas are detached buildings with a surrounding garden and sometimes a swimming pool.In Ho Chi Minh City, two kinds of villas exist: French or American colonial style villas, ormodern style villas that been constructed in recent years.

Most town houses are built by individuals who acquire a plot of land. However, there have

been some villa development projects away from the CBD area and command prices,which are upwards of $1m.

Interestingly town houses and villas values are calculated against the price of a gold barper sqm e.g. Gold bar price is $750, the villa size is 2,000 sqm, therefore:

750 x 2,000 = $1.500,000.

3 star 4 star 5 star TotalTotal SupplyNumber of hotels 23 8 10 41

Number of rooms 1,903 1,447 3,435 7,748

Total DemandOccupied rooms 1,398 1,120 2,539 5,057

Average Occupancy rate 83.33% 77.43% 73.92% 78.22%Average daily rate (US$)Rate 30-110 61-228 74-345 30-345


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In most cases, Villa values are much higher than those commanded by condominiums;however, they tend to be on a large scale and therefore require greater maintenance, mostsought after villas are those, which are located in compounds and therefore have goodmanagement and security.

2.6.2 Villas for rentThere are many villas for rent. The developers are not only the construction companies butalso the individuals who lease their own villas.

The tenants of these villas are mostly expatriate families working in Ho Chi Minh City (oftenin District 1). Each family usually comprise 4 members and preference is given to 4-bedroom villas of about 200-500 sqm. In addition, some villas are rented to companiesas office space. The rental prices for villas range from US$1,000-7,000 per monthdepending on the villas location and area.

2.7 New Development Areas2.7.1 Phu My Hung/Saigon SouthPhu My Hung Corporation, a joint venture between CT&D Group (Taiwan) and Tan ThuanCorp. (under the Ho Chi Minh City Peoples Committee) has the right to develop 850 haout of the total area of 2,600 ha in Saigon South and so far has built 1,000 apartmentswith plans to develop the whole site during their joint venture duration up to 2043. Withinternational expertise and financial strength, Phu My Hung Corporation has graduallyconverted Saigon South into a living place for the high-end residential market. SaigonSouth has some of the best infrastructure; including roads, green spaces, parking, andentertainment facilities etc, for the development of apartment buildings, villas, along withcommercial buildings.

2.7.2 Thu Thiem Master PlanThu Thiem located in District 2 directly across the Saigon River from the City centre andwill be a master planned community, which attempts to imitate the success of Saigon Southand hopes to compete on a similar basis, as the new City centre. Given the significanthead start, the ability (and willingness) of Saigon Souths investors to invest in the criticalareas of power and transportation infrastructure, it is unlikely that Thu Thiem will competedirectly with Saigon South within the next 10 years.

Ho Chi Minh City authorities are setting up the schedule of implementing the phases ofconstructing Thu Thiem New City Centre. Construction of The Thu Thiem Bridge with itsrelated facilities started in 2005. The Thu Thiem Tunnel connecting Thu Thiem Townshipwith District 1 was ground broken on 31st of January 2005 and construction began inMay 2005. This is a good signal for the residential and commercial projects in the North

East of Ho Chi Minh City.

Currently the Peoples Committee have engaged EDAW, a planning, design and economicconsulting firm based in Hong Kong, to head a team comprising Indochina Capital(Investment Advisory), Maunsell/Aecom (Engineering Consultancy) and CB Richard Ellis,Vietnam (Property Consultancy) to undertake a feasibility study.


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Location of Thu Thiem Layout of Thu Thiem


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3. HANOIHanoi, the capital of Vietnam, located in the central of Red River Delta, has nearly athousand years of being a socio-cultural-economic and political centre of the country.

Surface area: 920.97 sq km Average Air Temperature: 24.3C (ranging from average 17.2C in January to

29.7C in June) - tropical monsoon climate. 114 rainy days a year, 1,800 mm of

rainfall

9 Urban Districts, 5 Rural Districts 2006 GDP growth rate: 11.50% 2006 Average Population: 3.272 million (2.8%)


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3.1Office MarketThere are currently 9 developments classified as Grade A office buildings in Hanoi, most ofthem are foreign invested joint venture developments from Hong Kong, Singapore, Korea,Japan and France.

Most of the Grade A office buildings came on stream before 2000 except VietcombankTower, which opened in 2001. As at Q4/2006, the total lettable stock of Grade A officespace has stood at 84,172 sqm for over 5 years and will be increased at early 2007 whenover 18,000 sqm of Grade A office space will come on line.


Average asking rents of Grade A office space in Hanois CBD, registered at US$31.35 pmat the end of Q4/2006 (inclusive of service charges ranging between US$5.00 to

US$8.00 per sqm pm). With Grade A office occupancy in Hanoi hovering around 100% itis forecasted, rentals will increase by between 10% and 15%.

(Source : CB Richard Ellis)

Ha no i Cu m u la ti v e S t o ck a nd N e w S u p p l y o f G r a d eA &B O f f i c e P r o p e r t i e s

0

50,000

100,000

150,000

200,000

250,000

2004Q1

2004Q2

2004Q3

2004Q4

2005Q1

2005Q2

2005Q3

2005Q4

2006Q1

2006Q2

2006Q3

2006Q4

Sm

Stock as at begining of the quarter New supply as at quarter-end

A v e ra g e R e n t al o f H a n o i G ra d e A & B O f f i c e P ro p e r t i e s

15.00

20.00

25.00

30.00

2004Q1

2004Q2

2004Q3

2004Q4

2005Q1

2005Q2

2005Q3

2005Q4

2006Q1

2006Q2

2006Q3

2006Q4

USPQMPM


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The Grade A office leasing market in Hanoi is expected to remain under upward pressureuntil 2008, when a substantial quantum of new supply is expected to come on stream,given strong demand from both local and multi-national corporate tenants, across allsectors. Despite the introduction of two new Grade A properties at early 2007, rents in theGrade A buildings in prime locations are expected to trend upwards in the two year run upto the completion of new developments. However we expect that Grade B officedevelopments will experience slight downward pressure on rentals, given the substantialquantum of new Grade B developments coming on stream in 2007.

3.2. Serviced ApartmentsThe Hanoi serviced apartment market is mostly driven by expatriates, with budgets overUS$1,000 per month for accommodation. There are 15 serviced residential projects inHanoi, supplying the total of 1,200 units for the market, of which there are 1,140apartments and 60 villas. Rental rates range between US$1,100 and US$6,000 per unitper month for a 1-bedroom apartment to a 5-bedroom penthouse; whilst for independentvilla/townhouses range from US$2,500 to US$4,500 per month depending on location,condition and facilities. The average rent for an apartment in Hanoi market is

approximately US$3,100 per month, excluding VAT.The average occupancy rate of theserviced apartments in Hanoi is 97.33%.


3.3. Hotel MarketThere are 378 hotels in Hanoi, of which 34 are 3, 4 and 5 star hotels. Most 4 & 5 star

hotels in Hanoi were constructed before 1996 except a 5 star hotel, Hanoi Sheraton in2004. 4 and 5 star hotels, were developed by Singaporean, Japanese Hong Kong,French, Korean, Thailand and Malaysian investors

The average daily rate of 5 star hotels ranged US$70 US$620 and US$45 US$265for 4 star hotels. These rates include VAT (10%) and a service charge (5%). As inDecember 2006, 4 and 5 star hotels respectively achieved average occupancy rates of84.62% and 82.62%. With the increasing international tourist arrivals and limited future

Take-up & V acancy of Hanoi Serviced Apartments

-20

-10

0

10

20

30

Q3/2004

Q4/2004

Q1/2005

Q2/2005

Q3/2005

Q4/2005

Q1/2006

Q2/2006

Q3/2006

Q4/2006

Uns

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Va

Re%)

Take-up

Vacancy Rate


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3

supply of 3 to 5 star hotels, the hotel market will improve in terms of price and occupancyrate.

HOTELS FROM FIVE TO THREE STARS 2006


3.4.Retail MarketAlthough there are not many in numbers or good examples of modern shopping centres inHanoi, there are 9 projects can be categorised as shopping centres. The total leasablearea of shopping centres in Hanoi is 136,496 sqm. Me Linh Plaza is a specialised tradingcentre for building materials and interiors, etc. For consuming Vincom City Towers is thelargest and most prestigious mix-use modern shopping facility, while Trang Tien Plazapossesses the prime location by Hoan Kiem Lake, in the heart of the CBD.

No Shopping Centre District Leasable Area (sqm)1 Trang Tien Plaza Hoan Kiem District 12,000

2 Hanoi Tower Hoan Kiem District 2,056

3 V - Tower Ba Dinh District 940

4 VKO Ba Dinh District 8,000

5 Vincom City Towers Hai Ba Trung District 17,000

6 BigC Thang Long Tu Liem District 17,000

7 Luxury Mall Hai Ba Trung District 5,500

8 Me Linh Plaza Me Linh, Vinh Phuc Province 67,000

9 Hoa Binh Intl Towers Cau Giay District 7,000

Total 136,496(Source: CB Richard Ellis)

The average rental paid in Hanois shopping centres is US$22.83 per square metre permonth. However Trang Tien Plaza rental rate is 50% higher than most of the other

3 star 4 star 5 star TotalTotal SupplyNumber of hotels 21 5 8 34

Number of rooms 1,686 874 2,364 4,924

Total DemandOccupied rooms 1,349 722 2,000 4,171

Occupancy rate 80.00% 82.62% 84.62% 82.67%

Average daily rate (US$)Rate 19-120 45-165 74-1,800 19-1,800


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centres, thereby increasing the average rent per square metre per month quitesignificantly. Vincom City Towers has the largest leasable area with the rental rate ofUS$30. There are currently seven retail projects under construction and will provideapproximately 260,000 sqm coming online during 2007 to 2010.

3.5 ResidentialCurrently, there are 131 residential projects, which are in various stages of developmentfor various budgets of buyers in Hanoi. Most apartments were sold off-plan. The saleprices range from US$600 to US$900 per sqm for medium quality projects and fromUS$1,200 to US$2,500 for high quality projects. Some condominiums offer units as shellsand some offer fitted units. Majority of residential apartments constructed in Hanoi are of amedium class. These apartments sold quickly to middle class families with the average saleprice of US$400 to US$600 per sqm. Due to the supply shortage of residential apartment,units are sold off-plan and then re-sold, many times prior to completion.

HANOI TOP-END RESIDENCIAL PROJECTSName Location Developer No of Units Price per sqm $Pacific Place 83B Ly Thuong

Kiet Street Ever FortuneCo Ltd 176 1,800Ciputra Phu Thuong,

Nhat Tan, XuanLa Ward

Citra WestlakeCity

DevelopmentCo Ltd

9,000apartments and

2,000 villas 800 for apartment1,600 for villasThe Manor My Dinh Ward Bitexcoland Co

Ltd 450 apartmentsand over 100villas 900 1,500

The Garden My Dinh Ward Bitexcoland CoLtd 170 apartments 1,200 1,500

Chelsea Park Trung Kinh

WardVietnam Land

Co Ltd240 apartments

and 10 villas760 900

GoldenWestlake

151 Thuy KhueStreet Ha VietTungshing JVC 370 apartmentsand 16 villas 1,600



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BUSINESS LINE OVERVIEWCB Richard Ellis (Vietnam) Ltd, established in January 2003. The firm has now grown to bethe key property services provider in Vietnam with 20 professionals in Hanoi and Ho Chi

Minh City. The firm has a commitment to developing Vietnamese staff and we have acontinuous recruitment policy to ensure that we employ the best talent available. We willcontinue to expand the business to ensure that our clients receive the best possible level ofservice.

FOR DEVELOPERS AND INVESTORSDevelopment Planning,Design Layout Review, Pre-Leasing Preparation, Leasing,Management.

FOR OWNERSMarket Information, Existing Performance Review, Benchmarking, RepositioningAdvice, Redevelopment Consultancy, Management.

FOR OCCUPIERSMarket Trend Analysis, Market Entry Strategy, Location Outlet Strategy, LeaseAudit.

CB Richard Ellis (Vietnam) Ltd offers consistent standards of service and unmatchedaccountability across the Asia region. Comprehensive resources and unparalleled expertiseallow us to deliver new and innovative real estate solutions to our clients.

For further information on the services of CB Richard Ellis or for further detailedinformation contained in the report, contact:

MARC TOWNSEND NAIM KHAN-TURK TUAN Q. NGUYENManaging Director Associate Director Associate Director

Research & Consultancy Research & Consultancy

T: (848) 824 6125 ext 101 T: (848) 824 6125 ext. 109 T: (844) 220 0220ext. 104DL: (848) 823 7861 M: (84) 908 550 446 M: (84) 913 003 666M: (84) 903 006 790 E: [email protected]. E: [email protected]

E: [email protected] www.cbrevietnam.com www.cbre.com

Why Vietnam 2007

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