Vietnam quarterly knowledge report q1 2018 en

VIETNAM REAL ESTATE QUARTERLY KNOWLEDGE REPORT Q1 2018 TABLE OF CONTENTS Page ECONOMIC OVERVIEW 6-7 VIETNAM HO CHI MINH CITY HANOI DANANG HO CHI MINH CITY MARKET OVERVIEW 8-20 OFFICE RETAIL 11 CONDOMINIUM 13 VILLA & TOWNHOUSE 15 SERVICED APARTMENT 17 INDUSTRIAL 19 HANOI MARKET OVERVIEW 21-32 OFFICE 21 RETAIL 23 CONDOMINIUM 25 VILLA & TOWNHOUSE 27 SERVICED APARTMENT 29 INDUSTRIAL 31 DANANG MARKET OVERVIEW 33-40 OFFICE 33 RETAIL 35 CONDOTEL 37 VILLA 39 Cover Page: Deutsches Haus - Grade A Office Building, HCMC Page LIST OF FIGURES Figure 1: Vietnam Exports - Imports in 2017 Figure 2: International Arrivals to Vietnam in 2017 Figure 3: GDP Growth Rate of HCMC, Hanoi and Danang Figure 4: FDI of HCMC, Hanoi and Danang HO CHI MINH CITY MARKET OVERVIEW Figure 5: Office, Average Asking Rent Figure 6: Office, Occupancy Rate Figure 7: Retail, Rental Rate by quarter 11 Figure 8: Retail, Occupacy Rate by quarter 11 Figure 9: Condominium, New Launches by Segment and Quarter 13 Figure 10: Condominium, Sold Units by Segment and Quarter 13 Figure 11: Condominium, Primary Asking Price 13 Figure 12: Villa and Townhouse, Selling Prices on Land Area by District 15 Figure 13: Villa and Townhouse, Transaction Volume by Quarter 15 Figure 14: Villa and Townhouse, New Launches by District 15 Figure 15: Serviced Apartment, Occupancy Rate 17 Figure 16: Serviced Apartment, Average Asking Rent 17 Figure 17: Industrial, Market Performance by District 19 Figure 18: Industrial, Supply by District 19 LIST OF TABLES Table 1: Macroeconomic Indicators of HCMC, Hanoi and Da Nang Table 2: Significant Projects under expected completion in 2018 Table 3: Significant Office Projects Table 4: Retail, Significant Future Projects under Construction 11 Table 5: Significant Retail Projects 12 Table 6: Condominium, Significant new Projects launched in 2017 14 Table 7: Villa and Townhouse, Significant new Projects launched in 2017 16 Table 8: Serviced Apartment, Significant Future Projects under construction 17 Table 9: Significant Serviced Apartment Projects 18 Table 10: Industrial, Future Supply 19 Table 11: Industrial, Market Overview 20 HANOI MARKET OVERVIEW LIST OF FIGURES Page Figure 19: Office, Average Asking Rent 21 Figure 20: Office, Occupancy Rate 21 Figure 21: Retail, Rental Rates by Quater 23 Figure 22: Retail, Occupancy Rates by Quarter 23 Figure 23: Condominium, Sold Units and Absorption Rate by Segment .25 Figure 24: Condominium, New Launches 25 Figure 25: Condominium, Sold Units by Segment .25 Figure 26: Villa and Townhouse, Supply by Quarter, Hanoi 27 Figure 27: Villa and Townhouse, Asking Price on Secondary Market 27 Figure 28: Hanoi District Map 27 Figure 29: Serviced Apartment, Supply by Quarter 29 Figure 30: Serviced Apartment, Occupancy Rate 29 29 Figure 31: Serviced Apartment, Average Asking Rent Figure 32: Industrial, Market Performance by Distrtict 31 Figure 33: Industrial, Supply by District 31 LIST OF TABLES Table 12: Office, Future Supply 21 Table 13: Significant CBD Office Projects 22 Table 14: Retail, Significant Future Supply 23 Table 15: Significant Retail Projects 24 Table 16: Condominium, Significant New Projects Launched in Q4 2017 26 Table 17: Villa and Townhouse, Significant New Projects Launched in Q4 2017 28 Table 18: Significant Serviced Apartment Projects 29 Table 19: Industrial, Future Supply 31 Table 20: Hanoi Industrial Market Overview 32 DANANG MARKET OVERVIEW LIST OF FIGURES Page Figure 34: Office, Market Performance as of Q4 2017 33 Figure 35: Office, Market Performance by Quarter 33 Figure 36: Office, Supply by Grade 33 Figure 37: Retail, Market Performance as of Q4 2017 35 Figure 38: Retail, Market Performance Comparision among Key Cities 35 Figure 39: Retail, Supply by District 35 Figure 40: Condotel, Market Performance 37 Figure 41: Condotel, Supply by District 37 Figure 42: Condotel, Guaranteed Return by Project 37 Figure 43: Villa, Market Performance 39 Figure 44: Villa, Primary Supply by District .39 Figure 45: Villa, Buyer Profile 39 LIST OF TABLES Table 21: Significant Office Projects 34 Table 22: Significant Retail Projects 36 Table 23: Significant Condotel Projects 38 Table 24: Significant Villa Projects 40 LIST OF ABBREVIATIONS ARR: Average Rental Rate CBD: Central Business District CPI: Consumer Price Index GDP: GFA: Gross Floor Area GRDP: Gross Regional Domestic Product LUR: Land Use Right IP: NLA: Q-o-Q: Quarter on Quarter Y-o-Y: Year on Year Exchange rate: USD/VND = 22,750 Net Lettable Area Gross Domestic Product Industrial Park VIETNAM QUARTERLY KNOWLEDGE REPORT Q1 2018 | VIETNAM ECONOMIC OVERVIEW GDP GDP in the first quarter of 2018 achieved an estimated increase of 7.38% compared to the same period last year This is the highest growth rate of the first quarter in the last ten years, starting with assurance that the Government has demonstrated effective solutions on all levels, sectors and localities in the first days and first months of 2018 As a result, the agriculture, forestry and fishery sectors rose by 4.05% q-o-q Manufacturing was also a key contributor to growth, rising 13.56% over the quarter driven by a 9.07% rise in the industry and construction sector; the service sector expanded by 6.7% over the same quarter of the previous year 2018 forecast CPI AND INFLATION Consumer price index (CPI) in March was up 0.97% since last December, making the average CPI in first quarter 2.82% higher than the CPI of 2017 Core inflation in March 2018 decreased by 0.09% over the previous month however still up by 1.38% from the same period last year Average core inflation in the first Quarter of 2018 rose by 1.34% compared with the corresponding period in 2017 FOREIGN DIRECT INVESTMENT (FDI) Total FDI in Vietnam during Jan-March 2018 stood at approximately USD 5.8 billion, 24.8% down on the same period last year However, there was still USD 2.12 billion coming from 618 newly licensed projects The remainder was contributed by 199 currently-operating projects that raised their capital by more than USD 1.79 billion in total Indeed, the manufacturing and processing industries are the main destinations of FDI inflows, receiving USD 3.44 billion, comprising 59.4% of the total registered FDI The Republic of Korea is still the leading investor in Vietnam’s FDI projects with USD 1.84 billion Hong Kong and Singapore’s FDI is behind Korea but levels are increasing over time RETAIL SALES According to the General Statistics Office (GSO), the total Vietnam revenue from retail trade and services exceeds USD 44.05 billion in the first quarter of 2018, an increase of 10% year-on-year The retail sales of goods, which accounted for more than 75% of the revenue, topped USD 35.22 billion, up 10.5% year-on-year Overall, all the sectors show positive signs including food and foodstuff (up 12%), textiles and garments (up 13%), home appliances (up 11%) and transport services (up 8.4%) INTERNATIONAL ARRIVALS Total international arrivals in first three months reached 4,205,401 arrivals, an increase of 30.9% over the same period last year Based on booking data in the first quarter of 2018, Airbnb announced a list of the world’s top 10 destinations for the coming year, in whichequals to 49% of retail stock makes Son Tra District the largest retail space supplier, followed by Hai Chau and Thank Khe District with 48% and 3% respectively The total retail stock of 79,731 sqm has seen a decrease since August 2017 when Big C Da Nang closed Shopping malls and supermarkets are expected to have 15 new projects by 2025 that will provide about 720,000 sqm of retail space Figure 38: Retail, Market Performance by Quarter DEMAND In Q1 2018, Da Nang’s total retail sale of goods and services was estimated at VND 13,400 billion, equivalent to an increase of 14% y-o-y The demand for retail and hospitality development will continue to grow in the upcoming years In addition to that, by 2020, Da Nang targets to welcome a total of 8.5 million visitors, including 2.5 million foreigners with an expected earning of 27,400 billion VND in revenue Source: Colliers International Research OUTLOOK After hosting the APEC Summit, Da Nang has attracted tremendous attention from international and local tourists The city’s potential for retail properties has made Da Nang a popular destination for developers and investors However, the retail market in Da Nang still has its limitations The fashion segment faces the challenge of low average income per person, and the tourists’ preferences to spend on food and hotels The food & beverage sector is still the major source of income for retail properties Developers and investors need to be patient regarding the current market and wait for appropriate time to invest in Da Nang for this particular segment for the right return Figure 39: Retail, Supply by District Source: Colliers International Research ©2018 Colliers International Research Page 35 VIETNAM QUARTERLY KNOWLEDGE REPORT Q1 2018 | DANANG | RETAIL Table3:22: Significant RetailProjects Projects Table Significant Office No Name of Project/Building Address Indochina Riverside Towers 74 Bach Dang HAGL-Lake View Residences 72 Ham Nghi NLA ARR (*) Occupancy Rate 5,251 23 100% 2012 7,200 12.0 100% Hai Chau 2011 8,000 23.0 100% Thanh Khe 2007 11,760 under refurbishment Location Completion Year Hai Chau 2008 Thanh Khe (sq m) Retail Podium Parkson Vinh Trung Plaza 253-255-257 Hung Vuong Department Store Big C Da Nang 255-257 Hung Vuong Da Nang Square 35 Thai Phien Hai Chau 2011 3,280 6.2 79% Vincom Plaza Ngo Quyen 910A Ngo Quyen Son Tra 2015 36,800 23.0 100% LOTTE Mart 06 Nai Nam Hai Chau 2016 19,200 18.3 100% (*) ARR (Average Rental Rate): All rents are stated in net rents per sqm, inclusive service charge but exculding VAT ©2018 Colliers International Research Page 36 VIETNAM QUARTERLY KNOWLEDGE REPORT Q1 2018 | DANANG | CONDOTEL PERFORMANCE In major districts, average absorption rate reached 96.5%, equivalent to an increase of 1.5% q-o-q The Ngu Hanh Son and Son Tra Districts are the most popular destinations for investment due to their locations next to the beaches Some well-known condotels such as Hyatt Regency, Olalani Resort, Four Season, Fusion Maia Da Nang, and Vinpearl Riverfront reported high occupancy rates due to the increase of people coming to Da Nang The market for condotels became quieter after the Lunar New Year, partially because many investors are waiting for the government to improve and claify the legislature concerning condotels where there are obvious grey areas at the moment Son Tra District is keeping the lead with the highest average selling price at USD 2,236/sqm same as pervious quarter Figure 40: Condotel, Market Performance Source: Colliers International Research SUPPLY In 2018, the condotel supply expects to add another 20,000 rooms Da Nang has made official plans to upgrade its infrastructure for major projects in the upcoming year As a result, the supply of condotel in the city is expected to grow strongly This quarter saw the entry of two new condotel projects: Kim Long Ocean and Saia Complex The Hai Chai, Son Tra, and Ngu Hanh Son districts are supplying the increased condotel in the Da Nang market Han Riverside with 1,462 units is situated in the Hai Chai District and the complexes of Anh Duong-Soleil with 3,525 units, Times Square with 3,000 units and Hoa Binh Xanh with 1,440 units are all situated in the Son Tra District Lastly, Empire City with 6,500 units is located in the Ngu Hanh Son District Due to the amount of condotel projects planned for construction in Da Nang, it is and will remain the leader in the condotel market across Vietnam in the upcoming years Figure 41: Condotel, Supply by District DEMAND Da Nang has received a lot of attention as top city to visit in South East Asia By 2020, Da Nang is expected to welcome more than 2.5 million international visitors and million domestic visitors With a high demand and limited supply of condotels and hotel in Da Nang, the occupancy rate is expected to stay at a high level This aligns with the city’s plan to promote itself as a tourist city The city of Da Nang is cautious in approving more projects even though the demand clearly substantiates the needs for even more to be considered Source: Colliers International Research Figure 42: Condotel, Guaranteed Return by Project OUTLOOK Although the condotel segment is a promising investment to investors, who most likely use the condotel as a vacation house and rent it out for others to enjoy while not in use, legal issues remain an obstacle to some degree Until the government releases new policies and regulations on owning a condotel, the market for Da Nang could remain stagnant However, with a growth of 30% y-o-y in the hospitality industry, Da Nang has the potential to become a big market for condotels as the city upgrades its infrastructure and the government works towards improving the legislature about condotels and for foreign individual ownership Source: Colliers International Research ©2018 Colliers International Research Page 37 VIETNAM QUARTERLY KNOWLEDGE REPORT Q1 2018 | DANANG | CONDOTEL Table3:23: Significant Condotel Projects Table Significant Office Projects No Name of Project/Building Address Location Completion Year No of units Average Selling Price (USD/sqm)* F Home 16 Dang Tu Kinh Hai Chau Q1/2016 560 1,600 Ariyana Condotel Furama 105–107 Vo Nguyen Giap Ngu Hanh Son Q1/2016 1,320 2,534 Cocobay Truong Sa Ngu Hanh Son Q1/2016 1591 1,482 Vinpearl Riverfront Ngo Quyen Son Tra Q2/2016 736 2,203 Ocean Suites (Block A&B) Truong Sa Ngu Hanh Son Q2/2016 115 2,394 Wyndham Soleil Vo Nguyen Giap Son Tra Q3/2016 706 2,635 Hoa Binh Green Danang Le Van Duyet Son Tra Q3/2016 1,536 1,663 Naman Garden Truong Sa Ngu Hanh Son Q4/2016 99 2,325 Alphanam Luxury A1 - A6 Vo Nguyen Giap Son Tra Q4/2016 234 1,815 10 Vinpearl RiverFront Condotel Tran Hung Dao Q Q4/2018 736 1,732 11 Vinpearl Nam Hoi An Nam Hội An - Q1/2019 132 1,653 * Excluding all kinds of tax and promotions The information is updated as at the end of Q1 2018 ©2018 Colliers International Research Page 38 VIETNAM QUARTERLY KNOWLEDGE REPORT Q1 2018 | DANANG | VILLA PERFORMANCE Figure 43: Villa, Market Performance Da Nang was named one of the 20 cleanest cities in the world Following the hosting of APEC with the growth of the hospitality industry and the increasing number of investments in the villa segment, Da Nang could soon become a top desination for the villa market In the first quarter of 2018, asking prices for Da Nang’s villas ranged from USD 834/sqm to USD 2,761/sqm, the price remained relatively unchanged q-o-q In terms of average asking price per unit, Vinpearl Luxury Da Nang is the most expensive complex with an average price tag of USD 1.7 million per unit for a 390 sqm villa On the other hand, The Point Residences with a price tag of USD 324,000 per unit with an area of 325 sqm remains a favorite project for the middle-class among the affordable housing projects SUPPLY There was no new supply in the first quarter of 2018 The total supply of villas in Da Nang is estimated to be 1,000 units This sector is relatively smaller than the condotel sector The main supplier of villas, which holds 57% of the market share, continues to be Ngu Hanh Son District, followed by Son Tra District at approximately 43% Till the end of 2017, the net absrobtion in Da Nang market was 80.5% The price of furnished villa ranges from USD 650/sqm to USD 3,000/sqm Da Nang expects to have another 70 units to enter the market by the end of this year Source: Colliers International Research Figure 44: Villa, Primary Supply by District DEMAND Due to the higher price of resort villas, the target clients for this segment are wealthier Vietnamese and foreign investors Those clients usually buy villas either as a long-term investment or vacation home There seemed to be a plan to form functional satellite cities around Da Nang and the opening of a USD bllion casino in Hoi An by the end of 2019 is expected to generate demand in the villa segment The majority of villa buyers are from Ha Noi at 85% with only 5% from Ho Chi Minh City The rest of the market shares are held by Vietnamese-Americans and foreigners who work in Vietnam Son Tra 43% Ngu Hanh Son 57% Source: Colliers International Research OUTLOOK As the commerce treaty comes into effect for the Da Nang economy in 2018, we expect the villa segment to grow steadily However, the increasing price of land due to the lack of space in Da Nang CBD; the increasing cost to build new projects, and the new policy on owning a house may slow down developers and investors in launching new projects upcoming Figure 44: Villa, Buyer Profile Vietnamese Local provinces residing 5% abroad/Foreigners 5% HCMC 5% Ha Noi 85% Source: Colliers International Research ©2018 Colliers International Research Page 39