How to Invest in New Homes for Maximum Profit CHRIS CONDON
REDISCOVERING VIETNAM’S REAL ESTATE POTENTIAL Presented by: Marc Townsend – Managing Director 1st March, 2007 Renaissance Hotel, Kuala Lumpur, Malaysia WHAT HAS BEEN DRIVING THE PROPERTY MARKET SINCE 2003? •Limited capital markets •An emerging condo market in Hanoi and HCMC • Conspicuous consumption • Ability to borrow from local banks at 10-11% per annum • Consistently rising GDP and FDI • China + 1, APRC, the Stock Market and entry to WTO has put Vietnam on the radar screen, coupled with the ML report in Feb and the Euro Money Conference in Mar 2006 • Saturation in other South East Asian markets Client Logo Goes Here CB Richard Ellis | Page MAP OF VIETNAM Client Logo Goes Here CB Richard Ellis | Page HO CHI MINH CITY Client Logo Goes Here CB Richard Ellis | Page VIETNAM TODAY • No Starbucks and No MacDonalds • World leaders in pepper, coffee, cashew, shoes, fish/prawns, oil & gas exports • No shortage of land, just good sites • “If you build it, they will come” still exists but may not last much longer • Many similarities to China in the early 90s in terms of work ethic, chaos on the streets, migration of work force and market driven decisions • Traffic, complete absence of infrastructure, MRT/MTR, bridges and tunnels Client Logo Goes Here CB Richard Ellis | Page HCMC OFFICE MARKET HCMC Prime Office Stock End of Q1.2007 sqm 350,000 300,000 250,000 Office Stock at the beginning of the quarter 1/ 07 Q 4/ 06 Q 3/ 06 Q 2/ 06 Q 1/ 06 Q 4/ 05 Q 3/ 05 Q 2/ 05 Q 1/ 05 Q 4/ 04 Q 3/ 04 Q 2/ 04 Q Q 1/ 04 200,000 New supply during the quarter Client Logo Goes Here CB Richard Ellis | Page HCMC OFFICE MARKET Prime Office Rental Index 160 Index (Q1 1998 = 100) 140 US-VN Bilateral Trade Agreement 120 100 80 60 40 And the upward trend will continue due to: • Growing demand • Delays in new supply 20 Q1 98 Q2 98 Q3 98 Q4 98 Q1 99 Q2 99 Q3 99 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1.07 Client Logo Goes Here CB Richard Ellis | Page Vimedimex Golden Tower Sacombank DTH Major Buildings Existing - Future PetroVietnam Saigon Trade Center EVN Saigon Tower Centec Gemadept Pacific Place Sailing Tower Asiana Plaza Diamond Plaza Metropolitan Bao Viet Vietcombank Me Linh Point Saigon Center Times Square Sun Wah CB Richard Ellis | Page VPBank Financial Tower Client Logo Goes Here M&C Tower HCMC OFFICE MARKET SOME OF THE NEW OFFICE BUILDINGS COMPLETED IN Q1 2007 Opera View, Dist Lancaster, Dist Rosaco, Dist Estimated Total Supply in Q1 2007: 47,843 sqm Petro Vietnam, Dist CB Richard Ellis | Page E – Town 2, Tan Binh District Client Logo Goes Here HCMC OFFICE MARKET s qm Take up and vacancy rate of HCMC office buildings % 18,000 16,000 8.0% 14,000 12,000 10,000 6.0% 7.0% 5.0% 4.0% 8,000 6,000 4,000 3.0% 2.0% 1.0% 2,000 - 0.0% Q1.04 Q2.04 Q3.04 Q4.04 Q1.05 Q2.05 Q3.05 Q4.05 Q1.06 Q2.06 Q3.06 Q4.06 Take-up (Sqm) Vacancy Rate (%) Client Logo Goes Here CB Richard Ellis | Page 10