Hồ Chí Minh City Office market overview

Ho Chi Minh City Office Market Overview February 2008 Overall Office Market Overview Leased Area, Vacancy Rates and Rents, Q4/1996 – Q4/2007 Leased Area (LHS) 600,000 Vacancy (LHS) Average Rent (RHS) sq.m US$ per sq.m per mth 40 35 500,000 30 400,000 25 20 300,000 15 200,000 10 100,000 0 96 97 98 99 00 Source: Savills Research & Consultancy 01 02 03 04 05 06 07 Grade ‘A’ Office Market Leased Area, Vacancy Rates and Rents, Q4/1996 – Q4/2007 Leased area (LHS) 80,000 Vacancy (LHS) Average Rent (RHS) sq.m US$ per sq.m per mth 80 70,000 70 60,000 60 50,000 50 40,000 40 30,000 30 20,000 20 10,000 10 0 96 97 98 99 00 Source: Savills Research & Consultancy 01 02 03 04 05 06 07 Grade ‘B’ Office Market Leased Area, Vacancy Rates and Rents, Q4/1996 – Q4/2007 Leased Area (LHS) 140,000 Vacancy (LHS) Average Rent (RHS) sq.m US$ per sq.m per mth 50 45 120,000 40 100,000 35 30 80,000 25 60,000 20 15 40,000 10 20,000 96 97 98 99 00 Source: Savills Research & Consultancy 01 02 03 04 05 06 07 Grade ‘C’ Office Market Leased Area, Vacancy Rates and Rents, Q4/1996 – Q4/2007 Leased Area (LHS) 200,000 Vacancy (LHS) Average Rent (RHS) sq.m US$ per sq.m per mth 30 180,000 25 160,000 140,000 20 120,000 15 100,000 80,000 10 60,000 40,000 20,000 0 96 97 98 99 00 Source: Savills Research & Consultancy 01 02 03 04 05 06 07 Ho Chi Minh City CBD Completion 2008 Project / supply / Grade Gemadept 12,000 / B VP Tower 12,000 / B Saigon Happiness Square 12,000 / B Sailing Tower 14,500 / B Etown Sacombank 13,000 / Suburban Centec EVN Building Gemadept Sailing Tower Asiana Plaza (Not Shown) Airport Business Center 22,000 / Suburban Sun Wah Tower (Not Shown) Completion 2009 Project / supply / Grade Bitexco Tower Asiana Plaza 27,000 / A Centrepoint 27,000 / B (Not Shown) Completion in 2008 Centec Tower 16,000 / B Completion in 2009 EVN 11,000 / B Completion in 2010 Current Supply VP Tower Future supply will steadily increase Future Office Supply in HCMC, 2008 – 2012 sq.m Existing Supply New Supply 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 2008 2009 Source: Savills Resaerch & Consutlancy 2010 2011 2012 Grade ‘A’ office rents rose by almost 90% in 2007 Average Rents by Grade, Q4/2006 - Q4/2008E Grade 'A' 120 Grade 'B' Grade 'C' Suburban USD per sq.m per month 100 80 60 40 20 Q4/06 Q3/07 Source: Savills Resaerch & Consutlancy Q4/07 Q4/08E Note: Rent is inclusive of service charge but exclusive of VAT A ‘Full-house’ Scenario is expected in 2008 Occupancy Rates by Grade, Q4/2006 - Q4/2008E Grade 'A' 100 Grade 'B' Grade 'C' Suburban % 99 98 97 96 95 94 93 Q4/06 Q3/07 Source: Savills Resaerch & Consutlancy Q4/07 Q4/08E Strong upcoming take-up is expected Office Take up in HCMC, 1997 – 2010F 200,000 sq.m 160,000 120,000 80,000 40,000 2010F 2009F Source: General Statistics Office Of Vietnam, Savills Resaerch & Consutlancy 2008F 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Major office buildings completed in Phu My Hung in 2008 & 2009 Project Saigon Paragon BS1 Building BS2 Building Nam Long Capital Tower Crescent Office Building Saigon Design Center Expected completition Q2-2008 Q4-2008 Q4-2008 Q4-2008 2009 2009 Supply Status 9,000 Under construction 2,600 Foundation 7,200 Foundation 6,000 Foundation 7,900 Planning 5,500 Planning Current Market Comparison Estimated Highest Achievable Rent & Service Charge (US$/ sq m/ month) Occupancy Grade A in CBD $76.80 100% Grade B in CBD $60.65 100% Phu My Hung $22.88 100% Location Major office bldgs to be completed in Phu My Hung, 2008 & 2009 No new Grade ‘A’ supply in 2008 Office Supply, 2008 70,000 60,000 sq.m A total of 25 projects providing 173,886 sq.m in 2008 (7 projects) (13 projects) (5 projects) 50,000 40,000 30,000 20,000 10,000 (0 projects) Grade 'A' Grade 'B' Source: Savills Resaerch & Consutlancy Grade 'C' Suburban Demand will come from local companies such as banks, securities companies, funds and trading companies in addition to foreign investors New FDI in HCMC, 2008 – 2012 “Currently, the foreign-invested sector makes up more than 16 per cent of the gross domestic product and 58 per cent of last year’s export value providing more than $1.5 billion to the state budget annually, creating 1.3 million direct jobs and a million indirect ones.” Minister of Planning and Investment Vo Hong Phuc VIR: 28-1-2008 3,000 US$ million 2,500 2,000 1,500 1,000 500 2000 2001 2002 2003 2004 2005 Source: General Statistics Office Of Vietnam, Savills Resaerch & Consutlancy 2006 2007E “The reasons for the sharp rise in Japanese investment in Vietnam are increased risks in investment in China, increased production costs in Vietnam’s neighbours” Mizuho Corporate Bank Toshihiro Mitsui FDI keeps pouring into Vietnam Registered Investment Capital in Vietnam, 2000 – 2010F 35,000 US$ million (+16%) 30,000 (+16%) 25,000 (+16%) (+99%) 20,000 15,000 (+76%) 10,000 5,000 (+33%) (+40%) 2000 2001 2002 2003 2004 2005 2006 2007E 2008F 2009F 2010F Source: General Statistics Office Of Vietnam, Savills Resaerch & Consutlancy No of registered companies rapidly increasing No of Registered Companies & Total Registered Capital in HCMC, 2008 – 2012 No of Registered Local Enterprises (LHS) 16,000 Total Registered Capital (RHS) US$ million 14,000 2,000 1,800 1,600 12,000 1,400 10,000 8,000 6,000 1,200 1,000 800 600 4,000 400 2,000 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: HCMC Department of Planning and Investmen, Savills Research & Consultancy 200 Golden Land Sites: In the News! The Ho Chi Minh City administration has approved a US$56.5- million bid made by a consortium of construction industry firms for a 6,000-square meter plot of land at the Van Thanh Market in Binh Thanh District The Land [golden triangle area at Tran Hung Dao & Pham Ngu Lao Nguyen] attracted an astonishing VND10.5 trillion ($654.4 million) [bid] Thanh Nien Daily February 21, 2008 Issues facing tenants in Vietnam when leasing Ü Decentralization Completion dates delayed and sometimes stalled projects (multiple times in some cases) Ü Developer elects to self-manage building with little or no experience Ü Licensing issues - Ensure the Land Lord has the right to lease office space Ask for LUR AND business license Ü Deposits sometimes large and in advance (high costs when added to fitout costs) This often means the developer is out of money Ü Leasable Area calculations (what is the usable area? Calculated on gross or net area) Ü Car parking (Always an issue, never enough bays.) Ü Agreement terms and conditions (Land Lord demanding unrealistic clauses) Ü Liability clauses This document is prepared by Savills for information only Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars not constitute, nor constitute part of, an offer or contract; interested parties should not rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy No person in the employment of the agent or the agent’s principal has any authority to make any representations or warranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills  ...Overall Office Market Overview Leased Area, Vacancy Rates and Rents, Q4/1996 – Q4/2007 Leased Area (LHS) 600,000... The Ho Chi Minh City administration has approved a US$56.5- million bid made by a consortium of construction industry firms for a 6,000-square meter plot of land at the Van Thanh Market in Binh... 10,000 10 0 96 97 98 99 00 Source: Savills Research & Consultancy 01 02 03 04 05 06 07 Grade ‘B’ Office Market Leased Area, Vacancy Rates and Rents, Q4/1996 – Q4/2007 Leased Area (LHS) 140,000 Vacancy