COMBINED MARKET OVERVIEW Quarter 4 2007 Presented by Mr. Naim Khan-Turk – Associate Director CB Richard Ellis (Vietnam) CB Richard Ellis | Page 2 Agenda HCMC: ¾OFFICE MARKET ¾CONDOMINIUMS ¾SERVICED APARTMENT MARKET ¾RETAIL MARKET ¾HOTEL MARKET ¾INDUSTRIAL HA NOI: ¾OFFICE MARKET ¾SERVICED APARTMENT MARKET ¾HOTEL MARKET ¾RETAIL MARKET ¾RESIDENTIAL MARKET ¾MARKET OUTLOOK CB Richard Ellis | Page 3 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, APEC, the Stock Market and entry to WTO has put Vietnam on the radar screen, coupled with the ML reports and the Euro Money Conference in March 2006/2007 CB Richard Ellis | Page 4 MAP OF VIETNAM CB Richard Ellis | Page 5 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” no longer exists • 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 CB Richard Ellis | Page 6 DEVELOPMENT OPPORTUNITIES Source: Saigon Times CB Richard Ellis | Page 7 PROPOSED MRT LINES HCMC CB Richard Ellis | Page 8 VIETNAM AT A GLANCE CB Richard Ellis | Page 9 WTO CB Richard Ellis | Page 10 HO CHI MINH CITY Source:CBRE [...]... 06 Q2 06 Q3 06 Q4 06 Q1.07 Q2.07 Q3.07 Q4.07 Index (Q1 1998 = 100) HCMC - OFFICE MARKET Prime Office Rental Index 180 WTO 160 140 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 0 Source:CBRE CB Richard Ellis | Page 13 HCMC - OFFICE MARKET Take up and vacancy r ate of H C MC of fice buildings Q4.2007 % 80,000 8.0%... Ellis | Page 14 Vacancy Rate (%) CB Richard Ellis | Page 15 HCMC - OFFICE MARKET NEW MAJOR OFFICE BUILDINGS COMPLETED DURING 2007 E-Town 2 Tan Binh Dist Saigon Finance Centre, Dist 1 (27,000 sm) (10,692 sm) Petro VN, Citilight, Dist 1 Dist 1 (14,493 sm) (10,780 sm) Total Supply in 2007 165,381 sm CB Richard Ellis | Page 16 HCMC OFFICE MARKET – Rental Rates Rent trends of Grade A Q1/06 - Q1/07 uni t: US... t: US $ grow t h r at e 33% Q1 - 2008 $32.00 32 Increase of 33% in comparison to Q1.07 24 Q 1/ 2007 Q 1/ 2008 * Note: rents excluding S.C and VAT CB Richard Ellis | Page 19 Occupancy 98% HCMC OFFICE MARKET Market Outlook in 2008: Vacancy in grade A & B office space still remains limited Some new supply of Grade B office space expected to come on line during 2007 Factors driving demand: Strong economic... 5,000 4,000 1,000 VN Stock Market Poi nts 2,000 T he La nc a s t e r $ 2 ,0 5 0 A v a lo n $ 2 ,0 8 9 2005-07 S a igo n R e s ide nc e s $ 1,2 0 0 No of condo s 3,000 S a igo n R e s ide nc e s $ 3 ,8 0 0 2004 CB Richard Ellis | Page 29 2005 2006 Q1/ 07 Q2/ 07 Q3/ 07 Q4/ 07 Residential Condo - HCMC Price Change of Typical High-end Condominiums in District 2 & Binh Thanh VN Stock Market 2005-07 The Vista... Demand •Speculation •Rental Opportunities •Capital Growth •Desirability •Smart Marketing 1st Phase Tower 1&2 - June 07 Average Sales Price - $1,350 per sqm - Fully Booked 2nd Phase Tower 3 -17th Oct 07 Average Sales Price - $2,100 per sqm - Fully Booked Tower 4 -19th Oct 07 Average Sales Price 2,600 per sqm - Fully Booked The Market is Hot! CB Richard Ellis | Page 34 Residential Condo HCMC – Future Supply... $40 uni t : US $ gro wth rate 51% 40 26 5 Increase of 51% in comparison to Q1.07 Occupancy 100% Q1/2007 Q1/2008 * Note: rents are on net area excluding S.C and VAT CB Richard Ellis | Page 18 HCMC OFFICE MARKET – Rental Rates Q1 - 2006 $20.50 Rent trends of Grade C Q1/06 - Q1/07 Q1 - 2007 $24.00 uni t : U S $ gr ow t h r at e 17% 24 20.5 Increase of 43% Occupancy 97% Q 1/ 2006 Q 1/ 2007 * N ote: rents...AVERAGE REGIONAL RENTAL AND OCCUPANCY COST PRIME OFFICE RENTS AND OCCUPANCY COST IN KEY ASIAN CITIES (As of Q4.2007) Avarage market rents (US$/sqm/month) Total occupancy cost (US$/sqm/month) (unit: US$) 141 126 90.5 36 Melbourne 28.5 21.5 21.5 Sydney 14 16.516.5 Jakarta Bangalore N ew Delhi Seoul Tokyo Taipei 8.5 21.5 26 50... reflects upward momentum and growing demand vis-à-vis tight supply 2010 10 288,156 Vacancy rate remains low, grade A (0%) and B ( . ¾OFFICE MARKET ¾CONDOMINIUMS ¾SERVICED APARTMENT MARKET ¾RETAIL MARKET ¾HOTEL MARKET ¾INDUSTRIAL HA NOI: ¾OFFICE MARKET ¾SERVICED APARTMENT MARKET ¾HOTEL MARKET. ¾RETAIL MARKET ¾RESIDENTIAL MARKET MARKET OUTLOOK CB Richard Ellis | Page 3 WHAT HAS BEEN DRIVING THE PROPERTY MARKET SINCE 2003? • Limited capital markets