CBRE MARKET UPDATEDa Nang Q1/2012Presented by:THAO LE Da Nang ResearchOpening Remarks from:TIEN CAO Da Nang ResearchADAM BURY Senior ManagerCB Richard Ellis (Vietnam) Co., Ltd. Friday, April 20th, 2012.OPENING WORDSDa Nang 2012 – Continued S pptx

•“New launch”: the number of units that were released to the market by developers official start of sales for a project in the review quarter.. All units in each development are included

Presented by:

Opening Remarks from:

CB Richard Ellis (Vietnam) Co., Ltd

CBRE MARKET UPDATE

Da Nang Q1/2012

THAO LE

Da Nang Research

ADAM BURY

Senior Manager

TIEN CAO

Da Nang Research

O P E N I N G W O R D S

D a N a n g 2 0 1 2 – C o n t i n u e d

S i g n s o f G r o w t h

All Pictures – Source: CBRE Vietnam Date 19 th April, 2012

V I E T N A M E C O N O M I C O V E R V I E W

Q 1 / 2 0 1 2 P E R F O R M A N C E

International Arrivals (million arrivals) 1.9 (24.5% y-o-y) 1.7 (29.3% y-o-y)

Retail and Services Turnover (trillion dong) 569.7 (21.8% y-o-y) 611.5 (47.2% y-o-y)

CPI, VN (% y-o-y)) CPI, VN (% m-o-m) Refinancing rate (%) Rediscounting rate (%)

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

0

5

10

15

20

25

Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12

Inflation surged

Monetary controls took effect

Monetary controls

on interest rates

 Inflation continuing to trend down, possibility of

upward revisions remain;

 Petroleum prices increased 10.1% compared to the previous adjustment, leaving more pressure

on CPI in the second quarter;

• March CPI recorded the lowest m-o-m increase since January 2011 at 0.16% m-o-m,

(or 14.15% y-o-y)

• Bounce back in the stock market, in part a

reflection of decreasing inflation

V I E T N A M E C O N O M I C O V E R V I E W

I N F L A T I O N

9-Aug-10 16,900 16,400 410 2.56%

24-Feb-11 19,800 19,300 2,900 17.68%

29-Mar-11 21,800 21,300 2,000 10.36%

26-Aug-11 21,300 20,800 (500) -2.35%

29-Mar-12 23,400 22,900 2,100 10.10%

0 5 10 15 20 25

200 300 400 500 600 700

Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12

0 500 1,000 1,500 2,000 2,500 3,000

300

350

400

450

500

550

4-Jan 1-Feb 1-Mar 29-Mar 26-Apr 24-May 21-Jun 19-Jul 16-Aug 13-Sep 11-Oct 8-Nov 6-Dec 3-Jan 31-Jan 28-Feb 27-Mar

Trading value VNIndex 2011 VNIndex Q1/2012

Petroleum Price Adjustments

Stock Index and Inflation

 Positive signs with the downward adjustments

of key interest rates

• By 1% during the first quarter (March) – refinancing adjusting to 14%, Rediscount Rate to 12% and the deposit cap to 13%

• A further 1% reduction to each measure was announced in the second week of April

 Lower interest rate mortgage loans still scarce

• Still only limited signs of commercial loans being reduced to reflect the revised interest rates Slight decreases of approx 0.5% in

the beginning of 2012

• 20% - 25% for non-productive sector and 16.5% - 20% for productive sector (SBV)

 More stable USD/VND exchange rate, strict

controls on USD/gold trading remain

V I E T N A M E C O N O M I C O V E R V I E W

M O N E T A R Y C O N T R O L S

0

5

10

15

20

2008 2009 2010 2011 2012

Base rate Re-discounting rate

Re-financing rate

 The 4% y-o-y GDP growth rate is the lowest

recorded since Q2/2009

 Imports saw their lowest growth since Q4/2009

(6.9% y-o-y) resulting in low trade deficit in

Q1/2012

 Real estate ranked first in FDI attraction, uncertain if that will be disbursed in the

long-term

 Bank restructuring continues to be a key topic

of conversation;

• VietinBank to issue first dollar-bond in July;

received a B+/B credit rating from S&P

• Changes in top management at a couple

of banks

• Bank shareholders’ conflict

V I E T N A M E C O N O M I C O V E R V I E W

B U S I N E S S E N V I R O N M E N T

World Bank

Ranking 2011 2012

Ease of doing business

Protecting investors

5 STAR 4 STAR 3 STAR TOTAL

M A R K E T S N A P S H O T

H O T E L

Source: CBRE Vietnam

• In Q1/2012, Da Nang welcomed almost 590,000 visitors - a 31.9% q-o-q increase and 35.0% y-o-y increase

the number of visitors arriving increasing by 94.3% y-o-y

y-o-y, thanks to the arrival of famous cruise ships such as the Superstar Aquarius (Star Cruises)

will be opened in May 2012

appears to be a first step in a new tourism relationship between the two countries It is though noted that at the current time there is no charter flight between the two countries

5-star hotels decreased – though this was not unexpected as the new hotels are aiming to establish themselves for the longer term

y-o-y basis, reflecting new tourism arrivals, whilst 4-star occupancy decreased y-o-y as new supply took effect

H I G H L I G H T S

0

30

60

90

120

150

Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12

30%

40%

50%

60%

70%

80%

Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12

5-star 4-star

Average Daily Rate(US$) 5 star 4 star

Occupancy (%) 5 star 4 star

H O T E L

H O T E L

 Upcoming festivals and the high-season will put new supply, which came on line in 2011,

through its first full test

 There appears to be a growing trend of MICE travelers combining business with pleasure and thus the city may become a

more rounded destination

 Travelers from China, Korea, Japan, America, Australia, Germany and Russia are expected to grow throughout the year

 A second hotel operated by Intercontinental

Hotel Group is expected to become

operational in Q2/2012

 It is expected that over 1,000 rooms of additional supply will be launched in 2012;

launched by Melia, Pullman, InterContinental, Novotel and Dragon Vinh

Trung

O U T L O O K

C O N D O M I N I U M F O R S A L E

•“Existing supply”: is the total number of units that have been handed over for occupation

•“New launch”: the number of units that were released to the market by developers (official start of sales for a project) in the review quarter

All units in each development are included in the calculations, however, the developer may divide sales into numerous phases and thus not

all units may come online at launch date

Source: CBRE Vietnam

M A R K E T S N A P S H O T

C O N D O M I N I U M F O R S A L E

 DN welcomed 28 units of additional new supply from one

mid-end condo project, La Paz Tower

 In total there were over 30 units sold in the condo sector, more

than 70% of these were in the mid-end sector;

 Developers in Da Nang are keeping in line with the trend seen

in HCMC, of keeping asking prices relatively stable but offering

discounts/incentives during negotiation

 Luxury projects saw prices decrease to US$ 2,972 psm, a 2.0% q-o-q decrease, while the price of mid-end segment went

up to US$ 937 psm, a 2% q-o-q increase due to new supply

joining the sector

 The high-end projects saw prices remain stable

Condominium Supply (units) Opening supply

Change in quarter

Asking Price (US$ psm) Luxury High-end

Mid-end

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12

0

500

1,000

1,500

2,000

2,500

3,000

3,500

M A R K E T S N A P S H O T

 In Q1, majority of condo units transacted are in the price range of VND 0,75 – 3,0 billion

 The majority of sales in Q1/2012 were at projects which were nearing or completed

 In 2012, DN market is expected to welcome an addition of 217 units which have prices in the

range of US$ 700 – 1,500 psm

 Construction progress has been pushed forward sharply in some condo projects

 It appears that there has been a slight increase in enquiries since interest rates were dropped

 With the macro economy showing some positive signs for the real estate market, and some developers showing an increase in enquiries, it is hoped that the number of sales will increase in

the coming months

C O N D O M I N I U M F O R S A L E

O U T L O O K

All Pictures – Source: CBRE Vietnam Date 19 th April, 2012

S E C O N D - H O M E V I L L A F O R S A L E

All prices are quoted exclusive of VAT and service charges

•“Total supply”: is the total number of units available for sale – both primary and secondary market

•“New launch”: the number of units that were released to the market by developers (official start of sales for a project) in the review quarter

All units in each development are included in the calculations, however, the developer may divide sales into numerous phases and thus not all units may come online at launch date

Source: CBRE Vietnam

TOTAL

M A R K E T S N A P S H O T

14 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s DA NANG QUARTERLY UPDATES | APRIL 2012

V I L L A F O R S A L E

Sales rate (%)

2 nd Home Villa Supply (units)

0

100

200

300

400

500

600

700

2009 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11

Change in supply Openning supply

10.0

25.0

40.0

55.0

70.0

85.0

Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12

H I G H L I G H T S

 In Q1, DN market witnessed no new supply

 Although there were 10 units sold in Q1, the average sale rate dropped to 52.5%, a 0.9pp decrease due to the rescission of

some deals

 Only 2 of the villa 12 projects reduced asking price in Q1 The decrease was from 17 – 20% Other projects chose to leave

headline pricing stable

OUTLOOK

 In 2012, DN market is expected to welcome additional 133 units of new supply from 3 new projects The majority of them will priced from US$ 500,000 to US$800,000 and sized from

400 – 700 sqm per unit

 Despite tight monetary policy over previous quarters it is apparent that some activity has remained in the second home market – showing the wealth and disposable income that still

exists in some portions in society;

 It would be hoped that as monetary policy eases greater levels

of liquidity may be created within the market;

O U T L O O K

L A N D P L O T

Source: CBRE Vietnam

M A R K E T S N A P S H O T

 In Q1, the unchanged supply showed that developers hesitated in launching new land plots and reflected the reduced

sentiment for this market

 Price were flat ,or down, owing to the

selling of land plots by speculators having difficulties who want to mobilise

cash

 The coastal, southern and Thuy Tu areas saw greatest price declines – these were also the areas that saw the

largest price increases

 The secondary market is more active whilst primary market appears to be in

hibernation

 Land plots priced less than 1,5 billion VND are more attractive buyers in

current market

L A N D P L O T

H I G H L I G H T S

Land Plot Supply Opening supply Change in quarter

Price range by submarkets (VND mil psm)

Maximum price Average price

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2009 Q1/10Q2/10Q3/10Q4/10Q1/11Q2/11Q3/11Q4/11Q1/12 Est

2013

0

6,000,000

12,000,000

18,000,000

24,000,000

30,000,000

36,000,000

42,000,000

48,000,000

 The recent market brings good opportunities for end-user buyers and long-term investors with strong financial abilities

 DN market is expected to see positive signs from the

upcoming festivals (International Firework Competition/International Paramotor Competition), held in

April and May

 DN Land plot market is expected to have a slight recovery in

the second half of 2012 as transactions increase with

interest reductions

 Some developers are considering breaking larger land plots

into smaller, 65 – 90sm plots, in order to counter the slow down in the land plot market It is hoped this will draw

end-users to purchase

L A N D P L O T

O U T L O O K

O F F I C E

Source: CBRE Vietnam

All rents are quoted on NLA Rents are quoted including service charges and excluding VAT

M A R K E T S N A P S H O T

O F F I C E

H E A D L I N E S T O R I E S

Grade A Grade B Grade C

Asking Rents (US$ psm per month)

Vacancy rate(%) Grade A Grade B

Grade C

5

10

15

20

Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/11

0

10

20

30

40

50

60

70

80

Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12

insignificant changes were seen in both Grade B and

Grade C properties;

Q4/2011, an increase of 0.8 pts q-o-q

• Grade A and C saw good take-up with decreasing vacancy;

• The majority of Grade B projects saw good performance during Q1/2012, however one Grade B building saw a dramatic increase in vacancy as two companies withdrew leaving large empty space that affected headline numbers;

OUTLOOK

by the end of 2012 Will put pressure on vacancy rate

 In the next two quarters it is likely that the market will remain flat,

though this is dependent on all projects being completed

– this is unlikely

T o s u b s c r i b e , p l e a s e c o n t a c t …

Q 1 / 2 0 1 2 r e l e a s e d

T O D A Y , A p r i l 2 0 , 2 0 1 2

© 2012 CB Richard Ellis (Vietnam) Co., Ltd This report has been prepared in good faith and with due care by CB Richard Ellis (Vietnam) Co., Ltd We obtained some of the information above from sources we believe to be reliable However, we have not verified the accuracy of the information which we obtained from other sources and make no guarantee, warranty or representation about it We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us for example only, and they may not represent current or future performance of the market This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis

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