VIETNAM REAL ESTATE MARKET REPORT q2 2016

Industrial Snapshot Q2 2016Hanoi, Vietnam About Cushman & Wakefield Cushman & Wakefield is a global leader in commercial real estate services, helping clients transform the way people wo

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Industrial Snapshot Q2 2016

Hanoi, Vietnam

Economic Indicators

Market Indicators

Net Absorption/Asking Rent

Overall Vacancy

www.cushmanwakefield.com

Economy

The World Bank has revised its forecast for Vietnam’s economic growth for 2016 to 6.2% from previous estimate of 6.5%, mainly due to unfavorable climate and weaker global demand However, Vietnam is still expected to have the brightest growth prospects among Southeast Asian economies and one of the most attractive environment for foreign investors

As of May 2016, total inward FDI into Vietnam reached US$10.16 billion (both newly registered and adjusted), up 136% y-o-y; implemented FDI was estimated to have reached US$5.8 billion,

up 17.2% y-o-y The manufacturing and processing industry attracted the largest share, at 65% of total registered capital Real estate ranked third with 5.4% Korea was the leading investor with newly registered FDI accounting for 38% of total new investment

Market Overview

Q2 2016, total existing supply reduced by 2% to around 1,390 hectares (ha) due to the conversion of the Hanoi – Dai Tu IP in Long Bien District into urban area due to its poor performance in attracting tenants

Overall market performance was relatively stable, with the

overall occupancy remained stable at well over 72% on quarter but

up 1 percentage point y-o-y Six out of 10 IPs were fully occupied Significant improvement was recorded at Noi Bai IP Phase II and Phu Nghia IP with absorption of around 3 ha each

Average asking rent in Q2 2016 down 1% q-o-q but up 2%

y-o-y, recorded at VND2,451,000 per square meter per term (/sq.m./term),equivalent to US$110/sq.m/term Hanoi’s rent remained the highest in the Northern region, about 50% higher than that of Hai Phong and Bac Ninh Nam Thang Long IP offered the highest rent at VND4,172,000/sq.m/term (US$187/sq.m/term)

* ALL RENTS ARE ASKING RENTS AND VAT EXCLUDED Outlook

An additional supply of nearly 2,360 hectares from 9 identified IP projects is expected to enter the market through 2020, which is equivalent to 132% of current supply By 2030 with vision to 2050, Hanoi will have 33 IPs with an area of 8,000 hectares in total With the TPP and other free trade agreements that Vietnam has participated in recently, coupled with stable economic conditions, favorable government policies and low labor cost, Vietnam will attract more investments from foreign manufacturers as they shift their operations to Vietnam With demand for industrial land on the rise, this segment will remain a compelling investment

5 months 15 5 months 16 12-Month Forecast

Trade balance

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Industrial Snapshot Q2 2016

Hanoi, Vietnam

About Cushman & Wakefield

Cushman & Wakefield is a global leader in commercial real estate services, helping clients transform the way

people work, shop, and live The firm’s 43,000 employees in more than 60 countries provide deep local and

global insights that create significant value for occupiers and investors around the world Cushman & Wakefield

is among the largest commercial real estate services firms in the world with revenues of $5 billion across core

services of agency leasing, asset services, capital markets, facilities services (branded C&W Services), global

occupier services, investment management (branded DTZ Investors), tenant representation and valuations &

advisory To learn more, visit www.cushmanwakefield.com or follow @Cushwake on Twitter

SUBMARKET TOTAL IPs INVENTORY (ha) YTD LEASING ACTIVITY (ha) OVERALL VACANCY RATE YTD NET OVERALL ABSORPTION (ha) CONSTRUCTION (ha)UNDER (VND/SQ.M/TERM)NET RENT

Significant Future Projects

Phuoc Vo Director Valuations & Research Room 16, Level 14, Vincom Centre

72 Le Thanh Ton, District 1, HCMC Tel: +84 8 3823 7968

Fax: +84 8 3823 7969 Phuoc.Vo@cushwake.com

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Office Snapshot Q2 2016

Hanoi, Vietnam

Economic Indicators

Market Indicators

Grade A - Net Absorption/Asking Rent

Grade A - Overall Vacancy

Economy

The World Bank (WB) has revised its forecast for Vietnam’s 2016 economic growth to 6.2% from previous estimate of 6.5%, mainly due

to unfavorable business climate and weak global demand However, Vietnam is still expected to have one of the brightest growth prospects among Southeast Asian countries, and one of the most attractive environments for foreign investors

As of May 2016, total inbound Foreign Direct Investment (FDI) to Vietnam reached USD 10.16 billion (both newly registered and adjusted), up 136.0% year-on-year (YoY); implemented FDI was estimated to have reached USD 5.8 billion, up 17.2% YoY The manufacturing and processing industry attracted the largest share with 65% of total registered capital Real estate ranked third with 5.4% Korea was the leading investor,with newly registered FDI accounting for 38.0% of total new investment

Market Overview

No new projects entered the market in the second quarter of 2016

Currently, there are 17 Grade A and 67 Grade B office buildings, supplying over 400,000 square meters (sq.m.) and 784,000 sq.m of available office space, respectively Nearly half of the total supply is concentrated in the Non-Central Business District (CBD) area, roughly one-third are in the West, and only 20.0% in the CBD

The second quarter of 2016 recorded significant improvements in terms of market performance for both grades Occupancy of Grade

A spaces increased by 5 percentage points quarter-on-quarter (QoQ)

to 79.0%, but lower by 1 percentage point year-on-year (YoY) Grade B tallied nearly 91.0%, up 1 percentage point QoQ and 6 percentage points YoY

The total net absorption for both grades stood at nearly 28,540 sq.m this quarter, up by 53.0% QoQ, but down 26.0% YoY Net absorption of Grade A offices reached over 20,710 sq.m., accounting for 73.0% of the total absorption, while Grade B accounted for the remaining 7,830 sq.m

Average asking rent of both grades remained stable compared to

the previous quarter Average rent for Grade A stayed at VND 634,000 per square meter per month (/sq.m./mo.) or USD 28.41/sq.m./month, while average rent for Grade B was VND 406,000/sq.m/month, or USD 18.22/sq.m/mo

Outlook

Nine new projects are expected to be delivered in the second half of

2016, providing approximately 171,550 sq.m of office space to the market Due to the availability of land to develop large-scale projects, most of these projects are located in the Non-CBD and West area, contributing 56.0% and 41.0% of new supply, respectively Two-thirds

of of these projects are currently at the end stages of construction

Trade balance

Grade A Average Asking

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Office Snapshot Q2 2016

Hanoi, Vietnam

SUBMARKET TOTAL

BUILDINGS

INVENTORY (SQM) VACANT AREA (SQ.M)

OVERALL VACANCY RATE (%)

CURRENT NET ABSORPTION (SQ.M)

UNDER CONSTRUCTION (SQ.M)

AVERAGE ASKING RENT (US$/SQ.M/MO.)

US$

SF/YR

EURO SF/YR

CBD Totals 25 231,360 14,610 6.3% 2,140 24,200 30.27 33.74 29.69

Non-CBD Totals 39 551,860 92,340 16.6% 16,070 297,840 19.26 21.47 18.89

West Totals 20 402,090 52,970 13.2% 10,330 190,700 20.03 22.33 19.65

Key Lease Transactions Q2 2016

SUMMARY BY GRADE BUILDINGSTOTAL INVENTORY(SQ.M) DIRECT VACANT (SQ.M) VACANCY RATE (%)

CURRENT NET ABSORPTION (SQ.M)

YTD NET ABSORPTION (SQ.M)

UNDER CNSTR (SQ.M)

AVERAGE ASKING RENT OVERALL (US$/SQ.M/MO.)

AVERAGE ASKING RENT DIRECT (US$/SQ.M/MO.)

*Rental rates reflect gross asking $psq.m/year

Significant Projects Under Construction Q2 2016

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Residential Snapshot Q2 2016

Hanoi, Vietnam

Economic Indicators

Market Indicators

Overall Primary Supply / Asking Prices

Asking Prices of All Segments

Economy

Market Overview

Q2 2016 witnessed positive market momentum, reflected by strong launches of nearly 8,000 units across all grades from

both new and active projects Q2 2016, there are over 16,960 available units for sale across all Grades in the primary market, of which Grade B accounted for 59%, while Grade A and Grade C contributed around 4% and 37% respectively

Transaction volume fell both on a quarterly and yearly basis,

at 11% and 17% respectively 64% of sold units were Grade B, followed by Grade C with 34% Tu Liem District had the highest share of over 33% of total sale volume this quarter

Grade A and Grade C recorded an increase in price level on

both a quarterly and yearly basis, up 29% q-o-q and 17% y-o-y, to nearly VND60.5 million per square meter (/sq.m)

(US$2,714/sq.m.) for Grade A; and up 3% q-o-q and 14% y-o-y ,

to reach VND19.1 million/sq.m (US$820/sq.m) for Grade C The increase was mainly due to the higher prices being offered by new projects In contrast, Grade B’s price declined by nearly 6% q-o-q and 12% y-o-y, reaching VND29.7 million/sq.m (US$1,326/sq.m.)

Outlook

Market sentiment is expected to remain positive in the second half

of 2016, in terms of both the number of newly launched projects and sale performance.The Western area is expected to see the highest supply of apartments in 2016 The high to mid-end segments tend to come back the market and attract a large number of investors

Trade balance

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Residential Snapshot Q2 2016

Hanoi, Vietnam

Key launched projects Q2 2016

Key future projects

YEAR

Fax: +84 8 3823 7969 phuoc.vo@Cushwake.com

SUMMARY BY GRADE TOTAL PROJECTS INVENTORY NET ABSORPTION AVERAGE PRICE LEVEL*(mil VND/SQM)

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Retail Snapshot Q2 2016

Hanoi, Vietnam

Economic Indicators

Market Indicators

Overall Vacancy

Economy

Market Overview

No new retail centres entered the market in Q2 2016

Currently, there are 50 projects supplying around 883,900 sq.m, unchanged since Q4 2015 and up 22% y-o-y Approximately 97%

of the total supply is concentrated in the non-CBD areas as land available for development in the CBD remains limited

Overall market performance continued to experience steady improvement, with vacancy rate down by 1 ppt q-o-q and 7 ppts

y-o-y to well under 11% in Q2 2016 This was mainly attributed to outstanding performance of shopping centers, especially

significant absorption at Vincom Mega Mall Royal City and Times City Meanwhile, vacancies of department store and retail podium slightly increased by 1 to 2 ppts q-o-q

The average asking rent was recorded at VND887,000/sq.m/month (US$39.8/sq.m/month), down 1% q-o-q but up 7% y-o-y While the asking rent of the CBD was stable on quarter but down 6% on year, to approximately VND2,647,000 million per square meter (/sq.m) (US$119/sq.m.), tripled that in the non-CBD

Outlook

Around 118,960 sq.m of new supply is expected to be completed

in the second half of 2016, 40% of which will be from the two Vincom shopping centres in Cau Giay and Dong Da No additional retail space in CBD is expected to be completed in 2016

With WTO commitments, FTA participation and the signing of TPP, the number of retailers into Viet Nam is expected to rise in the future and consequently intensify competition between domestic and foreign retailers

Trade balance

Overall Average Asking

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retail center All rents include Service charge and exclude VAT

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Retail Snapshot Q2 2016

Hanoi, Vietnam

SUBMARKET TOTAL BLDGS INVENTORY (SQ.M) VACANT AREA(SQ.M) OVERALL VACANCY RATE CURRENT NET ABSORPTION UNDER CNSTR AVERAGE ASKING RENT (VND/SQ.M/MONTH)*

Significant projects under construction Q2 2016

SUMMARY BY LOCATION BLDGSTOTAL INVENTORY (SQ.M) VACANCY RATE CURRENT NET ABSORPTION(SQ.M) YTD NET ABSORPTION(SQ.M) AVERAGE ASKING RENT(VND/sq.m/month)

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Serviced Apartment Snapshot

Q2 2016

Hanoi, Vietnam

Economic Indicators

Market Indicators

Overall Vacancy

Economy

As of May 2016, total inward FDI into Vietnam reached US$10.16 billion (both newly registered and adjusted), up 136% y-o-y; implemented FDI was estimated to have reached US$5.8 billion, up 17.2% y-o-y The manufacturing and processing industry attracted the largest share, at 65% of total registered capital Real estate ranked third with 5.4% Korea was the leading investor with newly registered FDI accounting for 38% of total new investment

Market Overview

One Grade A project has completed in Q2 2016, raised Grade A

stock by roughly 8% q-o-q and y-o-y to nearly 2,090 units from 13 projects Meanwhile, Grade B supply had remained unchanged since Q1 2014 with nearly 1,170 units from 18 projects Non-CBD area accounted for 60% of total stock, followed by Western districts with 31%, leaving only 9% in the CBD

Overall occupancy of both grades remained stable on quarter but up 4 ppts y-o-y Specifically, while occupancy of Grade B

reached 90% in Q2 2016, up 3 ppts q-o-q and 7 ppts y-o-y, that of Grade A was recorded at round 86%, down 1 ppt q-o-q but still up 2 ppts y-o-y The new project had quite good performance but still caused the overall occupancy of Grade A to decrease compared to the previous quarter

Overall average asking rent for both grades stood at VND634,000/sq.m/month (US$28.4/sq.m/month), up 4% q-o-q but down 2% y-o-y The higher rent of the new project caused the

average asking rent of Grade A to increase by nearly 5 ppts on quarter, to VND727,000/sq.m/month (US$32.6/sq.m/month), but remained stable on year Meanwhile, the average rent of Grade B continued its downward trend, standing at VND466,000/sq.m/month (US$20.9/sq.m/month), down 2 ppts q-o-q and 7 ppts y-o-y

* ALL RENTS ARE ASKING RENTS, WITH SERVICE CHARGE INCLUDED AND VAT EXCLUDED Outlook

There is no new project expected to come online in 2016 However, the market will experience more competition from Grade A buy-to-let apartments besides the current over-supply status Therefore, the asking rents are expected to remain stable or slightly decrease otherwise in order to maintain occupancy

Trade balance

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HANOI SERVICED APARTMENT

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Serviced Apartment Snapshot

Q2 2016

Hanoi, Vietnam

Significant Projects Under Construction Q2 2016

EXPECTED COMPLETION DATE

SUMMARY BY GRADE BLDGSTOTAL TOTAL UNITS VACANCY RATE CURRENT NET ABSORPTION ABSORPTIONYTD NET AVERAGE ASKING RENT OVERALL* AVERAGE ASKING RENT DIRECT*

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