Q1 2018 | ECONOMIC OVERVIEW Figure 4: FDI of HCMC, Hanoi and Danang Source: General Statistics Office | Colliers International Research Source: General Statistics Office | Colliers Inter
Trang 1VIETNAM REAL ESTATE
QUARTERLY KNOWLEDGE REPORT Q1 2018
Trang 2TABLE OF CONTENTS
ECONOMIC OVERVIEW
VIETNAM
HO CHI MINH CITY
HANOI
DANANG .
HO CHI MINH CITY MARKET OVERVIEW .
OFFICE
RETAIL .
CONDOMINIUM .
VILLA & TOWNHOUSE
SERVICED APARTMENT
INDUSTRIAL .
HANOI MARKET OVERVIEW .
OFFICE
RETAIL .
CONDOMINIUM .
VILLA & TOWNHOUSE
SERVICED APARTMENT
INDUSTRIAL .
DANANG MARKET OVERVIEW .
OFFICE
RETAIL .
CONDOTEL .
VILLA
Cover Page: Deutsches Haus - Grade A Office Building, HCMC
6-7 6 7 7 7
8-20 8 11 13 15 17 19
21-32 21 23 25 27 29 31
33-40 33 35 37 39
Page
Trang 3Figure 1: Vietnam Exports - Imports in 2017
Figure 2: International Arrivals to Vietnam in 2017
Figure 3: GDP Growth Rate of HCMC, Hanoi and Danang
Figure 4: FDI of HCMC, Hanoi and Danang
HO CHI MINH CITY MARKET OVERVIEW Figure 5: Office, Average Asking Rent
Figure 6: Office, Occupancy Rate
Figure 7: Retail, Rental Rate by quarter
Figure 8: Retail, Occupacy Rate by quarter
Figure 9: Condominium, New Launches by Segment and Quarter
Figure 10: Condominium, Sold Units by Segment and Quarter
Figure 11: Condominium, Primary Asking Price
Figure 12: Villa and Townhouse, Selling Prices on Land Area by District
Figure 13: Villa and Townhouse, Transaction Volume by Quarter
Figure 14: Villa and Townhouse, New Launches by District
Figure 15: Serviced Apartment, Occupancy Rate
Figure 16: Serviced Apartment, Average Asking Rent
Figure 17: Industrial, Market Performance by District
Figure 18: Industrial, Supply by District
LIST OF TABLES Table 1: Macroeconomic Indicators of HCMC, Hanoi and Da Nang
Table 2: Significant Projects under expected completion in 2018
Table 3: Significant Office Projects
Table 4: Retail, Significant Future Projects under Construction
Table 5: Significant Retail Projects
Table 6: Condominium, Significant new Projects launched in 2017
Table 7: Villa and Townhouse, Significant new Projects launched in 2017
Table 8: Serviced Apartment, Significant Future Projects under construction
Table 9: Significant Serviced Apartment Projects
Table 10: Industrial, Future Supply
Table 11: Industrial, Market Overview
6 6 7 7
8 8 11 11 13 13 13 15 15 15 17 17 19 19
7 8 9 11 12 14 16 17 18 19 20
Trang 4LIST OF FIGURES
Figure 19: Office, Average Asking Rent
Figure 20: Office, Occupancy Rate
Figure 21: Retail, Rental Rates by Quater
Figure 22: Retail, Occupancy Rates by Quarter
Figure 23: Condominium, Sold Units and Absorption Rate by Segment
Figure 24: Condominium, New Launches
Figure 25: Condominium, Sold Units by Segment
Figure 26: Villa and Townhouse, Supply by Quarter, Hanoi
Figure 27: Villa and Townhouse, Asking Price on Secondary Market
Figure 28: Hanoi District Map
Figure 29: Serviced Apartment, Supply by Quarter
Figure 30: Serviced Apartment, Occupancy Rate
Figure 31: Serviced Apartment, Average Asking Rent
Figure 32: Industrial, Market Performance by Distrtict
Figure 33: Industrial, Supply by District
LIST OF TABLES Table 12: Office, Future Supply
Table 13: Significant CBD Office Projects
Table 14: Retail, Significant Future Supply
Table 15: Significant Retail Projects
Table 16: Condominium, Significant New Projects Launched in Q4 2017
Table 17: Villa and Townhouse, Significant New Projects Launched in Q4 2017
Table 18: Significant Serviced Apartment Projects
Table 19: Industrial, Future Supply
Table 20: Hanoi Industrial Market Overview
Page
21 21 23 23 25 25 25 27 27 27 29 29 29 31 31
21 22 23 24 26 28 29 31 32
Trang 5LIST OF FIGURES
Figure 34: Office, Market Performance as of Q4 2017
Figure 35: Office, Market Performance by Quarter
Figure 36: Office, Supply by Grade
Figure 37: Retail, Market Performance as of Q4 2017
Figure 38: Retail, Market Performance Comparision among Key Cities
Figure 39: Retail, Supply by District
Figure 40: Condotel, Market Performance
Figure 41: Condotel, Supply by District
Figure 42: Condotel, Guaranteed Return by Project
Figure 43: Villa, Market Performance
Figure 44: Villa, Primary Supply by District
Figure 45: Villa, Buyer Profile
LIST OF TABLES Table 21: Significant Office Projects
Table 22: Significant Retail Projects
Table 23: Significant Condotel Projects
Table 24: Significant Villa Projects
LIST OF ABBREVIATIONS ARR: Average Rental Rate CBD: Central Business District CPI: Consumer Price Index GDP: Gross Domestic Product GFA: Gross Floor Area GRDP: Gross Regional Domestic Product LUR: Land Use Right IP: Industrial Park
NLA: Net Lettable Area Q-o-Q: Quarter on Quarter Y-o-Y: Year on Year
Exchange rate: USD/VND = 22,750
33 33 33 35 35 35 37 37 37 39 39 39
34 36 38 40
Page
Trang 6Q1 2018 |
GDP
GDP in the first quarter of 2018 achieved an estimated increase of 7.38% compared to the same period last year This is the
highest growth rate of the first quarter in the last ten years, starting with assurance that the Government has demonstrated
effective solutions on all levels, sectors and localities in the first days and first months of 2018 As a result, the agriculture,
forestry and fishery sectors rose by 4.05% q-o-q Manufacturing was also a key contributor to growth, rising 13.56% over
the quarter driven by a 9.07% rise in the industry and construction sector; the service sector expanded by 6.7% over the
same quarter of the previous year
CPI AND INFLATION
Consumer price index (CPI) in March was up 0.97% since last December, making the average CPI in first quarter 2.82%
higher than the CPI of 2017 Core inflation in March 2018 decreased by 0.09% over the previous month however still up by
1.38% from the same period last year Average core inflation in the first Quarter of 2018 rose by 1.34% compared with the
corresponding period in 2017
FOREIGN DIRECT INVESTMENT (FDI)
Total FDI in Vietnam during Jan-March 2018 stood at approximately USD 5.8 billion, 24.8% down on the same period last
year However, there was still USD 2.12 billion coming from 618 newly licensed projects The remainder was contributed by
199 currently-operating projects that raised their capital by more than USD 1.79 billion in total Indeed, the manufacturing
and processing industries are the main destinations of FDI inflows, receiving USD 3.44 billion, comprising 59.4% of the total
registered FDI The Republic of Korea is still the leading investor in Vietnam’s FDI projects with USD 1.84 billion Hong Kong
and Singapore’s FDI is behind Korea but levels are increasing over time
RETAIL SALES
According to the General Statistics Office (GSO), the total Vietnam revenue from retail trade and services exceeds USD 44.05
billion in the first quarter of 2018, an increase of 10% year-on-year The retail sales of goods, which accounted for more than
75% of the revenue, topped USD 35.22 billion, up 10.5% year-on-year Overall, all the sectors show positive signs including
food and foodstuff (up 12%), textiles and garments (up 13%), home appliances (up 11%) and transport services (up 8.4%)
INTERNATIONAL ARRIVALS
Total international arrivals in first three months reached 4,205,401 arrivals, an increase of 30.9% over the same period last
year Based on booking data in the first quarter of 2018, Airbnb announced a list of the world’s top 10 destinations for the
coming year, in which Da Nang ranks fifth in booking, surges up 25.5% against the same period this year while Hanoi comes
9th on the list, with a 21.2% year-on-year increase
TRADE BALANCE
Export turnovers of goods in the first quarter of 2018 was estimated to reach USD 54.31 billion, up 22% from the same
period last year, of which the domestic economic sector achieved USD 14.97 billion, up 18.9%; the FDI sector (including
crude oil) gained USD 39.34 billion, rose by 23.2% Import turnovers of goods in the first quarter of 2018 reached an estimate
of USD 53.01 billion, an increase of 13.6% from the same period last year, of which the domestic economic sector gained
USD 21.26 billion, climbing by 13.4%; the FDI sector achieved USD 31.75 billion, increasing by 13.7% Trade deficit of services
in the first quarter was USD 391 million, equaling 10% of the service export turnovers
REMITTANCES & REAL ESTATE ENTERPRISES DEVELOPMENT
In the first quarter of 2018, HCM City remained the largest recipient of remittances in Vietnam, with the inflows estimated at
USD 5.2 billion, a 4.5% y-o-y increase However, according to the National Center for Information and Forecast of Social -
Economic (NCIF), in 2018 further pressure on remittances to Vietnam will keep on this year due to the recovery of the world
economy, high remittances costs and coordination between stakeholders
VIETNAM ECONOMIC OVERVIEW
2018 forecast
Trang 7Q1 2018 | ECONOMIC OVERVIEW
Figure 4: FDI of HCMC, Hanoi and Danang
Source: General Statistics Office | Colliers International Research
Source: General Statistics Office | Colliers International Research
Table 1: Marcoeconomic Indicators of HCMC, Hanoi and Danang
HO CHI MINH CITY
According to Statistical Office in Ho Chi Minh City, the GRDP
(Gross Regional Domestic Product) in the first quarter of
2018 was estimated to reach VND 260,317 billion, increasing
by 7.64% compare to the first quarter in 2017 The growth is
considered to be the highest among the first quarters since
2016, a sign that Ho Chi Minh City’s economy is growing steadily
The success of Ho Chi Minh City market is partially due to
the growth of agricultural, fishery and forestry sectors which
increased by 5.83% The sector of industrial and construction
increased by 7.25% and the customer service industry sector
increased by 7.98% There are 9 industries accounted for
55.11% in GRDP; 92.56% of which are for the customer service
sector And among them the 4 major industries include: retail
(13.6%), industrial and warehouse (9.2%), commercial real
estate (6.0%), investment and banking (7.6%) These are the
industries boosting the economy in Ho Chi Minh City
HANOI
In 2017, Hanoi’s economy grew positively with improvements
recorded in most economic indicators The GRDP of 2018
expects to increase by 7 % The industrial and construction
sector is the leading factor for the economic growth with an
estimation of 11% increase Export turnovers reached USD 54.3
billion, an increase of 23% y-o-y, import turnovers at USD 53
billion, up 13.6% y-o-y FDI is expected to reach USD 3.88 billion
with an increase of 7.2 % y-o-y due to the strong performance
in manufacturing and processing Hanoi market has some
favorable conditions to achieve its target of 7% growth this
year However, the government should pay attention closely to
ensure the positive momentum for Ha Noi market in the next
quarters
Figure 3: GDP Growth Rate of HCMC, Hanoi and Danang
Source: General Statistics Office | Colliers International Research
DANANG
Da Nang’s economy continued strong momentum in the first
quarter of 2018 with GRDP growth rate at 9 to10% compared
to the same period last year Industrial production index (IPI) of
Da Nang in 2018 increased by 7.9% y-o-y, lower than the index
of 2017 which was recorded at 13.82% but is still considered
significant growth A total retail sale of goods and services
reached USD 7.04 billion, an increase of 14% y-o-y Another
positive sign was reported in the Consumption Price Index (CPI)
in the first quarter with an increase of 3.06% compared with
the same period in 2017 In the first quarter of 2018, Da Nang
attracted almost VND 6.922 billion from investors, increasing
by 3.24% compared to first quarter in 2017 In this amount,
the money from central government accounted for 23.0%,
private sector account 70.0%, and Foreign Direct Investment
(FDI) 7.0% The tourism industry is one of the major sources of
income for Da Nang The number of people coming to Da Nang
in first quarter was approximately 926,000 increased by 3.34%,
among them; 235,000 were international travelers, up by 9.52%
Trang 8Q1 2018 |
Figure 6: Office, Occupancy Rate
PERFORMANCE
Ho Chi Minh City continued to show rising demand for office space
with an increase of 2% in occupancy q-o-q among Grade A and
Grade B offices Average rents for Grade A decreased by 2.8%
q-o-q, sitting at USD 43.2/sqm/month With the opening of Saigon
Centre Phase 2 and Deutsches Haus HCMC at the end of 2017, the
old Grade A office buildings have had to adjust the rent downward
to make them more attractive to potential tenants On the other
hand, the Grade B segment enjoyed a growth of 9% occupancy
rate q-o-q and the average NLA increased by 11.3% due to strong
flow of Foreign Direct Investment (FDI) up to USD 17.5 billion
compared to 2017’s USD 15.8 Billion
SUPPLY
The last quarter of 2017 welcomed Etown Central, a high quality
building located in District 4 with 36,500 sqm NLA We also
welcomed Deutsches Haus HCMC, a Grade A building with LEED
certificate (very first building to receive this certificate in Vietnam)
located in D1 with 25.000 sqm No Grade A offices are set to
open in 2018 In constrast, one Grade B building and four Grade C
building are expected to open this year, adding more than 50,000
sqm NLA to the total office stock
DEMAND
Ho Chi Minh City remains a top choice for multi-national companies
to open head offices in Vietnam In the long term, the city’s reliable
workforce coupled with the number of upcoming infrastructure
projects are seen to unlock the city’s potential in office space,
especially buildings located in outskirt districts, facilitating faster
decentralization trend in the coming years In the short term, the
lack of Grade A office spaces will create rises in rental rates
With the growing of start-up companies; 33,000 new companies
created in 2017, the demand for Grade B and C office space will
also increase in the upcoming year
OUTLOOK
There are indicators that show the demand could exceed the
supply in next year and it appears to favor landlords with more
bargaining power The shortage of supply in Grade A office in
Ho Chi Minh City makes it very attractive for developers to plan
new projects in the city There is no Grade A building set to come
on the market in the next 2 years Nevertheless, conditions can
vary significantly depending on location and building quality
Due to a new regulation to encourage start-up companies, the
market expects the demand in Grade B and C offices to increase to
accommodate the need for office spaces for start-up companies
HO CHI MINH CITY | OFFICE
Table 2: Significant Projects under Expected Completion in 2018-2020
Source: Colliers International Research
Source: Colliers International Research
Figure 5: Office, Average Asking Rent
Project name Location Grade Estimated NLA Year
The Spirit of Saigon District 1 A 43500 2020
Saigon Gem Complex District 1 A 35900 2020
Trang 9Average net asking rent
Grade A
Grade B
Table 3: Significant Office Projects
Trang 10Q1 2018 | HO CHI MINH CITY | OFFICE
SKYLINE REVIEW- CBD HCMC GRADE A OFFICE BUILDINGS
mPLAZA SAIGON
39 Le Duan, District 1 26,000/1,402
$ 51.70 $ 6.50
DIAMOND PLAZA SAIGON
34 Le Duan, District 1 15,936/2,200
$ 41.00
$ 8.00
SAIGON TOWER
29 Le Duan, District 1 13,950/920
$ 45.2
$ 6.00
DEUTSCHES HAUS 3-5 Le Van Huu, District 1 25,062/1,400
BITEXCO FINANCIAL TOWER
45 Ngo Duc Ke, District 1 37,710/900-1,300
$ 53.30
$ 7.00
SAIGON CENTRE
65 Le Loi, District 1 11,650/ 1,073
Trang 11Q1 2018 |
Table 4: Some Significant Future Projects (2018-2019)
PERFORMANCE
In Q1 2018, the retail segment in Ho Chi Minh City was one of the major segments to contribute to the GDRP for the city It accounted for 13.6% Gross Regional Domestic Product (GRDP) It ranked second after the manufacturing industry Regarding rental rates, the CBD rent is increasing due to the good performance from its tenants which are mostly from the Food and Beverage, Fashion, Health and Entertainment sectors Due to solid demand, rents of CBD retail properties will continue to rise in next two to three years and vacancy shall remain under 5%
SUPPLY
In Q1, the retail stock in Ho Chi Minh City increased with over 50,000 sqm NLA from the Van Hanh Mall (District 10) The Xiaomi Corporation opened their first store in Vietnam called Mi Store G25,
a grocery store company from South Korea, opened its first store in the Ho Chi Minh City market However, the closing down of 26,000 sqm of Parkson Fleminton in District 11 caused a slight decrease
in total supply There will not be any new supply in CBD until Q3 earliest and five new projects scartterd around non-CBD supplying around 293,000 sqm NLA Currently, the total net floor area of retail in Ho Chi Minh City remains the same to previous quarter with over 1.1 million sqm Among the new supply, the retail podiums still maintain dominant position The average market rent is USD 47/sqm, inceasing by 1.1% compared to first quarter in 2017 For upcoming quarters, the retail market is expected to welcome 3 new buildings include The Spirit of Saigon, Union Square, and Vinhomes Central Park in the third quarter of 2018 The fourth quarter will welcome Cresent Mall phase 2 and Estella Place
DEMAND
With a young population and the country’s average income per capita growing at a rate 30% every two years, it means that the middle and affluent classes will account for 33 million people by 2020
Therefore, the demand for Food and Beverage, High-end Fashion, Health and Entertainment sectors will increase In the 2016-2020 periods, Vietnam’s retail market expected to reach about USD 179 billion by the end of 2020 In addition, in 2018, market demand for the Vietnam clothing market was forecasted approximately at USD 35.2 billion
OUTLOOK
With a population of more than 90 milions among which 40% are under 25 years old, the potential in the Vietname retail market has been long recognized Ho Chi Minh City continues to be an attractive destination for retailers in South East Asia, mostly due to the rising household expenditure, the young population and large labour force and improving economic conditions Therefore, Ho Chi Minh City’s economic importance and status as retail hub continue to attract a strong development pipeline The supply pipeline is expected to grow bigger in 2018-2020 with about 50,000sqm NLA in the suburban area expected to open in upcoming quarters and account for 25%
of total supply in 2018 Lifestyle concept and co-working space are most likely to attract interest from big retail companies In 2018 the market will witness significant expansion of the convenience store segment The G25 opened its first store this quarter and plans
to open 2,500 stores in the next 10 years, with a lot of merging and acquisition from the corporation giants like Vinmart bought out Ocean Mart, Vomatexmart, and Maximark; Berli Jucker, Central Group from Thailand acquired the Metro chain and Big C Vietnam
In 2019 and 2020, there is 124,000 sqm of new supply coming from the podiums of luxury mixed-use projects such as Golden Hill, Tax Plaza and The Spirit of Saigon
Figure 8: Retail, Occupancy Rate by Quarter
Source: Colliers International Research
Source: Colliers International Research
Figure 7: Retail, Average Asking Rent by Quarter
Source: Colliers International Research
Project name District NLA (sqm) Completion Expected
The Spirit of Saigon 1 35,000 Q3 2018
Trang 12Q1 2018 | HO CHI MINH CITY | RETAIL
Table 3: Significant Office Projects
(*) ARR (Average Rental Rate): All rents are stated in net rents per sqm, inclusive service charge but exculding VAT
No Name of Project/Building Address Location Completion Year NLA
(sq m) ARR (*)
Occupancy Rate
Retail Podium
Department Store
Shopping Centre
Table 5: Significant Retail Projects
Trang 132017, it decreased by 10% The market expects to have greater interest in the affordable apartments for upcoming quarters.
SUPPLY
The first quarter of 2018 only saw one luxury project to launch
in HCM market, making up for 0.8% of new supply District
2 hotspots (Thu Thiem, An Phu, Thach My Loi) will be the focal point of new developments Later this year, with a lot of launch dates announced for many new condominium projects, estimated to add more than 36,000 new units to market later this year Foreign developers currently have 13% of market share in luxury condominium segmentation are planning
to launch many new projects in Ho Chi Minh City market
to increase its hold The competition between the local and foreign developers is definitely getting more interesting with the many new projects in the pipeline competing for customers
at some many different levels
DEMAND
After the fire at Catrina’s apartments, there is heightened fire safety concerns that will affect the demand of condomium both existing and in the pipeline, as buyers want more actions from the owners to prevent similar tragedy to happen in the future
The new projects would feature some amenities to ensure the safety of residents Althought there is a concern about the safety in high-rise building; the Ho Chi Minh City market witnessed a sales record with number of units sold exceeding the new launch units, with the mid-range seeing the biggest net absoption at 20,000 units In the upcoming quarters, the market is expected to have more demand for mid-range units, with a forecasted increase of 20% compared to 2017, and estimated to sell about 38,000 units
Figure 9: Condominium, Primary Asking Price by Quarter (from 2014-2018)
Source: Colliers International Research
Source: Colliers International Research
Figure 10: Condominium, Sold Units by Segments and Years
Figure 11: Condominium, Supply by Segments, by Years (2010-2018F)
Source: Colliers International Research
OUTLOOK
For the forseeable future, District 2 includes Thu Thiem, An Phu, and Thanh My Lai area would be a destination for many new major projects Not to mention the plan to expand the Ho Chi Minh’s CBD and form statelite cities around Ho Chi Minh City Therefore, District 9, Nha Be, Binh Chanh, and Can Gio districts would gain a lot of interest from local and international investors, most importantly, Vingroup, a powerhouse in residential segmentation, plan to develop an affordable housing project Vincity in District 9 possibly supplying 100,000 units by
2019 as stated on their project website Developers are shifting their focus to affordable segment where having strong demand from end-users
Trang 14Q1 2018 | HO CHI MINH CITY | CONDOMINIUM
No Name of Project/Building Developer Location Completion Year Number of units Asking Price (US$/sqm)
14 Mizuki Park (Condo Flora Mizuki Park 1&2) Hankyu Realty, Nishi Nippon Railroad và Nam Long 7 2024 576 1,100
* Excluding all kinds of tax and promotions
The information is updated as at the end of Q1 2018
Table 6: Condominium, Significant new projects launched in the first quarter 2018
Trang 15on the location and areas in the first quarter of 2018 compared
to last quarter For primary market, the price kept on climbing with continued good demand from both owner-occupiers and investors In addition, there is a price growth in secondary market, with considerable increases of 5-7% q-o-q recorded in some lower-priced projects
SUPPLY
In the last quarter of 2017; 1,300 dwellings were launched, adding to the stock of around 2,000 Most of the projects were located in the East and South of the city Townhouses outnumber villas thanks to the more reasonable pricing In terms of location, for the first time, Binh Chanh District emerges with 45% of share in the market, followed by District 9, District
2 and some other suburban areas
DEMAND
Landed property remains to be one of the traditional investment channels given its potential long-term capital gain Although condominiums have gained its popularity in recent years, landed property is still the preferred choice of investment There are two major groups of buyers in this market segment: while investors prefer products from new launches to take advantage of good initial pricing, end-users would seek projects with reputable developers, good construction progress and supporting facilities
Figure 12: Villa&Townhouses, Selling Price on Land Area by District and Quarter
Source: Colliers International Research
Figure 14: Villa and Townhouse, New Launches by District
Source: Colliers International Research
Figure 13: Villa&Townhouse, Supply by Years
Source: Colliers International Research
District 7 13%
District 9 64%
District 12 9%
Binh Tan 14%
Trang 16Q1 2018 | HO CHI MINH CITY | VILLA & TOWNHOUSE
No Name of Project Developer Location Completion Year Number of units Asking Price (US$/sqm)
* Excluding all kinds of tax and promotions
The information is updated as at the end of Q1 2018
Table 7: Villa and Townhouse, Significant new projects launched in 2018
Trang 17to the last quarter The average asking rent is USD 37.2/sqm increased by 11% q-o-q.
SUPPLY
After the Carina’s incident, there were a lot of serviced apartment projects put on hold due to the public concerns about the safety in high-rise buildings On the other hand, for lodging services, there are about 350 hotels and hostel established in the first 3 months of the year increasing by 2% Until 2020, the city will have 14 new projects adding another 3,500 rooms to the total supply In the mean time, there are 300 new rooms waiting to be classified
DEMAND
Demand from business and high-income travelers for serviced apartments continue to grow strongly thanks to the growing economy 2018 is a promising year for the serviced apartment market in Vietnam largely due to the amount of online booking portals such as Airbnb & Booking.com These allow serviced apartment operators to market themselves more effectively on
a global scale for years to come
OUTLOOK
The market is expected to have high supply in 2-bedrooms apartment, meanwhile smaller sizes apartments are in shortage Ho Chi Minh City is now a top destination for overseas professional in the area, and this is sustaining the demand in serviced apartments the coming 3 to 5 years However, officetel (office building with apartments), a newer concept is in the market may influence the pricing of serviced apartment market
in 2018 with many of them on offer now
Table 8: Serviced apartment, Significant Future Projects under Construction
Source: Colliers International Research
Figure 15: Serviced Apartment, Occupancy Rate
Source: Colliers International Research
Figure 16: Serviced Apartment, Average Asking Rent
Source: Colliers International Research
Project name District Total units Completion Expected
Berkley Serviced Residence 2 85 Q3 2018
Trang 18Q1 2018 | HO CHI MINH CITY | SERVICED APARTMENT
No Project Name Address Location Completion Year Total
Room
Average Occupancy
ARR(*) (**)
Grade A
Grade B
(*) USD/sqm/month
(**) ARR (Average Rental Rate): All rents are stated in gross rents per sqm, not including VAT and serviced charge
Table 9: Significant Serviced Apartment Projects
Trang 19in 2018 showed that Tan Thuan Export Processing Zone was the most expensive area in terms of prime industrial rents: the costs increased from USD 260/sqm/month as of the fourth quarter
2017 to USD 270/sqm/month early months 2018.The average occupancy rate this past quarter was 81.3% and seven industrial zones were fully occupied There were six industrial zones with occupancy rate above 97% For a minimum leasable area from 1,000-5,000sqm, ready-built warehouses rent rates were mostly from USD 3.0-4.0 USD/sqm/month (excluding VAT and service charge) The lowest rent rate belonged to Tay Bac Cu Chi industrial park with USD 1.25/sqm/month and the highest was Tan Thuan Export Processing Zone with USD 6.5/sqm/month
SUPPLY
Tan Thuan EPZ inaugurated its multi-storeyed workshop in 2018
The workshop was completed after three years of construction (2015-2018), under part of the multi-storeyed workshop model
in the export processing zones and industrial parks, high tech areas The workshop was built with 8 floors and one basement covering an area of 2,290 sqm and aimed to save land resources and maximize land use efficiency There is no other industrial park entering the market this quarter but until 2020 total supply
is estimated to increase to about 3,000 hectares, up 85% from current supply In terms of the number of IPs, 18 existing IPs will expand and about 12 new IPs will be operational in 2020
DEMAND
Statistics from the HCMC Department of Science and Technology showed that until the second quarter of 2018, there have been nearly 50 companies in Ho Chi Minh City receiving the certificate for science and technology business Thanks to political stability,
Ho Chi Minh City became the first locality to welcome big names like Intel, Samsung, Toshiba, Mercedes, Isuzu and Nidec; creating breakthroughs in production and development More importantly, Vietnamese government continues to improve business conditions through reform and has included tax incentives in recent legislative updates; most notably Vietnam’s Law on Investment; to lower the cost of doing business within the country Foreign investors, particularly those involved in slightly higher value-add production, should be able to use incentives to offset their temporary costs until regulatory reforms take hold, and to position themselves ahead of their competitors in the years ahead
Figure 17: Industrial, Market Performance by District
Source: Colliers International Research
Figure 18: Industrial, Supply by District
Source: Colliers International Research
Source: Colliers International Research
Table 10: Industrial, Future Supply
Industrial Park Name District GFA (ha)
Le Minh Xuan Industrial Park - phase 2 Binh Chanh 338
Le Minh Xuan Industrial Park - phase 3 Binh Chanh 242
Vinh Loc Industrial Park III Binh Chanh 210.3Tay Bac Cu Chi Industrial Park - phase 2 Cu Chi 173Hiep Phuoc Industrial Park - phase 3 Nha Be 1,000Phong Phu Industrial Park Binh Chanh 148.4
Binh Chanh 19%
District 9 10%
Nha Be 19%
Cu Chi 29%
Others 24%
8
Trang 20Q1 2018 | HO CHI MINH CITY | INDUSTRIAL
Table 3: Significant Office Projects
No Name of Industrial Park Location Distance to CBD (km) Total Area
(ha)
Total able area (ha)
leas-Asking Rent (US$/sqm/
term)
Occupancy Term LUR
OUTLOOK
Fuelled by rapid growth and increased foreign direct investment
(FDI), average rental rate is expected to rise faster as the market
demand is growing Recently, industrial parks have outstanding
development due to significant improvement in labor qualification
and localization rate in hi-tech products which will secure a
promising industrial market for the foreseeable future In 2018,
Ho Chi Minh City plans to build an industrial park to attract high
technology enterprises and innovative enterprises in addition
to the existing five start-up centers to be supported including
City Department of Science and Technology, Vietnam National University, Ho Chi Minh City Hi-Tech Park, City Youth Union, Quang Trung Software Park In addition, the city is investigating
in formation of the creative city in the east of the city in District
2, 9 and Thu Duc in another 5-7 years Speculative developments without formal commitment from any tenant but a robust demand and a scarcity of suitable land for development are likely to secure
a promising industrial market for the foreseeable future
Table 11: HCMC Industrial Park
Trang 21and monthly rental at USD 32.5/sqm in 2018 These numbers are good signals to the office market in the year of 2018 An estimated 1% q-o-q rent acceleration for Grade A office buildings was recorded with the average net asking rent currently sitting
at USD 27.8/sqm/month Grade B’s average asking rent also reported an upward adjustment of nearly 1.6% compared to the previous quarter at USD 16.3/sqm/month
SUPPLY
The limited availability of Grade A office space in Hanoi has contributed to the increase of rental rates by 3.5% in Q1 2018, meanwhile the occupancy rate has decreased to 93% with new project expects to open in the western of Hanoi increasing the total NFA There have been no new office buildings so far in
2018 and until Q3 but one Grade B building has entered the market, the Eurowindow Office Building, adding 12,400 sqm office space to total NLA in Hanoi Hoan Kiem District is the leading area for office leasing in Hanoi market, followed by Dong Da District
DEMAND
With regard to the demand for office space in Hanoi in first quarter 2018, the average occupancy rate increased by 17%
quarter-on-quarter The rental rate for Grade A office is USD
30 sqm/month and Grade B is USD 17 sqm/month The typical tenants are companies from investment banking, insurance and techonology The market demand is increasing and the lack of space in the Grade A office sector is likely to be an incentive for landlords to increase the asking rent for upcoming quarters
OUTLOOK
Hanoi and Ho Chi Minh City markets have the same disadvangtage in that they both lack Grade A office space and their CBD doesn’t have enough land of the right value to develop more new projects This has led to developers in Hanoi and
Ho Chi Minh City to look for land outside the CBD for pipeline development The demand continues to grow due to favorable economic conditions and more start-up companies being established in Hanoi With the demand increasing and the lack
of Grade A or B office space in Hanoi, the average rental rates are expected to go up
Figure 19: Office, Average Asking Rent
Source: Colliers International Research
Figure 20: Office, Occupancy Rate
Source: Colliers International Research
Table 12: Office, Future Suppy
Source: Colliers International Research
Project name Grade (sqm) NLA completion Expected