Rediscovering vietnam’s real estate potential

How to Invest in New Homes for Maximum Profit CHRIS CONDON

REDISCOVERING VIETNAM’S REAL

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, APRC, the Stock Market and entry to WTO has put Vietnam on the radar screen, coupled with the ML report in Feb and the Euro Money Conference in Mar 2006

• Saturation in other South East Asian markets

MAP OF VIETNAM

HO CHI MINH CITY

VIETNAM TODAY

• 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” still exists but may not last much longer

• 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

4 Q3/0

4 Q4/0

4 Q1/0

5 Q2/0

5 Q3/0

5 Q4/0

5 Q1/0

6 Q2/0

6 Q3/0

6 Q4/0

6 Q1/07

sqm

Office Stock at the beginning of the quarter New supply during the quarter

Sailing Tower

Metropolitan Saigon Tower

Sun Wah Saigon Center

Diamond Plaza

Gemadept Saigon Trade Center

Me Linh Point

PetroVietnam

9 DTH

Vimedimex Sacombank

Bao Viet

Golden Tower

HCMC OFFICE MARKET

Take up and vacancy rate of

HCMC office buildings

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

HCMC OFFICE MARKET – Rental Rates

Rental growth of Grade A

2006 - 2007

*Note: Rents excluding S C and VAT

Q1 - 2006 $23.00 Q1 - 2007 $29.50

Occupancy 100%

HCMC OFFICE MARKET – Rental Rates

Rental Growth of Grade B

2006 - 2007

* Note: rents excluding S.C and VAT

unit:US$ growth rate 26%

Q1 - 2006 $21.00 Q1 - 2007 $26.50

Occupancy 99%

HCMC OFFICE MARKET – Rental Rates

Rental Growth of Grade C

2006 - 2007

* Note: rents excluding S.C and VAT

Q1 - 2006 $17.50 Q1 - 2007 $20.50

Occupancy 95%

HCMC OFFICE MARKET

Market Outlook in 2007:

9 Limited grade A office space still

remains.

9 Some new supply of Grade B office

space expected to come on line during

2007.

9Factors driving demand: Strong

economic growth, FDI growth, WTO

access, new multi-national companies,

expansion of existing multi-national

companies, Vietnam companies

upgrading, safety & quality Issues

9 Grade A office rental rates reflects

upward momentum and growing demand

vis-à-vis tight supply

9 Vacancy rate remains low, grade A (0%)

and B (<1%)

180,657 18

2008

187,824 15

2009

273,146 12

2010

800,425 72

TOTAL

158,798 27

2007

Expected supply (sqm)

Supply of new grade

A, B & C buildings

Expected year of completion

HCMC OFFICE MARKET HCMC MAJOR UNDER CONSTRUCTION OFFICE DEVELOPMENTS IN Q1&Q2/07

3,100

8,000

27,000 1,600

10,143 10,780 3,960

7,600 6,000

11,945 6,000

Opera View - Dist 1 Rosaco Tower - Dist 1 E-Town 2 - Tan Binh

Lancaster Petro VN, Dist 1 Vimedimex - Dist 1 E-Star, Dist 3 ITAXA, Dist 3 N'Orch - Dist 1 Cetpa - Tan Binh Manulife - Dist 7

Rosaco Tower Petro VN VP Bank Tower Sacom Bank Centec Asiana

Plaza Financial Tower Vietcombank Tower

2007 2008 2009 2010

THE MARKET’S TIMING – LARGER BUILDINGS

Bao Viet 20,000 sqm(owner occupied)

VPBank20,000 sqm(12,000 sqm for lease)

Times Square31,000 sqm

HCMC Power Head Office20,000 sqm(10,000 sqm for lease)

Centec25,000 sqm

Asiana Plaza32,000 sqm

Vietcombank77,000 sqm

Financial Tower100,000 sqm

M&C Tower35,000 sqm

2010

2011

Gemadept16,500 sqm(10,000 sqm for lease)

A & B25,000 sqm

2010

RESIDENTIAL CONDO HCMC Number of Condos and Projects launched year-by-year

0 3,000 6,000 9,000 12,000

MAP OF CONDO PROJECTS IN HCMC

RESIDENTIAL CONDO HCMC

Completed Condominium Units year-by-year

0 500 1000 1500 2000 2500

RESIDENTIAL CONDO HCMC

Ave rage S e l l i ng P ri ce Change of T ypi cal Hi gh-e nd Condo

P roje cts i n Di stri ct 2 and Bi nh T hanh

RESIDENTIAL CONDO HCMC Ratio between launched and sold units year-by-year

0 9000 18000 27000 36000 45000

0% 20% 40% 60% 80% 100%

Average ratio between

sold and available

0% 9% 11% 22% 42% 57% 56% 53%

1994 1998 2001 2002 2003 2004 2005 2006

RESIDENTIAL CONDO HCMC – FUTURE SUPPLY

Projects will be completed in 2007 – 2009

Central Garden-D.1 Hung Vuong Plaza-D.5 Cantavil-D.2 River Garden-D.2 Capitaland Vista-D.2 Ben Thanh Orient

Plaza-D.1

New Development year-by-year

0 3,000 6,000 9,000 12,000

0 10 20 30 40 50

RESIDENTIAL CONDO HCMC

TRENDS:

9 New money flow from stock market into property

9 Strong investment wave from Asia: Korea, Japan,

Singapore Keen on buying projects already licensed and

under construction instead of leasing land, developing from the

beginning.

9 Hot market with more money from foreign institutional

and individual investors activated by Land Law effective

from 1 Jul 06 and Property Trading Law from 1 Jan 07.

9 With encouraging Government policies, more developers

investing in low income projects.

RESIDENTIAL CONDO HCMC

TRENDS:

infrastructure remain high

as speculators as previously.

come partly thanks to loan flexibility of banks.

brand plays a more and more important role

RESIDENTIAL VILLA HCMC

Phu GIa – PMH town Thao Nguyen SG-D.9 Thu Duc Garden Home-TD Villa Riviera – D.2 An Phu Dong Villa – D.12

Price Trend of Phu Gia, Villa R iviera and Thu Duc Garden H om e

HCMC RESIDENTIAL FOR LEASE MARKET OVERVIEW

Ho Chi Minh City Serviced Apartments

9 Less Usable Area

Current Serviced Apartments

0 40 80 120 160 200

Diamon

d Plaza

Sheraton (Oc

ean Place)

Somerset C

hancellor

Court

Units

0 10 20 30 40 50

Supply Average Rent ($US/sqm/mth)

District 1 & 3

projects There are 7 grade A serviced apartment projects provide over 500 units from 1 to 4 bedrooms

with most marketable size of 1 & 2 bedrooms, from 50 – 80 sqm

20%, from US$22 to US$31 per sqm per month in January

2006 to US$25 to US$35 in December 2006

expected to keep rising during 2007.

RESIDENTIAL FOR LEASE HCMC

RESIDENTIAL FOR LEASE HCMC

An Phu, An Khanh, District 2

ƒ Still an attractive area for tenants with family

ƒ Limited good quality villas and serviced

RESIDENTIAL FOR LEASE HCMC – IN DISTRICT 2

$11

$5,000 450

3

Le Van Mien

$12

$7,000 600

Bedrooms Picture

Location

RESIDENTIAL FOR LEASE HCMC - 2007 NEW SUPPLY

1,16011,3003,300

27,531

Total sqm

LocationProject

4-5 bdrs11

January 2007

Saigon Queen VillaNguyen Van Huong, An Phu, District 2,

1-4 bdrs100

February 2007

Green HillsLot 25, Quang Trung Software Park, District 12, 40 minutes to CBD

1-3 bdrs

40 - 50

February/ March 2007

The Lancaster

Le Thanh Ton Street, District 1,

CBD

2-4 bdrs228

February/March 2007

Pasteur CourtPasteur Street, District 3, 5 minutes

to CBD

An Phu Small SA

The Manor 2

Kumho Asiana Plaza Times Square

Saigon Riverview Apartments Saigon Pearl

RESIDENTIAL FOR LEASE HCMC - FUTURE PROJECTS

VN STOCK MARKET

VN Index from 18 July 2000 to 27 February 2007

28/7/2000:2 listed companies - VN Index: 100 – Daily turnover Avg $45m

27/2/2007:107 listed companies & 2 funds- VN Index: 1167.36 - Market capitalisation:$15b

VN Index: increased by 9.5 times

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

2000 2007

Market cap: increased by 300 times

100 RICHEST PEOPLE IN VIETNAM

(Till 3rd Jan 2007)

71,625,500MPC

Deputy DirectorChu Thị Bình - Deputy Director

5

71,625,500MPC

Minh Phú Fisheries

Lê Văn Quang - Chairman &

General

Director4

74,562,500FPT

FPT- Technology Investment and Development Co

Bùi Quang Ngọc - Vice Chairman &

Deputy Director3

106,625,000FPT

FPT- Technology Investment and Development Co

Lê Quang Tiến – Vice Chairman &

Deputy Director2

147,125,000 FPT

FPT- Technology Investment and Development Co

Trương Gia Bình – Chairman &

General Director1

Value (US$)Code

Listed companiesName

Rank

HCMC RETAIL MARKET

2004 RANK

2005 RANK

2006 RANK COUNTRY

8 9

10

TURKEY

5 7

9

CROATIA

4 5

8

SLOVENIA

6 6

7

LATVIA

-

-6

CHILE

3 4

5

CHINA

11 3

4

UKRAINE

7 8

3

VIETNAM

1 2

2

RUSSIA

2 1

1

INDIA

Top 10 Countries for Retail Investment

HCMC RETAIL MARKET

HCMC Shopping Centre Existing Supply

6,252 5,700

8,000 1,366

6,810

21,797 17,000

14,670

18,000 5,000

Zen Plaza Dist 1

Thuan Kieu Plaza

Dist 5

Parkson Dist 1

Tax Plaza Dist 1

An Dong Plaza

Dist 5 Saigon Square

Eden Mall Dist 1

CBD prime occupancy rate 100% 100% 100% 100% 98% 95% 95% 95% 94% 100% 100%

CBD prime average rents $32.40 $32.40 $32.40 $35.33 $36.67 $39.95 $43.03 $45.11 $49.21 $59.68 $80.00

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

HCMC RETAIL MARKET

unit: US$/sqm/month

COMP AR IS ON OF R E T AIL R E NT S IN CIT IE S IN S OUT H E AS T AS IA

727560

290191

18513370

804820

Hong Kong BangkokSingaporeTaipeiShanghaiBeijingJakarta

Ho Chi Minh CityNew DelhiManila

(Source: CBR E)

HCMC RETAIL MARKET

Source: CB Richard Ellis

Growth in prime retail rates in HCMC

HCMC RETAIL MARKET – NEW RETAIL CENTRES

HCMC RETAIL MARKET – FUTURE SUPPLY

12,367 11,882 6,880

8,292

30,000

Opera View Dist 1

Tan Da Court Dist 5

Saigon Paragon Dist 7

Hung Vuong Plaza Dist 5

Sailing Tower Dist 1

Times Square Dist 1

Happiness Square Dist 5

Kumho Asiana Dist 1

SJC Tower Dist 1

Saigon Pearl Binh Thanh

HCMC RETAIL MARKET – FUTURE SUPPLY COMING NEXT IN EARLY 2007

OPERA VIEW – 161 – 167 Dong Khoi, Dist 1

HCMC RETAIL MARKET – FUTURE SUPPLY

HCMC RETAIL MARKET – FUTURE SUPPLY

HUNG VUONG PLAZA

Location: 126 Hung Vuong St Dist 5.

Developer : M&C and Kinh Do

Mixed use development with 6 levels

of retail inc cinema and 2 basement

Hotel Market HCMC

41 6,785

TOTAL

83 23

1,903

3 - star

181 8

1,447

4 - star

344 10

3,435

5 – star

ROOMS PER HOTEL

HOTELS ROOMS

AVERAGE ROOM RATE (US$), 2005-2006

Average % Increase from 2005

arrivals up 350,000 from 2005

Growth down from

2006 by 9.08 %

Hotel Market HCMC

776

692 519

Existing Supply New Supply

Times Square, Saigon

Happiness

2010F

Asiana Plaza and

International Trade Centre (Tax Plaza)

2009F

Grand, Majestic, Continental, Majestic Upgrade In PMH District

7 of Saigon Tourist

2008F

Rex Upgrade 2007F

DEVELOPMENT YEAR

EXISTING AND FUTURE SUPPLY OF 4 AND 5-STAR ROOMS

HANOI OFFICE MARKET

Supply - Demand

Pre-lease in Q4/2006:

- 2 Grade A Buildings: Opera Business Centre & Pacific

Place (to be completed in Q1/2007)

- 2 Grade B buildings: North Asia Tower & Viglacera

Tower (to be completed in Q1/2007)

- Factors driving demand: Economic growth; FDI growth; WTO accession; Newly established MNCs; Expansion of existing MNCs; Local companies upgrading;

- Increasing demand on Grade A & B office space

- Low vacancy rate remains on Grade A &B office space

Take-up and Vacancy of Grade A&B Office Properties

-5,000 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

35.00% Take-up

New supply as at quarter-end

Stock as at begining of the quarter

HANOI OFFICE MARKET

Rental

Q3-Q4/2006: Sharp increase in Grade A & Grade B office rentals

- Grade A Office: 9.5% and 7.5% increase q-o-q, respectively in Q3 and Q4

- Grade B Office: 10.7% and 7.9% increase q-o-q, respectively in Q3 and Q4

Average Rental of Hanoi Grade A Office Properties

HANOI OFFICE MARKET

Future Supply

- 22,350sqm GFA of Grade A Office space will come on stream in Q1/2007

- Significant amount of Grade B office space will be launched during 2007

Estimated new stock of Grade A,B&C Office

2007 2008 2009 2010

S qm

HANOI OFFICE MARKET

Land Area – 888sqmOffice GFA – 3,550sqmRetail NLA – 1,070sqm

OPERA BUSINESS CENTRE

Opening date

HANOI OFFICE MARKET

Q1/2007

PACIFIC PLACE

HANOI SERVICED APARTMENT MARKET

Supply

- 61 units of Somerset Westlake Hanoi has been closed for renovation for Q2-Q4/2006

- 39 units of Elegant Suites come on stream in Q3/2006

Hanoi Cumulative Stock of Grade A&B Serviced Apartments

61

347 519

84

146

0 200 400 600 800 1,000 1,200 1,400

HANOI SERVICED APARTMENT MARKET

Demand

- Low vacancy rate

- High demand

Rentals

- Rental rate: US$18 - US$45/sqm/month

Average Asking Rent per sqm per month (US$)

HANOI SERVICED APARTMENT MARKET

Future Supply

- Strong growth

- Increasing demand

- Limited supply

- Vacancy rate still remains low

- Rental will increase slightly

- Increasing number of expatriates in Hanoi

HANOI SERVICED APARTMENT MARKET

Serviced Apartment Building

15 storey building with 2 basements for parkingCompletion Date & Opening Date:

Q1/2007Leasable Area:

NLA: 5,000sqm

52 Apartments

ATLANTA

HANOI SERVICED APARTMENT MARKET

Serviced Apartment Building

23 storey building with 1 basementCompletion Date & Opening Date:

Q1/2007Leasable Area:

NLA: 8,714sqm

88 Apartments

Opening date

SKYLINE

HOTEL & TOURISM MARKET

Y-o-Y Visitor Arrivals to Vietnam

- Low fair airlines: AsiaAir, Jetstar & Tiger Airlines

Nu mber of Foreign Visitor A rrivals to Vietnam

0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000

Number of foreign tourist arrivals y-o-y change

HANOI HOTEL & TOURISM MARKET

HANOI HOTEL & TOURISM MARKET

Room Supply: 4,924 (5, 4 and 3 star hotels)

Number of Hotels

5-star 23.53%

4-star 14.71%

3-star 61.76%

Number of Hotels' rooms

5-star 48.01%

4-star 17.75%

3-star 34.24%

- 1.15 million int’l visitor arrivals to Hanoi in 2006

- 4,924 rooms, including 5, 4 and 3 star hotel rooms

- 5 star hotels: 2,364 rooms/ 8 hotels

NUMBER OF FOREIGN VISITOR A RRIVA LS

HANOI HOTEL & TOURISM MARKET

Room Supply: 3,238 rooms (5 and 4 star)

- Most of 5 and 4 star hotels came on stream in 1990s

- No new supply over last few

years

- Lack of quality hotel rooms

Cumulative Stock & New Supply of 5 & 4 star Hotel rooms

218

102

250 1,131 1,131

New supply as at year-end

Stock as at beginning of the year

HANOI HOTEL & TOURISM MARKET

ADR & Occupancy rate of 5 star hotels

- Stably high occupancy rate over years

- Occupancy rate as at end Q4/2006:

•5 star hotels: approx 84.28%

•4 star hotels: approx 90.00%

•3 star hotels: approx 80%

- High demand

- Limited supply

- High occupancy rate, approximately 84% in Q4/2006

- 5 star hotels: ADR of US$128.26 as at end of Q4/2006

Average Occupancy Rate & ADR of 5-star Hotels

Ave Room rate Ave Occupancy rate

Monthly Occupancy Rate of Hanoi's 5-star Hotels

Jan- 06

Feb- 06

Mar- 06

Apr- 06

May- 06

Jun-Jul-06 06

Aug- 06

Sep- 06

Oct- 06 Dec- 06

Nov-HANOI HOTEL & TOURISM MARKET

Requirement for Hotel Rooms (2005 - 2020)

4,924 6,285 4,17011,076

20,715

5,530

0 5,000 10,000 15,000 20,000 25,000 30,000

3- to 5-star 1- to 2-star Others

Actual Hotel Rooms as at 2005 Hotel Rooms Requirement as at 2020-2005

Hotel Market Outlook:

- Hot market for investors, foreign investment funds …

- High occupancy rate

- Limited supply

- High demand

- Increasing number of int’l visitor arrivals

- More high quality hotels required

- Tourism industry has significant impacts on property

Market Highlights:

- High occupancy rate

- 390 new 3 to 5 star hotel rooms in 2007

- 2 licenses were granted in early Q1/2007 to build 2

5-star hotels in My Dinh area

Hotel - Future Supply

Dan Chu Hotel

Hoan Kiem Hotel Dong Loi Hotel

Hanoi Sofitel Metropole

HANOI RETAIL MARKET

Number of supermarkets by districts

23.91%

13.04% 8.70%

Dong Da Hai Ba Trung Cau Giay Hoan Kiem Hoang Mai

Ba Dinh Thanh Xuan Tu Liem Dong Anh Thanh Tri

No District

Number of Supermarkets GFA (sqm)

Trading area (sqm)

3,520 1,702

11,725 300

250

Hoan Kiem Hoang Mai

Ba Dinh Thanh Xuan

Tu Liem Dong Anh