Q1 2016 | MARKET INSIGHTS

OFFICE SECTOR HO CHI MINH CITY

OUTLOOK

As there is a current drought of premium office stock, landlords are gaining confidence in offering higher rents and pushing back incentives. High quality assets are expected to achieve a rent growth up to 10%. With prime locations and in close proximity of traffic hubs, CBD office buildings continue to be highly sought-after. Decentralised districts with well-established infrastructure and traffic system such as District 7 and Thu Thiem new urban area will become alternative options for tenants looking for large contiguous floor plates. Figure 1: Net absorption 20 16 2015

Grade B Q1 Q3

Grade A

Q1 Q3 Q1

2013

The combination of slowdown in manufacturing and decrease of profitability in agricultural sector in Q1-2016 due to weather difficulties may have caused a slow growth rate of GDP. Vietnam’s GDP grew 5.46% in Q1-2016, significantly lower than 6.12% in Q1-2015. The Consumer Price Index (CPI) increased to 0.57% m-o-m in March which resulted in a 1.25% increment in the first three months of the year. Export achieved USD37.9 billion, up 4.1% y-o-y while import values were USD37.1 billion, down 4.8% y-o-y. FDI of newly registered and supplementary capital was USD4.02 billion which was less than the amount of USD5.607 billion in Q4 2015 but rose 119% y-o-y. The disbursement value reached USD3.5 billion, a growth of 14.8% y-o-y. Credit growth achieved 1.54% which was higher than the growth rate of 1.25% same period last year. As manufacturing sector showed a slowdown, the increase in credit growth is contributed by real estate sector. If Vietnam aims to set the GDP growth target for this year to at least match the 2015 growth rate, the nation will have to make great efforts in the next coming quarters.

2014

ECONOMY OVERVIEW

PERFORMANCE

Q3 Q1

Rental growth across all grades was recorded in the review quarter. Grade A’s average net asking rents increased 1.92% q-o-q, staying at USD40.5/sqm/month while those of Grade B surged 5.1% q-o-q, reaching USD22.07/sqm/month. Average occupancy rate witnessed downward trend over the quarter but maintained at a high rate of 93.4%. Grade A and Grade B’s occupied rate were 92% and 94.8%, down 3.1% and 1.86% q-o-q respectively.

-10,000

0

10,000 sq m

20,000

30,000

40,000

Source: Colliers International Research

Figure 2: Average occupancy rate Grade A

%

Grade B

100 90 80 70

SUPPLY

60 50

No new office building entered the market in the first quarter of 2016. The supply pipeline remained stable with 11 Grade A and 57 Grade B office buildings, providing approximately 1,331,347 sqm GFA. Grade B will domininate new supply in the next quarters with nearly 77,000sqm NLA from 4 projects. Despite having no additional buildings this year, Grade A stock will grow substantially in the next two years. By the end of 2018, the market is expected to welcome 4 more Grade A office buildings which are Deutsches Haus, Saigon Centre (Phase 2), Saigon One Tower and The One, providing nearly 172,859sqm NLA.

40 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011

2012

2013

As a result of stronger FDI inflow to the city, the growing number of foreign enterprises will continue to drive office demand. This type of tenants would have distinctive enquiries such as green buildings with good access to natural light and energy efficiency, contiguous floor plates of larger than 1,000 sqm, prime locations with accessibility to public transport and staff amenity or close proximity to clients and brand profile. Landlords should be strategic to statisfy sophisticated leasing requirements from clients.

2015

2016

Source: Colliers International Research

Table 1: Future supply Grade

NLA sqm

Expected Completion

Hai Quan Tower

A

30,000

2016

SGGP Building

B

16,940

2016

HQC Royal Tower

B

22,500

2016

Deutsches Haus

A

24,900

2017

Saigon Center Phase 2

A

40,000

2017

Mapletree Business Center

B

30,000

2017

E-Town Central

B

35,000

2017

Project name

DEMAND

2014

Source: Colliers International Research

PLEASE CONTACT US FOR ANY INFORMATION

DAVID JACKSON

General Director [email protected]

HA VO

Research Manager [email protected]

©2016 Colliers International Research

Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a full range of services to real estate users, owner and investors worldwide, including global corporate solutions, brokerage, property and asset, management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the secondmost recognized commercial real estate firm in the world. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s).

www.colliers.com/vietnam

Q1 2016 | MARKET INSIGHTS

RETAIL SECTOR HO CHI MINH CITY

The combination of slowdown in manufacturing and decrease of profitability in agricultural sector in Q1-2016 due to weather difficulties may have caused a slow growth rate of GDP. Vietnam’s GDP grew 5.46% in Q1-2016, significantly lower than 6.12% in Q1-2015. The Consumer Price Index (CPI) increased to 0.57% m-o-m in March which resulted in a 1.25% increment in the first three months of the year. Export achieved USD37.9 billion, up 4.1% y-o-y while import values were USD37.1 billion, down 4.8% y-o-y. FDI of newly registered and supplementary capital was USD4.02 billion which was less than the amount of USD5.607 billion in Q4 2015 but rose 119% y-o-y. The disbursement value reached USD3.5 billion, a growth of 14.8% y-o-y. Credit growth achieved 1.54% which was higher than the growth rate of 1.25% same period last year. As manufacturing sector showed a slowdown, the increase in credit growth is contributed by real estate sector. If Vietnam aims to set the GDP growth target for this year to at least match the 2015 growth rate, the nation will have to make great efforts in the next coming quarters.

OUTLOOK

The supply pipeline of shopping malls will grow bigger when Saigon Center Phase II and Aeon Mall Binh Tan will come online in the next quarters of 2016. The two new shopping centers will bring more foreign brands to the local market, creating intense competition between Vietnam and international retailers. Given abundant new supply, low quality retail properties need to be repositioning to avoid downtrend in rents and occupancy rates. Figure 1: Market Performance Average asking rent

Average occupancy

100%

100 90

98%

80 70

96%

60 50

94%

40 30

92%

USD/sq m/month

ECONOMY OVERVIEW

20 10

PERFORMANCE

90%

SUPPLY

The retail stock increased 65,400sqm NLA with the opening of two new shopping centers in suburban districts. Vingroup has made all efforts to expand their retail network in every district in Ho Chi Minh City. While Vincom Le Van Viet marks Vingroup’s first presence in District 9, Vincom Plaza Go Vap is their second retail project in the highly-populated Go Vap District. To date, they have owned 6 retail properties across the city, providing more than 200,000sqm NLA.

Department store

Shopping centre

Source: Colliers International Research

Figure 2: Asking Rent 350 300

USD/ sq m/ month

Lower rental rate in suburban areas resulted in a drop of 2% q-o-q and 10% y-o-y in the average net asking rent across all segments. Department stores and retail podiums maintained their rents while shopping centers was down 3% q-o-q in rents, averaging at USD44/ sqm/month. Average occupancy rate decreased 1.5% q-o-q, staying at 91.6% as some newly-opened retail projects have not fill up their vacant space.

0 Podium

250 200 150 100 50 21

13

0

Retail Podium

14

Department Store

Min average asking rent

Shopping Centre

Max average asking rent

Source: Colliers International Research

Figure 3: Total Supply 800,000

DEMAND

700,000

NLA (sq m)

Food and beverage (F&B) tenants is expected to be the main driver that will support the performance of HCMC’s retail market in the short to medium term. McDonald, Starbucks, Subway, KFC and Burger King are a few international names that are growing their empires in the local market. These retailers tend to sercure prime locations in a retail center to easily catch the eyes of customers and lower the chance of their competitors.

600,000 500,000 400,000 300,000 200,000 100,000 0 2010

2011

2012

2013

2014

2015

2016YTD

Source: Colliers International Research

PLEASE CONTACT US FOR ANY INFORMATION

DAVID JACKSON

General Director [email protected]

HA VO

Research Manager [email protected]

©2016 Colliers International Research

Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a full range of services to real estate users, owner and investors worldwide, including global corporate solutions, brokerage, property and asset, management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the secondmost recognized commercial real estate firm in the world. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s).

www.colliers.com/vietnam

Q1 2016 | MARKET INSIGHTS

CONDOMINIUM SECTOR HO CHI MINH CITY The combination of slowdown in manufacturing and decrease of profitability in agricultural sector in Q1-2016 due to weather difficulties may have caused a slow growth rate of GDP. Vietnam’s GDP grew 5.46% in Q1-2016, significantly lower than 6.12% in Q1-2015. The Consumer Price Index (CPI) increased to 0.57% m-o-m in March which resulted in a 1.25% increment in the first three months of the year. Export achieved USD37.9 billion, up 4.1% y-o-y while import values were USD37.1 billion, down 4.8% y-o-y. FDI of newly registered and supplementary capital was USD4.02 billion which was less than the amount of USD5.607 billion in Q4 2015 but rose 119% y-o-y. The disbursement value reached USD3.5 billion, a growth of 14.8% y-o-y. Credit growth achieved 1.54% which was higher than the growth rate of 1.25% same period last year. As manufacturing sector showed a slowdown, the increase in credit growth is contributed by real estate sector. If Vietnam aims to set the GDP growth target for this year to at least match the 2015 growth rate, the nation will have to make great efforts in the next coming quarters.

OUTLOOK

Improved infrastructure provides better connection between areas of the city as well as shorten the distance to the CBD. This helps to increase the demand and the price of projects in outer city areas. In addition, the new Law on Housing which permits foreigners to purchase up to 30% of the total number of apartments in a residential apartment project expects to boost sales further. Nevertheless, condominium has one of the highest proportions of speculation among different segments of real estate market. It is therefore vulnerable to government policies and credit growth. Figure 1: Sold Units 40000 35000 30000 25000 units

ECONOMY OVERVIEW

20000 15000

PERFORMANCE

In the first quarter of 2016, more than 9,000 units were sold across all segments, up 3.43% y-o-y. It is forecasted that throught out 2016, approximately 57,500 units will be available for sale. High-end and mid-end segments account for more than 70% of the market share. Sale rate of mid-end segment grew 16% y-o-y while affordable segment declined 18.9% y-o-y. In the coming quarters, the market share of high-end segment will see more challenge from mid-end segment.

10000 5000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016

Source: Colliers International Research

Figure 2: Average Asking Price by Segment Average primary price

Average secondary price

5,000

SUPPLY

4,000

US$/sqm

In Q1-2016, it is estimated that 6,700 new units were launched for sale. Eastern and Southern areas account for majority of new units supplied. Condominium market is expected to continually increase both in quantity and quality. Developers nowadays have to take part in intense competitions for potential buyers. Apart from prime location, high-end developers have come up with unique amenities and concept such as cruise habour, waterfall infinity pool, artificial sea or hanging gardens, while mid-end and affordable segments have competitively provided offers such as low construction density as well as associated public services such as internal parks, schools and sport centers.

3,000 2,000 1,000 0 Luxury

High-end

Mid-end

Affordable

Source: Colliers International Research

Figure 3: Q-o-Q and Y-o-Y Changes In Asking Price q-o-q changes

y-o-y changes

10.0%

DEMAND

Across all segments, buyers tend to be more selective in spending their money. Branding of a developer and its ability in assuring a project’s quality and progress are key factors considered by potential buyers. Units with 1 or 2 bedrooms and price less than USD1,000/sqm are in excessive demand from end-users. Demand for affordable segment seems very high and is predicted to be grown steadily in the future.

8.0%

6.0%

4.0%

2.0%

0.0% Primary market

Secondary market

Source: Colliers International Research

PLEASE CONTACT US FOR ANY INFORMATION

DAVID JACKSON

General Director [email protected]

HA VO

Research Manager [email protected]

©2016 Colliers International Research

Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a full range of services to real estate users, owner and investors worldwide, including global corporate solutions, brokerage, property and asset, management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the secondmost recognized commercial real estate firm in the world. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s).

www.colliers.com/vietnam

Q1 2016 | MARKET INSIGHTS

VILLA/TOWNHOUSE SECTOR HO CHI MINH CITY ECONOMY OVERVIEW

The combination of slowdown in manufacturing and decrease of profitability in agricultural sector in Q1-2016 due to weather difficulties may have caused a slow growth rate of GDP. Vietnam’s GDP grew 5.46% in Q1-2016, significantly lower than 6.12% in Q1-2015. The Consumer Price Index (CPI) increased to 0.57% m-o-m in March which resulted in a 1.25% increment in the first three months of the year. Export achieved USD37.9 billion, up 4.1% y-o-y while import values were USD37.1 billion, down 4.8% y-o-y. FDI of newly registered and supplementary capital was USD4.02 billion which was less than the amount of USD5.607 billion in Q4 2015 but rose 119% y-o-y. The disbursement value reached USD3.5 billion, a growth of 14.8% y-o-y. Credit growth achieved 1.54% which was higher than the growth rate of 1.25% same period last year. As manufacturing sector showed a slowdown, the increase in credit growth is contributed by real estate sector. If Vietnam aims to set the GDP growth target for this year to at least match the 2015 growth rate, the nation will have to make great efforts in the next coming quarters.

This, accompanied with the new Housing Law which permits foreigners to purchase up 250 separate houses in a project where the population is equivalent to a ward, would expect to increase the demand for villas and townhouses. Districts 2 and District 9 in the East, District 7 and Nha Be in the South are forecasted to continue to dominate the market while the Western area have high potential to grow in the future. Figure 1: Changes in Asking Price q-o-q changes

y-o-y changes

5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

PERFORMANCE

Primary market

The villa and townhouse segment performed well in Q1 2016 thanks to a warming property market and stable macroeconomic factors. Prices continued to go up an average 1- 2% q-o-q. The transaction volume went down 24% q-o-q due to a shortage in supply of affordable segment.

Secondary market

Source: Colliers International Research

Figure 2: Supply by Year Existing supply

units

New supply

8000 7000

SUPPLY

Four notable projects offered 486 new villas and townhouses to the market. Future supply is expected to grow strongest in Eastern and Souther areas of HCMC this year while the western area has high potential to develop in the longer term.

6000 5000 4000 3000 2000 1000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ho Chi Minh City is home of three million immigrants. The city also welcomes 50,000 newly married couples every year. Certain proportions of these people might want to settle in the city in their own house and would become potential clients of villa and townhouse market. Hence, the demand for the market is maintained high and stable over years. For mid-end and high-end segments, buyers prefer projects with well-developed infrastructure, good traffic system and transparent legal status. Similar to condominium market, low-priced, small area houses in suburban seem to have highest demand from the market.

Q1 2016

Source: Colliers International Research

Figure 3: Current Supply by District No. of townhouses

No. of villas

800 600

dwellings

DEMAND

400 200

OUTLOOK

Free trade agreements such as the TPP would bring about an inflow of foreign investors, specialists, management teams to Ho Chi Minh City.

0 Dist. 9 Dist. 2

Go Vap

Nha Dist. 7 Binh Thu Be Thanh Duc

Dist. 12

Binh Binh Tan Chanh

Source: Colliers International Research

PLEASE CONTACT US FOR ANY INFORMATION

DAVID JACKSON

General Director [email protected]

HA VO

Research Manager [email protected]

©2016 Colliers International Research

Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a full range of services to real estate users, owner and investors worldwide, including global corporate solutions, brokerage, property and asset, management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the secondmost recognized commercial real estate firm in the world. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s).

www.colliers.com/vietnam

Q1 2016 | MARKET INSIGHTS

SERVICED APARTMENT SECTOR HO CHI MINH CITY OUTLOOK

The combination of slowdown in manufacturing and decrease of profitability in agricultural sector in Q1-2016 due to weather difficulties may have caused a slow growth rate of GDP. Vietnam’s GDP grew 5.46% in Q1-2016, significantly lower than 6.12% in Q1-2015. The Consumer Price Index (CPI) increased to 0.57% m-o-m in March which resulted in a 1.25% increment in the first three months of the year. Export achieved USD37.9 billion, up 4.1% y-o-y while import values were USD37.1 billion, down 4.8% y-o-y. FDI of newly registered and supplementary capital was USD4.02 billion which was less than the amount of USD5.607 billion in Q4 2015 but rose 119% y-o-y. The disbursement value reached USD3.5 billion, a growth of 14.8% y-o-y. Credit growth achieved 1.54% which was higher than the growth rate of 1.25% same period last year. As manufacturing sector showed a slowdown, the increase in credit growth is contributed by real estate sector. If Vietnam aims to set the GDP growth target for this year to at least match the 2015 growth rate, the nation will have to make great efforts in the next coming quarters.

Demand for serviced apartments will be strengthen in the long term after Vietnam joined Trans Pacific Partnership and Asean Economic Community, leading to the growing number of foreign workforce. Despite solid demand, this market segment have to compete with buy-to-let apartments and private houses where offering competitive rents for long-term stays. To maintain healthy occupancy rates, landlords need to adjust rents and consolidate their services when new completions enter the market. Figure 1: Average Asking Rent by Grade Grade A

Grade B

35

30

US$/sqm/month

ECONOMY OVERVIEW

25

20

15 2010

PERFORMANCE

SUPPLY

The existing stock was stable with approximately 4,100 units from 80 projects. Due to well-establised public facilities and amenities, the CBD is home of more than 40% of total serviced apartments. New supply from now until end of 2017 will grow substantially with approximately 1,459 units. It is notable that five out of seven significant future projects is located in District 1 and District 3. To meet current demand from single tenants, the proportion of one-bedroom and two-bedroom units tend to be increased in newly launched developments.

DEMAND

Demand for serviced apartments in Ho Chi Minh City will be boosted Serviced apartments in the CBD are typically preferred by professional singles due to its close proximity to their workplace. District 2 and District 7 are attractive for expatriate families as these two locations can provide large size accommodation together with social amenities such as international schools, hospitals, shopping malls, etc. It is observed that District 2 with peaceful riverside environment is popular for Westerners while District 7 is a hot spot for Asian community.

PLEASE CONTACT US FOR ANY INFORMATION

General Director [email protected]

2012

2013

2014

2015

Q1 2016

Figure 2: Total Current Supply Grade A

HA VO

Research Manager [email protected]

©2016 Colliers International Research

Grade B

4,000

3,000

units

Grade A’s average occupancy rate remained unchanged over the quarter, reaching 86.4%. The average gross asking rent recorded a drop of 2.61ppts q-o-q, staying at USD29.9/sqm/month. Grade B had the best performance in the review quarter. Average occupancy rate increased to 88.2%, up 0.45ppts while rental rate saw an improvement of 1.35ppts, averaging at USD22.4/sqm/month.

DAVID JACKSON

2011

Source: Colliers International Research

2,000

1,000

0 2010

2011

2012

2013

2014

2015

Q1 2016

Source: Colliers International Research

Table 1: Significant future projects under construction

District

Grade

Total units

Expected Completion

Sila Urban Living

3

B

217

2Q 2016

Ascott Waterfront Saigon

1

A

222

3Q 2016

Saigon Plaza

1

B

119

4Q 2016

New Pearl

3

B

120

4Q 2016

Saigon South Place

7

A

480

2017

Saigon Center Phase 2

1

A

216

2017

Berkley Service Residence

2

B

85

2017

Project name

Source: Colliers International Research

Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a full range of services to real estate users, owner and investors worldwide, including global corporate solutions, brokerage, property and asset, management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the secondmost recognized commercial real estate firm in the world. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s).

www.colliers.com/vietnam

Q1 2016 | MARKET INSIGHTS

INDUSTRIAL SECTOR HO CHI MINH CITY ECONOMY OVERVIEW

The combination of slowdown in manufacturing and decrease of profitability in agricultural sector in Q1-2016 due to weather difficulties may have caused a slow growth rate of GDP. Vietnam’s GDP grew 5.46% in Q1-2016, significantly lower than 6.12% in Q1-2015. The Consumer Price Index (CPI) increased to 0.57% m-o-m in March which resulted in a 1.25% increment in the first three months of the year. Export achieved USD37.9 billion, up 4.1% y-o-y while import values were USD37.1 billion, down 4.8% y-o-y. FDI of newly registered and supplementary capital was USD4.02 billion which was less than the amount of USD5.607 billion in Q4 2015 but rose 119% y-o-y. The disbursement value reached USD3.5 billion, a growth of 14.8% y-o-y. Credit growth achieved 1.54% which was higher than the growth rate of 1.25% same period last year. As manufacturing sector showed a slowdown, the increase in credit growth is contributed by real estate sector. If Vietnam aims to set the GDP growth target for this year to at least match the 2015 growth rate, the nation will have to make great efforts in the next coming quarters.

representing an 80% y-o-y increase. Companies from non- TPP member nations such as China, Korea, India would relocate their operations and factories to Vietnam in order to benefit from tax incentives for their products. Foreign investors, especially from the U.S and Japan, will also flow into Vietnam more heavily to take advantage of Vietnam’s abundant labor force and a 90-million consumers market. These factors positively contribute to the demand for industrial real estates.

OUTLOOK

Rents and occupancy rates are likely to go up in the coming quarters as the inflows of FDI and the expansion of production in preparation for the TPP and other FTAs are expected to continue. The number of industrial areas is still being expanded. However, the majority of future projects are in the process of site clearance and compensation and hence construction process is expected to be prolonged. Le Minh Xuan 2, Le Minh Xuan 3, Vinh Loc 3, Hiep Phuoc phase 2 are among those that are on track to be in operation soon. Figure 1: Net Absorption

PERFORMANCE

80

SUPPLY

70 60 50

ha

In Q1 2016, the average rent of industrial parks (IPs) in HCM City was USD122/sqm/term and the average land use right term was 35.7 years. IPs in Cu Chi district have the lowest rents, averaging at USD50-USD60/ sqm/term. On the contrary, IPs in Tan Binh District and District 7 have highest asking rents of , up to USD220-USD270/sqm/term. In general, rents in HCMC are currently more than double compared to those in the Southern Key Economic Region such as Binh Duong, Dong Nai, Long An, Vung Tau. The average occupancy rate was 68%, stable over the quarter. About two-thirds of IPs enjoyed above 90% occupancy rates due to its convenient location and efficient services. Common offers for ready-built factories were USD2.5-USD4/sqm/month (exclusive of VAT and service charge) with a minimum area from 1,000-5,000 sqm.

40 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2012

2013

2014

2015

2016

Source: Colliers International Research

Figure 2: Supply by District

Others 13%

Dist. 9 22%

Nha Be 8%

In the first three months of 2016, there is no new supply of IPS. The total areas of IPs in HCMC are over 3,900ha of which the leasable areas are over 2,700ha. By 2020, the total supply of industrial zones is estimated to rise to above 6,500 ha, up to 67% compared to the current supply. However, there is an uncertainty on the construction progress of some industrial parks.

Dist. 7 8%

Binh Tan 10%

Cu Chi 23% Binh Chanh 16%

Source: Colliers International Research

DEMAND

Inflows of Foreign direct investment (FDI) to Export Processing Zones (EPZs) and industrial parks (IPs) in Ho Chi Minh City plummeted 69.5% year-on-year to USD116 million in the first three months of 2016. As of the end of March 2016, domestic and foreign firms registered to invest in 1,390 projects with accumulated capital of USD9.17 billion in HCM City’ EZs and IPs of which foreign-owned-enterprises accounted for 554 projects and USD5.42 billion. Meanwhile, domestic companies pledged to invest nearly USD80.4 million in EZs and IPs in the first quarter of 2016,

Table 1: Future Supply District

GFA (ha)

Binh Chanh

242

Tay Bac Cu Chi Industrial Park - phase 2

Cu Chi

173

Hiep Phuoc Industrial Park - phase 2

Nha Be

597

Industrial Park Name Le Minh Xuan Industrial Park - phase 3

Source: Colliers International Research

PLEASE CONTACT US FOR ANY INFORMATION Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a full range of services to real estate users, owner and investors worldwide, including global corporate solutions, brokerage, property and asset, management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the secondmost recognized commercial real estate firm in the world.

DAVID JACKSON

General Director [email protected]

HA VO

Research Manager [email protected]

©2016 Colliers International Research

This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s).

www.colliers.com/vietnam