RETAIL REAL ESTATE MARKET UPDATE OUTLOOK FOR 2015
CONTENT
Vietnam Market Overview Market Trends Other Indochina Markets Updates Retailer Analytics
Legal updates on Retail Real Estate
2 VIETNAM RETAIL MARKET
VIETNAM MARKET OVERVIEW
VIETNAM GDP GROWTH – REGION’S 2ND BEST APAC Real GDP Growth (2014-2015) vs Long Term Average IMPROVING Improvement in geopolitical pressure
Y-o-Y Real GDP Growth (%)
12
SLOWING
Recovery in export on the back of stronger global demand
China slow down knock-on effect
Election in 2016
Oil price drops
10 8 6 4 2
2014F
2015F
Malaysia
Taiwan
Philippines
Australia
New Zealand
China
Japan
Hong Kong
Singapore
South Korea
Thailand
India
Indonesia
Vietnam
0
Average 2004 - 2013
Source: CBRE Research, Oxford Economics, December 2014. 4 VIETNAM RETAIL MARKET
OIL PRICES GETTING INCREDIBLY CHEAP
Crude oil price
Oil had been getting stronger since 2009, 2010; but then declined significantly since mid-2014 Good consequences:
Bad consequences:
Weakening VND/USD.
Falling oil world prices would slash Vietnam’s state budget by around US$3 billion
But just a minimal impacts against VND (Sufficient USD reserves, surplus trade balance, robust FDI, low inflation)
Stronger consumptions due to lower industrial input and logistics costs (-3% approx.)
Lower construction cost
Lower building operating cost (service charge)
5 VIETNAM RETAIL MARKET
FUNDING GETTING CHEAPER Interest Rates and Inflation 25
Lending rate for the first 12 months: • Techcombank: 9.49% • Vietcombank: 7.99% • ACB: 8.9%
Interest rate (%)
20
15
10
5
0 2007
2008
Average CPI (y-o-y)
2009
2010
Rediscounting rate
2011 Refinancing rate
2012
2013
Lending rate
2014 Deposit rate
Source: Vietnamese General Statistical Office.
6 VIETNAM RETAIL MARKET
RETAILS & SERVICES TURNOVER Turnover continues to increase whilst growth continues to slow
40%
3000 32%
24%
2000 1500
16%
1000 8% 500
Retails and Services Turnover
2014P
2013
2012
2011
2010
2009
2008
2007
2006
2005
0% 2004
0
Growth Rate (%)
2500
2003
Turnover (Trillion dong)
3500
Retails and Services Turnover Growth
7 VIETNAM RETAIL MARKET
RETAIL MARKET UPDATE Strong supply from Hanoi market
Retail supply by city (NLA, ‘000 sqm)
Retail supply by city (NLA, ‘000 sqm) 1,200 1,000 800 600
400 200 0 HCMC Hanoi HCMC Hanoi HCMC Hanoi HCMC Hanoi HCMC Hanoi HCMC Hanoi 2011
2012
2013
2014
2015F
2016F
Source: CBRE Vietnam, Q2 2014. 8 VIETNAM RETAIL MARKET
0 Melbourne
Taipei
Perth
Auckland
Jakarta
Hong Kong
Brisbane
Adelaide
Sydney
Tokyo
Ho Chi Minh City
Source: CBRE Research Q4 2014.
Singapore
Mumbai
Manila
Shanghai
Hanoi
Guangzhou
Kuala Lumpur
New Delhi
Bangkok
Shenzhen
Beijing
Development Pipeline (‘000 sqm)
RETAIL MARKET UPDATE APAC Development Pipeline 1,200 2015F
1,000
800
600
400
200
9 VIETNAM RETAIL MARKET
HANOI MARKET PERFORMANCE 2014 Softer rents but vacancy still up AVERAGE ASKING RENT (US$/sm/month) NON-CBD
VACANCY RATE (%)
CBD 160,000
21%
Q4 Q3 Q2
120,000
2013
Net Absorption (sm)
Q1
Q4 Q3 Q2 Q1 Q4
2012
Q3 Q2
15%
80,000 9% 40,000 3%
0
Q1
Vacancy Rate (%)
2014
Q4 2011
Q3
-40,000
Q1
150
-3% 2010 2011 2012 2013 Net Absorption (sm)
Q2
100
50
0
0
50
100
2014 Vacancy
150
Source: CBRE Vietnam, Q4 2014.
10 VIETNAM RETAIL MARKET
HOCHIMINH CITY PERFORMANCE 2014 Consistent performance for the last eight quarters AVERAGE ASKING RENT (US$/sm/month) NON-CBD
VACANCY RATE (%)
CBD
60,000
20
Q4 Q3 Q1
2013
Q4 Q3 Q2 Q1 Q4
2012
Q3
12 20,000 8 0
4
Q2 Q1
-20,000
Q4 2011
16
40,000
Vacancy Rate (%)
Q2
Net Absorption (sm)
2014
0 2011
2012
2013
2014
Q3 Q2
Net absorption
Q1
150
100
50
0
0
50
100
Vacancy rate
150
Source: CBRE Vietnam, Q4 2014.
11 VIETNAM RETAIL MARKET
NEW SUPPLY IN 2014 HANOI Shopping Centre & Department Store
Trang Tien Plaza reopening
More affordable brands
LOTTE MART
LOTTE
(Mipec Tower)
DEPARTMENT STORE
Dong Da District GFA: 27,000 sm
Ba Dinh District GFA: 21,480 sm
Opened: Q1/2014
Opened: Q3/2014
Add more F&B
ALMAZ by Vingroup Convention – F&B – Retail & Entertainment Center Long Bien District GFA: 2,5 ha Opened: Q4/2014 12 VIETNAM RETAIL MARKET
NEW SUPPLY IN 2014 HoChinhMinh City Shopping Centre & Department Store
AEON MALL
AEON MALL
TAN PHU CELADON
BINH DUONG CANARY
Tan Phu District GFA: 42,100 sm Anchor: Aeon Mart, Aeon department store, CGV, Dream Games
Binh Duong GFA: 62,100 sm Anchor: Aeon Mart, Aeon department store, CGV, Play Time
Tan Binh District GFA: 10,000 sm Anchor: Lotte mart, Lotte Cinema, Wall Street English, California Fitness
Opened: Q1/2014
Opened: Q4/2014
Opened: Q4/2014
LOTTE MART CONG HOA
13 VIETNAM RETAIL MARKET
UPCOMING RETAIL DEVELOPMENT Hanoi Expect to open in 2015
HOA BINH GREEN CITY
AEON MALL HANOI
HO GUOM PLAZA
• Hai Ba Trung District • GFA: 25,000 sm • 4 floors • Opened on Jan 31st • Offering free rentals in perpetuity
• Long Bien district • GFA: 108,000 sm • 4 floors • Under construction • Expected to open: Q4, 2015
• Ha Dong District • GFA: 23,400 sm • 5 floors • Completed. Open for lease • Anchor tenants: Tran Anh, CGV • Expected to open (fully): Q2, 2015
VINCOM NGUYEN CHI THANH • Dong Da District • GFA: 44,500 sm • Under construction • Expected to open: Nov 2015
14 VIETNAM RETAIL MARKET
UPCOMING RETAIL DEVELOPMENT Ho Chi Minh City Expect to open in 2015
VINCOM THU DUC
SC VIVOCITY
THAO DIEN PEARL
Thu Duc District GFA: 27,860 sm
District 7 GFA: 62,000 sm
District 2 GFA: 20,000 sm
Expected to open: Feb 8, 2015
Expected to open: April 2015
Expected to open: July 2015
PEARL PLAZA Binh Thanh District GFA: 20,000 sm Expected to open: July 2015 15 VIETNAM RETAIL MARKET
METRO LINE NO. 1 AND RETAIL PROJECTS NEW EASTERN BUS STATION LONG BINH DEPOT
Taken in front of Rex Hotel on Jan 7, 2015
The Vista An Phu Vincom MegaMall Masteri Thao Dien Thao Dien Pearl
The Estella Heights Cantavil Premier
Vinhomes Central Park
Union Square The One
Tax Plaza Saigon Center 16 VIETNAM RETAIL MARKET
RETAIL MARKET UPDATE Retailing hospots across APAC – strong activities in Hanoi
HANOI 27 ENTRIES
17 VIETNAM RETAIL MARKET
NEW RETAIL ENTRIES IN 2014 Hanoi & HCMC Markets
Hanoi
MORE TO COME… Ho Chi Minh City
18 VIETNAM RETAIL MARKET
MARKET TRENDS
LOCAL PLAYERS EXPAND Vingroup’s movements in retail sector To invest US$166 million
M&A activity by Vingroup To open 100 supermarkets and 1,000 convenience stores in the next 3 years
13 supermarkets and convenience stores with ~ 40,000 sm retail area
VINCOM MEGAMALL THAO DIEN
25 Shopping Centers in 2015 - HCMC, HANOI, BAC NINH, VIET TRI, DA NANG, CAN THO, BIEN HOA, AN GIANG, HAI PHONG, …
GFA: 100,000 sm Expected completion: 2015
… VINCOM MEGAMALL TRUONG CHINH HCMC GFA: 100,000 sqm
VINCOM NGUYEN CHI THANH GFA: 44,500 sm
VINCOM
VINCOM
DA NANG
CAN THO 2
20 GFA: 31,000 sm
GFA: 14,500 sm VIETNAM RETAIL MARKET
AND FOREIGNERS TOO! Mostly Asian retailers: Korea, Japan…
Ministop Trung Nguyen (25% share)
2011
Aeon Mall HCMC
1/ 2014
2020
2014 2013
2012 2008 Opened first store in HCMC
Expanded to Dong Nai and Da Nang
Opened Lotte Mart Binh Duong and Phan Thiet
• Bought Pico • Opened Lotte Department Store in Hanoi
To open 60 supermarkets in Vietnam
Aeon Mall Binh Duong
11/ 2014
Aeon Mall Hanoi
2015
2020 20 hypermarkets
Already successfully acquired a 30%– stake in Fivimart (operates 20 stores in Hanoi) & a 49% stake in Citimart (runs 27 stores, mainly in HCMC) 21 VIETNAM RETAIL MARKET
AND FOREIGNERS TOO! …and Thailand! BJC acquires Metro Vietnam for US$879 million, incl. 19 distribution centers and related real estate.
BJC’s B's Mart
Central Group’s Robins Department Store in Hanoi and HCMC
Central Group buys 49% stake in Nguyen Kim
bought 94 Family marts in Vietnam aim to expand to 300 stores by 2018
Target: > 50 stores in 2019
49%
51%
22 VIETNAM RETAIL MARKET
DEPARTMENT STORE 2015 - 2016 2013 - 2014 2005
Vingroup Department store Takashimaya
1999
Robins Department Store
Diamond Plaza
Parkson Department Store
Lotte Department Store
23
Source: Google Images
VIETNAM RETAIL MARKET
AFFORDABLE RETAIL More Bazaar emerged
Supermarket
SAIGON SQUARE 3
HUNG VUONG SQUARE
AEON CITIMART
District 3, HCMC GFA: 3,100 sm
District 5, HCMC GFA: 9,500 sm
Go Vap District, HCMC
Opened: 1 Jan. 2015
Opened: 31 Dec. 2014
Opened: Jan. 2015
Rent-free Shopping Center
V+ Shopping Center – Hoa Binh Green City
24
Minh Khai Street, Hai Ba Trung District, Hanoi GFA: 25,000 sqm Open: 31st Jan 2015 Lower number of SKU’s Rental free for all store selling “Made-in-Vietnam” products VIETNAM RETAIL MARKET
FOOD & BEVERAGE Steady demand – New Entries - Expansion Tenants enquiries by preferences, 2014
Tenants enquiries by categories 2014 F&B
24%
Fashion
Shopping center
Accessories Education
High Street
76%
of enquiries
Cosmetics Furniture Others
Source: CBRE Vietnam, Q4 2014.
Source: CBRE Vietnam, Q4 2014.
F&B is increasingly dominant with 47%
High Street stores are still highly preferred by retailers
High-end restaurants moving out More casual F&B moving in
Source: CBRE Vietnam, Q4 2014.
25 VIETNAM RETAIL MARKET
FOOD & BEVERAGE DESTINATIONS
Crescent Lake – D7, HCMC
Almaz – Long Bien Dist., Hanoi
West Lake, Hanoi Source: Google Images 26 VIETNAM RETAIL MARKET
ESTABLISHED & EMERGING RETAIL NODES IN HANOI
West Lake
Old Quarter
Korean Town – Trung Hoa Nhan Chinh 27
Source: Google Images
VIETNAM RETAIL MARKET
UNCONVENTIONAL RETAIL IN HCMC
Roof-top beer Club
Cinema in 4-star Hotel CBD Location Cheaper rent New concept, young, cool Word of Mouth 28
Source: Google Images
Upstairs Café/ Fashion store – In small ally’s VIETNAM RETAIL MARKET
ONLINE SHOPPING There’s enough of the pie for everyone Foreigner Players keep investing: Rocket Internet (Lazada.vn, Zalora.vn, Lamido.vn); 701Search (ChoTot.vn) More Big Local Players to join market: VinEcom (Vingroup), Sendo (FPT), VCCorp, 24h
Contribution from services providers: online payment, shipping Support from Government: Vietnam Ecommerce and Information Technology Agency – Ministry of Industry and Trade Individual sellers: mostly through Facebook, Instagram
29 VIETNAM RETAIL MARKET
COMPETITION WILL INTENSIFY… Shopping center landlords must understand the needs thoroughly
Source: The New Age of the Asia Pacific Retail Market, CBRE Research, 2014 30 VIETNAM RETAIL MARKET
STRATEGIES FOR SUCCESS CBRE recommends shopping cente landlords four strategies
Source: The New Age of the Asia Pacific Retail Market, CBRE Research, 2014 31 VIETNAM RETAIL MARKET
WHAT SHOULD LANDLORDS DO TO CATCH THE TREND?
CBRE recommends retailers adapt their online strategy
Big data is here to help Use existing data provided by customers to formulate a more tailored strategies to enhance overall shopping experience
Create simple and useful apps
Build your brand Holding special events at shopping centers may not generating additional sales; however, they are the key to crafting a mall’s brand and image
BRAND
35% of survey respondents admitted to have never been using mobile applications designed specifically for shopping centers. For most app users, simplicity and ease of use is critical
32 VIETNAM RETAIL MARKET
OTHER INDOCHINA MARKETS UPDATES
LAOS MARKET UPDATE - VIENTIANE Current projects
Future projects View Mall
TTTM Nakhone Sup
San Jiang market
World Trade Centre
Vanthong Plaza
Vientiane Centre
Vientiane Complex (BIM)
450 Vanthong Plaza
Home Ideal
That Luang Plaza
D Mart
Talat Sao Mall 1 Talat Sao Mall 2
Lane Xang Arcade
ASEAN Mall
Vientiane New World
34 VIETNAM RETAIL MARKET
LAOS MARKET UPDATE – FUTURE SUPPLY
VIENTIANE CENTER
WORLD TRADE CENTER
Vientiane, Laos
Vientiane, Laos
Complex of Office, Shopping center & Service Apartments
Complex of Office, Shopping center, Residential & Hotel Developer: Lao International Development Co., Ltd
Developer: North Nong Chan
Center
Development & Company Co., Ltd
Retail GFA: 200,000 sqm Completion: 2016
Commercial
Retail GFA: 53,333 sqm Completion: 2015 35 VIETNAM RETAIL MARKET
LAOS MARKET UPDATE – FUTURE SUPPLY
THAT LUANG PLAZA Vientiane, Laos Shopping center
VIENTIANE NEW WORLD Vientiane, Laos Complex of Business Center, Shopping center & Residential
Developer: Chitchareune That Luang Plaza Sole Co., Ltd
Developer: CAMCE
Retail GFA: 26,880 sqm Completion: Q2/2016
Retail GFA: 80,000 sqm Completion: Q2/2016
36 VIETNAM RETAIL MARKET
CAMBODIA MARKET UPDATES – EXISTING SUPPLY
37 VIETNAM RETAIL MARKET
CAMBODIA MARKET UPDATES – EXISTING SUPPLY
SORYA SHOPPING CENTER
AEON PHNOM PENH Developer:
Aeon
Developer:
Canadia
GFA:
104,000 sq m
GFA:
40,000 sq m
Opening Date:
2014
Opening Date:
2003
PARAGON
TK AVENUE Developer:
TK Avenue Co
GFA:
11,000 sq m
Opening Date:
2011
Developer:
Paragon
GFA:
10,000 sq m
Opening Date
1995
38 VIETNAM RETAIL MARKET
CAMBODIA MARKET UPDATES – EXISTING SUPPLY
NAGAWORLD
VATTANAC TOWER Developer:
Vattanac
Developer:
NagaCorp
GFA:
7,000 sq m
GFA:
1,055 sq m
Opening Date:
2014
Opening Date:
1995
YOUNG SOVANNA Developer:
Canadia
GFA:
25,000 sq m
Opening Date:
2008
39
Developer:
Young Co.
GFA:
28,000 sq m
Opening date:
2013 VIETNAM RETAIL MARKET
CAMBODIA MARKET UPDATE – FUTURE SUPPLY
LANDMARK Developer: GFA: Opening Date:
HK Land 13,000 sq m 2017
PARKSON PCC Developer: GFA: 40
Opening Date:
Hassan 70,000 sq m 2016 VIETNAM RETAIL MARKET
CAMBODIA MARKET UPDATE – FUTURE SUPPLY PARKSON LION CITY Developer:
Lion Group
GFA:
80,000 sq m
Opening Date:
2017
OLYMPIA CITY Developer:
Canadia
GFA:
TBC sq m
Opening Date:
2018
THE BRIDGE Developer:
Oxley
GFA:
30,000 sq m
Opening Date:
2017
AEON PHNOM PENH 2 Developer:
Aeon
GFA:
TBC sq m
Opening Date:
TBC
BPH TOWNCENTER Developer:
Peng Huoth
GFA:
143,000 sq m
Opening Date:
2018
NAGACITY WALK Developer:
NagaCorp
GFA:
15,800 sq m
Opening Date:
2017
41 VIETNAM RETAIL MARKET
MYANMAR RETAIL MARKET OVERVIEW Approximately 40 retail developments in Yangon East Outer City West Outer City North Outer City
Shopping centre
Inner City
Department stores Hypermarket Supermarket
Down Town
South Outer City
42 VIETNAM RETAIL MARKET
EXISTING PROJECTS IN YANGON, MYANMAR
DAGON shopping CENTER
Junction Square
TAW WIN CENTER
Mixed-use development
Shopping center
Shopping center Developer:
Developer: Dagon International
Developer: STD
Retail GFA: 15,000 sqm Completion: 2011
Retail GFA: 30,000 sqm Completion:
Retail GFA: 45,000 sqm Completion: 2011
2012
43 VIETNAM RETAIL MARKET
PIPELINE PROJECTS IN YANGON, MYANMAR
Myanmar Center
Junction City
Landmark
Mixed-use development
Hotel, Shopping mall, Offices
Mixed-used development Developer: SPA / Yoma Group
Developer: Hoang Anh Gia Lai (Vietnam)
Developer: Shwe Taung Group
Retail GFA: 38,000 sqm Retail GFA: 53,333 sqm
Retail GFA: 54,000 sqm
Completion: 2016 Completion: 2016
Completion: Q2/2015 (Retail)
44 VIETNAM RETAIL MARKET
RETAILER REPRESENTATION - ASIA RETAILER ANALYTICS
BENEFITS TO YOU CBRE’s Retailer Analytics platform allows clients to: ASSESS AND SELECT THE MOST PROFITABLE TRADING LOCATIONS
We are the only real estate advisor who can bring together knowledge and data on consumer demographics, market size, retailer activity, turnover potential and real estate affordability. This combination allows us to provide you with the most accurate assessment of profitability and viability at country, city and store level.
IDENTIFY LATENT OPPORTUNITIES ACROSS A BROAD GEOGRAPHY
Our ability to model and review the largest number of retail destinations across Asia means that we can identify unexpected locations and opportunities for you. We also use local knowledge of future retail developments to spot locations which will become attractive in the longer term.
DELIVER THE MOST PROFITABLE STORE
Because our Retailer Representation team works hand-in-hand with our agency teams throughout Asia, we can ensure our country, city and street level recommendations are truly deliverable. Once decisions have been made on the target destinations, our Asia Retailer Representation team will work with our market leading agents to negotiate and deliver the best stores on the best terms.
46 VIETNAM RETAIL MARKET
BENEFITS TO YOU WHY RETAILER ANALYTICS? Where and who are my customers? How many stores can a market hold and how much demand exists? What’s the best process for market entry, expansion and network optimization? What kind of location should I pursue? Mall, Street, Department Store or Factory Outlet?
To answer those question, CBRE combines geography, statistics, economics and real estate data in a unique analytical framework to support retail network planning.
How much revenue will I generate? Do the economics stack up? What will the impact be on my existing stores (cannibalization)?
47 VIETNAM RETAIL MARKET
OUR APPROACH WHY RETAILER ANALYTICS? CBRE can provide clients a comprehensive strategy solution for market entry and expansion, existing store evaluations and site selection. The process is thorough, putting our clients in the best position for success throughout Asia.
DEVELOP OVERALL STRATEGY
Country and city level strategies
DRILL DOWN TO MARKET LEVEL
SITE SELECTION
Local agent insights, existing network evaluation, impact analysis and new location forecasting
CBRE will recommend executable strategies and achievable locations with the highest turnover potential.
48 VIETNAM RETAIL MARKET
METHODOLOGY WHY RETAILER ANALYTICS? MARKET OVERVIEW
+
RETAIL LANDSCAPE
MARKET ANALYTICS CATCHMENT MODELING + SALES DRIVERS + DEMAND AND SALES FORECASTING + COMPETITOR BENCHMARKING
CBRE RECOMMENDATIONS
ACQUISITION AND STRATEGY MANAGEMENT 49 VIETNAM RETAIL MARKET
PART I: Market Overview and Retail Landscape 50
VIETNAM RETAIL MARKET
RETAILER ANALYTICS – PART I MARKET OVERVIEW
MACRO ANALYSIS
DEMOGRAPHIC
TRANSPORT AND INFRASTRUCTURE
UNIQUE CITY FEATURES
51 VIETNAM RETAIL MARKET
RETAILER ANALYTICS – PART I RETAIL LANDSCAPE
REAL ESTATE ANALYSIS (rents, landlords, supply, pipeline, sales densities)
COMPETITOR & ADJACENCY (count per retail centre)
GAP ANALYSIS (identify market gaps for further investigation)
GAP ANALYSIS Location
Competitors
Adjacencies
Existing stores
COMPETITOR MAPPING
52 VIETNAM RETAIL MARKET
Part 2: Market Analytics & Competitor Benchmarking
PART II: Market Analytics
53 VIETNAM RETAIL MARKET
RETAILER ANALYTICS - PART II MARKET MODELLING: Retail Centre Catchment Definition CBRE will model the catchments of every retail centre to better understand the market potential for your brand. This allows retail centres to be ranked both within and between markets.
METHODOLOGY Demand Model current and future national demand to census zones and correlate to demographic socio-economic characteristics Supply Assemble data to measure the size and profile of every Retail Centre and the fit with the client brand Gravity model Calibrate CBRE’s Gravity Model to replicate real world interactions between Demand and Supply
54 VIETNAM RETAIL MARKET
RETAILER ANALYTICS - PART II MARKET MODELLING: Market Potential and Market Share CBRE will model consumer demand to city, district and commune administrative boundaries to better understand where demand exists throughout Vietnam.
Market Potential and Market Share Ho Chi Minh Retail Demand at commune level
55 VIETNAM RETAIL MARKET
RETAILER ANALYTICS - PART II MARKET MODELLING: Catchment Definition CBRE will model the catchments of every retail centre to better understand the market potential for your brand. This allows retail centres to be ranked both within and between markets.
Retail Centre Scorecard and Catchment Modelling General Information Urban Shopphing Centre (CBD) or Suburban Shopping Centre 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49
SCORE Space Availability There is no availability due to external factors (Ie government, How quickly can a retailer lease a space in the centre? project rennovations) for a unforseen time CBRE Centre Perception The environment and vicinity of the location is poor Retail strength in terms of ability to draw customers Clean but could be cleaner, average management, presence of Property Management Quality security camera and staff Centre Visibility Average visibility, poor signage, poor access (entrance/exit) Is the centre and entry/exit easily spotted while walking or driving by? Strong direct access (parking and bus station are connected to the Transit Accessibility mall but not the metro) Marketing Good marketing activities (leisure facilities, events, community How well does the retail centre market their band and tenants? action…) Sustainability Lowest sustainability rating Level of environmental certification (e.g. LEED and China Energy Rating) Productivity (new: turnover/Sqm; research data availability) A mix of office, residential and retail offering (majority department Area Maturity store format) Potential conflict and opportunity in waiting for the new developments vs. securing a location in an existing location (Ie Supply Rating Dazhongli, eastern portion of West Nanjing Road) Footfall Social Media Index Luxury - Brand Adjacencies Two brands out of the four selected brands Luis Vuitton, Chanel, Prada
Presence of Hermes, Gucci, Brand Adjacencies (by count - how many adjacencies exist) Accessories (Luxury) Accessories (Premium) Accessories (Mass) Apparel (Luxury) Apparel (Premium) Apparel (Mass) Electronics (Luxury) Electronics (Premium) Electronics (Mass) House & Home (Luxury) House & Home (Premium) House & Home (Mass) Personal Care (Luxury) Personal Care (Premium) Personal Care (Mass) Toys/Games & Books (Luxury) Toys/Games & Books (Premium) Toys/Games & Books (Mass) Toys/Games & Books (Luxury) Toys/Games & Books (Premium) Toys/Games & Books (Mass) Multiple Merchandise Stores (Luxury) Multiple Merchandise Stores (Premium) Multiple Merchandise Stores (Mass) Grocery Stores (Luxury) Grocery Stores (Premium) GroceryStores (Mass) F&B (Bar - Luxury) F&B (Bar - Premium) F&B (Bar - Mass) F&B (Full Service Restaurant - Luxury) F&B (Full Service Restaurant - Premium) F&B (Full Service Restaurant - Mass) Service (Communications) Service (Financial) Service (Personal Care)
Score rank 1 1 3 2 4 3 2 #N/A 4 3 #N/A #N/A 2 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
56 VIETNAM RETAIL MARKET
RETAILER ANALYTICS - PART II REVENUE DRIVERS
CBRE works with international clients to understand what drives sales in existing locations, to aid future expansion.
POTENTIAL DRIVERS OF SALES
COMPLEMENTARY RETAILERS % OF PROFESSION
COMPETING RETAILERS
FUTURE GROWTH TO 2020 (GDP)
TOTAL MARKET SIZE (SPEND)
% OF MOST AFFLUENT GROUP
CASE STUDIES
% MALE/FEMALE
57
For luxury retailers we have worked with in Asia, drivers often relate to purchasing power, and complimentary/competing adjacencies rather than market size or sheer volume of people.
For a mid-market fashion brand in Malaysia, the presence of those aged 10-19 was important as this was the target market for the brand. In this case, footfall was also essential because of the high volume of sales required for what was an inexpensive product.
For an upper-mid market watch retailer in the Taiwan, we found that sales were driven by those aged 25-44 years of age. Additionally, affluence was a factor, as well as market size and the presence of key footfall drivers. VIETNAM RETAIL MARKET
RETAILER ANALYTICS - PART II EXISTING STORE EVALUATION: NETWORK OPTIMIZATION & SALES FORECASTING Understanding the factors driving sales of your existing portfolios allows CBRE to analyse for network optimizations and evaluate sites for trading potential.
What is driving my sales in Hanoi? Direction of Relationship
Skincare Competitors
18%
+
Single
17%
+
Aged 20-24
15%
+
Adjacencies
14%
+
Health & Beauty Spend
13%
+
Aged 0-4
9%
+
Catchment Population
9%
+
Department Store Sales
5%
+
Variable
CBRE use multiple regression analysis to test market variables for their contribution towards store sales. Regression analysis is a statistical technique used to understand the level of impact on sales that each particular variable has; such as complementary retailers, competition, market size and consumer demographics
How are my stores and sites performing compared to the model?
$2,500,000
Under Performance of Doors $2,000,000 Forecast Retail Sales
Percentage Impact
Under Performance of Doors $1,500,000 R² = 0.74 $1,000,000
Over Performance of Doors
$500,000
Over Performance of Doors $0 $-
$500,000
$1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000
Actual Retail Sales 58 VIETNAM RETAIL MARKET
RETAILER ANALYTICS - PART II SALES FORECASTING: THE IMPACT OF RENT ON MARGIN Retailer X: Store Profitability Models
Retailer X: Store Profitability Models
COUNTRY
A
COUNTRY
X
TOWN
B
TOWN
Y
Year 1
CBRE uses cost modelling to show retailers what operating costs will apply, and how this impacts upon margin.
Year 1
Annual Turnover
$750,257 Annual Turnover
$849,958
Gross Profit
$430,493 Gross Profit
$491,915
Annual Rent + Rates
$87,037 Annual Rent + Rates
$269,266
Payroll
$85,875 Payroll
$128,798
Other Costs
$49,659 Other Costs
$54,283
Total Costs
$222,571 Total Costs
$452,348
Contribution
$207,922 Contribution
$39,567
Contribution as % Turnover
28% Contribution as % Turnover
5%
COSTS ASSESSED Rent Business rates
Service charge Employment costs
Cost of goods Shipping
Head office costs Advertising/marketing costs
59 VIETNAM RETAIL MARKET
RETAILER ANALYTICS- PART II SALES AND DEMAND FORECASTING: IMPACT ANALYSIS CBRE will quantify impacts and identify action that should be taken by the client as a result of network optimizations and the expected changes in revenue due to pipeline developments coming to fruition over the next 3 to 5 years (to 2020). This has taken into account: Target market retail centre pipeline developments. Retail spend growth (2020 forecast - Oxford Economics)*. Changes in the flow of retail spend. On this basis, CBRE’s recommendations have been split into four categories:
NO CHANGE
DROP
NEW FORMAT
EXPANSION
60 VIETNAM RETAIL MARKET
RETAILER ANALYTICS - PART II SALES AND DEMAND FORECASTING Based on the results of store profitability and demand modelling, locations are prioritised at sub-market, city and country levels. These recommendations are then fed to our local agency teams to validate and finalize the recommendations Our local agency teams are part of an integrated holistic process. The analytic rigour of our Retailer Analytics team and the experience of our agency teams combine together to create the strategy for our clients. MALAYSIA CITY
LOCATION
KUALA LAMPUR JOHOR BAHRU
CHINA FORECAST TURNOVER
MARGINS
CITY
BERJAYA TIMES SQUARE
$2,112,000
LOCATION
FORECAST TURNOVER
MARGINS
7.98%
SHANGHAI
SKYMALL
$2,351,000
JOHOR PREMIUM OUTLET
10.32%
$1,947,000
7.73%
BEIJING
HUAXI LE MALL
$2,900,000
PLAZA SENTOSA
9.54%
$2,145,000
6.19%
HANGZHOU
MIXC HANGZHIOU
$1,500,000
8.12%
NANJING
NANJING INTERNATIONAL CENTRE
$2,876,000
7.56%
BEIJING
BEIJING SCITECH PREMIUM OUTLETS
$2,000,000
7.46%
SHANGHAI
SUPERBRAND MALL
$1,700,000
7.43%
BEIJING
TAIKOO LI SANLITUN
$2,871,000
6.42%
CHONGQING
SM CHONGQING YUBEI
$2,300,000
6.19%
TIANJIN
GALAXY MALL
$2,866,000
6.16%
SINGAPORE CITY
LOCATION
FORECAST TURNOVER
MARGINS
SINGAPORE
VIVOCITY
$2,750,000
4.31%
HONG KONG CITY
LOCATION
HONG KONG
HARBOUR CITY
FORECAST TURNOVER
MARGINS
$1,495,000
8.23%
CITY
LOCATION
FORECAST TURNOVER
MARGINS
HYOGO
HANKYU NISHINOMIYA GARDENS
$1,850,000
TOKYO
TAKASHIMAYA TIMES SQUARE
TOKYO
INDONESIA
JAPAN CITY
LOCATION
FORECAST TURNOVER
MARGINS
8.43%
TANGERAND
MALL @ ALAM SUTERA
$1,850,000
8.43%
$4,350,000
8.12%
JAKARTA
PLAZA SENAYAN
$4,350,000
8.12%
LALAPORT TOYOSU
$3,250,000
6.16%
JAKARTA
MALL ARTHA GADING
$3,250,000
6.16%
IBARAKI
AEON MALL MITO-UCHIHARA
$2,700,000
5.12%
BEKASI
MAL METROPOLITAN
$2,700,000
5.12%
SAITAMA
AEON LAKE TOWN KAZE
$3,245,000
5.01%
JAKARTA
SENAYAN CITY MALL
$3,245,000
5.01%
61 VIETNAM RETAIL MARKET
RETAILER ANALYTICS – PART II COMPETITOR BENCHMARKING
COMPETITORS’ SALES ANALYSIS
+
COMPETITORS’ RENTS
CBRE will provide competitor benchmarking in the recommended centres as an additional quantifier of performance.
62 VIETNAM RETAIL MARKET
PART III: CBRE RECOMMENDATIONS 63
VIETNAM RETAIL MARKET
RETAILER ANALYTICS - PART III RECOMMENDATION The recommendation will assess the strongest retail markets evaluating existing, and future real estate. The projects will be prioritized by country, city and submarket.
3 to 5 year growth or optimization strategy; Recommendations by submarket
Mapping of target projects with relevant location and positioning
64 VIETNAM RETAIL MARKET
PART IV: SOLUTIONS FOR EVERY RETAILER 65
VIETNAM RETAIL MARKET
RETAILER ANALYTICS SOLUTIONS FOR… Market Entry Market Overview Retail Landscape Market and Catchment Modeling Demand Analysis and Sales Drivers Market Potential Competitor Benchmarking
Benefits Understanding of the target market macro-economy Understanding of rents, landlords, supply, pipeline and sales densities Understanding of the competitive landscape and competitor penetration Understanding of market demand for brands and categories Achievable recommendations; and locations with the highest revenue potential Achievable 3 to 5 year growth strategy
Market Expansion & Optimization Market Overview Retail Landscape Competitor and Adjacency Impact Analysis Market and Catchment Modeling Sales Impact Analysis Existing Store Assessment Network Optimization Sales Forecasting Pipeline Impact Analysis Competitor Benchmarking
Benefits Understanding of the target market macro-economy Understanding of rents, landlords, supply, pipeline and sales densities Understanding of the competitive landscape and competitor penetration Understanding of available demand for brands and categories Impact Analysis – Competitor, Sales and Pipeline Sales Forecasting based on a sound, statistical approach Achievable 3 to 5 year growth strategy
66 VIETNAM RETAIL MARKET
CBRE CLIENTS Case Studies
67 VIETNAM RETAIL MARKET
For more information please contact: Richard Leech, MRICS
Joel Stephen
Executive Director, Retail Services CBRE South East Asia
Head of Retailer Representation CBRE Asia
T +84 912 573 130 Email:
[email protected]
T +852 2820 2803 Email:
[email protected]
Hang Vu Senior Manager, Retail Services CBRE Vietnam T +84 903 012 175 Email:
[email protected] LAOS MARKET
Michael Ruby Head of Asia Retailer Analytics CBRE Asia T +852 2820 2916 Email:
[email protected] CAMBODIA MARKET
Trang Tran
Laszlo Fulop
Senior Manager, Retail Services CBRE Vietnam
Senior Retail Consultant, Retail Services CBRE Vietnam
T +84 912 486 399 Email:
[email protected]
T +84 972 058 444 Email:
[email protected] MYANMAR MARKET
Michael Vong Retail Consultant, Retail Services CBRE Vietnam +84 917 294 834
[email protected]
RETAIL LEGAL UPDATE VIETNAM, CAMBODIA AND LAO PDR 5 FEBRUARY 2015
BANGLADESH | VIETNAM
| CAMBODIA
|
INDONESIA
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69
LAO PDR
|
MYANMAR
|
SINGAPORE
|VIETNAM THAILAND RETAIL MARKET
WHAT MAKES US UNIQUE?
“We are pioneers in emerging markets” 1994
1995
2005
2006
2010
2011
Lao PDR
Cambodia
Thailand
Vietnam
Singapore
Bangladesh
Myanmar
Indonesia
Our Strategy Not “Go Where our Clients Go”, BUT “Go BEFORE you Go”. 70
Part 1 Key Legal Regulations
71
VIETNAM
Key news laws are expecting to boost the retail industry in Vietnam. –
Law on Investment
–
Law on Enterprises
–
Law on Real Estate Business and Law on Housing
The new laws will enter into force on 1st July 2015.
Decree 23 of the Government dated 12 February 2007
Circular 08 of the Ministry of Industry and Trade (“MOIT”) on trading activities (including retail business)
72
VIETNAM
Circular 34 of the MOIT entered into force in February 2014, it: –
announces the schedule for implementation of foreign companies’ trading activities.
–
replaces Decision 10 on the same subject, which was issued in 2007.
As of 1 January 2015, pursuant to the ASEAN Trade in Goods Agreement (ATIGA), 10,000 merchandise items coming from ASEAN member countries are free of custom barriers (import tax reduced to 0%).
73
CAMBODIA
The Civil Code of 2007
The 2011 Law on implementation of certain provisions of Civil Code
Law on Investment dated 4 August 1994 (as amended 4 February 2003)
Law on Commercial Enterprises dated 19 June 2005
The 2001 Land Law
74
LAOS PDR
Investment Promotion Law № 02/NA dated 08 July 2009
Decree on the Implementation of the Investment Promotion Law № 119/PM dated 20 April 2011
Decision regarding Businesses on Retail and Wholesale Trade № 0977/MOIC. ITD dated 18 May 2012
Enterprise Law (№ 46/NA, 26 December 2013)
Decree on Document Registration № 52/PM, dated 13 March 1993
Notification № 1489 regarding Categories of Goods and Investment ratio open to foreign investors for investment in the Establishment of import business units for wholesales in the Lao PDR, dated 20 July 2012 75
Part 2 Selected key issues in retail
76
VIETNAM
77
VIETNAM-MARKET ACCESS TO TRADERS
Direct investment (100% foreign owned or joint venture) or Indirect investment (franchise/ nominee-proxies Structure).
Definition of “retailing”: the activity of selling [purchased] goods directly to final customers
Definition of “outlet”: a unit owned by an enterprise for the purpose of conducting retailing activities
Permitted goods: retail of all legally imported and domestically produced products (except tobacco, pharmaceuticals, crude oil, processed oil, books, newspapers, magazines, precious stones, etc.)
78
VIETNAM-MARKET ACCESS TO TRADERS CONT’D
Direct investment: 100% foreign owned or JV - initial license for first outlet (investment certificate) ‒ ‒
‒
Application to local authority / approval MOIT required (lengthy) Criteria: (i) Government’s policies, (ii) amount of investment capital and contributed capital, (iii) capacity and experience of the investor, (iv) business plan and operation results of investor’s existing enterprises, (v) master plan of the relevant province/city Economic Need Test (ENT) for second outlet and having an area of more than 500m2
ENT: permission considered on a case by case basis, depending on number of retail outlets, market stability, population density in the province/city of proposed additional retail outlet, and consistency with the master plan of such province/city
Indirect investment - Franchising: commonly used in Vietnam; Need to register with MOIT/DOIT and
Indirect investment - Nominee/proxy structures: also used in Vietnam but this structure presents uncertain legal validity and risk of misappropriation 79
VIETNAM-PROTECTION OF INTELLECTUAL PROPERTY (IP)
Adopt and implement a strategy
Protect trademarks, domain names, designs, sensitive information
Obtain from your local partners to protect your and their IP
Practical issues – protect your brand: consumers rights, understand and anticipate rumors; know and work with local authorities and restrictions on advertisement
80
VIETNAM-MARKET ACCESS TO DEVELOPERS
Lease land from the State or infrastructure developer
Necessity to undertake a land due diligence to make sure the land location is appropriate
Approval in principle on the project location
Conditions to develop a real estate project such as master plan, architecture design compliance
Land Use Right granted in compliance with the Investment Certificate
81
CAMBODIA
82
CAMBODIA-SECTORAL OVERVIEW
No specific sectorial legal framework
Freehold or leasing
No specific land use type with respect to certificates of title/zoning classification.
Several draft laws: draft law/amendments to the Law on Investment; Draft Sub-Decree on Urbanization of the capital city, towns and urban areas; Draft Law on Construction; Draft Law on Environment Impact Assessment; Draft Consumer Protection Law and Draft ECommerce Law
83
CAMBODIA-MARKET ACCESS TO TRADERS
Trading of goods: 100% foreign owned entity possible
Food and beverage – restaurants, cafes, bakeries, etc.: 100% foreign owned entity possible
Franchising – possible (and common) but no specific franchise law yet in. Franchising is governed mainly by the provisions of the Civil Code.
Registration of trademark possible (including exclusive trademark licensing right) under the Law on Marks, Trade Names and Acts of Unfair Competition
84
CAMBODIA-PROTECTION OF IP
•
Trademark law is the most developed intellectual property system, but enforcement remains problematic due to nascent (but developing) legal infrastructure and government authority resources
•
Protection of patents, industrial designs and models are less developed but government authority understanding and international interest grows year on year
•
Risk: local company registers marks although it is not the rightful owner
•
Strategy: first register trademark in Cambodia, regardless of any presence in Cambodia. Proactive vigilance by IP proprietor of infringement is key.
85
CAMBODIA-MARKET ACCESS TO DEVELOPERS
Joint Venture with no more than 49% foreign capital can own land
Landholding structuring possible (different classes of shares + protection documents + mortgage)
Alternative: long term lease up to 50 year-term. It is required to be registered with Cadastral authorities to be enforceable against third parties
86
LAOS PDR
87
LAOS-MARKET ACCESS TO TRADERS
“ Retail Sale Business” means the final stage of the business of goods distribution to individuals or households for consumption.
“Wholesale Business” means a goods distribution business to people or legal entities for the purpose of further production, wholesale or retail
The 2012 Retail Decision states that Retail Sales Business is reserved only for Lao citizens
88
LAOS-MARKET ACCESS TO TRADERS CONT’D
For Retail Sales Business, foreign individuals and legal entities are only permitted to:
conduct the distribution of goods within the Lao PDR through distributors or franchisees of Lao nationality, residing in Lao PDR; or
Invest or enter into a joint venture for the construction of new forms of modern sales establishments for business units which are to be reserved for trading, such as hypermarkets, supermarkets, shopping centers or malls, in accordance with the Investment Promotion Law and related laws and regulations.
89
LAOS-PROTECTION OF IP
Registration of industrial property at Ministry of Science and Technology
IP includes patents, petty patents, industrial designs, trademarks, trade names, trade secrets etc.
Owner of IP enjoys the benefits derived from the IP; transfer all or part of their IP rights to other person by sale, exchange, lease or assignment; permit other persons to seek benefits over all or part of the IP; bequeath and assign the rights in the IP to other person; and protect the IP from violation by other parties.
Strategy: first register trademark in the Lao PDR, regardless of any presence in the Lao PDR
90
LAOS-MARKET ACCESS TO DEVELOPERS
Land ownership is not an option
Land lease possible
30 years from private owners
50 years from the Government (concessions)
75 years in specific economic zones and special economic zones
Under 2009 Investment Promotion Law, foreign-invested entities with a minimum of USD 500,000 equity investment may hold “land use rights”, but not fully implemented
91
LAOS-STRUCTURING OPTIONS Supply Chain Management Contract. Under this structure, a foreign owned entity provides supply chain management services to a locally owned entity. These may include, the lease or sub-lease of retail or wholesale premises, contractual licensing of intellectual property, licensed rights to IT systems and marketing methodologies, warehousing, accounting and administrative services. The fees payable to the supply chain management services may be structured so that they mirror what the foreign entity might have earned by way of dividends had it been entitled to enjoy equity participation in the locally owned entity. Investing in SEZ: The foreign owned supply chain if incorporated in a Special Economic Zone (“SEZ”) in the Lao PDR, will be eligible for significant tax benefits and may also obtain an exemption from the wholesale and retail restrictions described above.
92
THANK YOU
Tran Thi Vu Hanh Partner, Vietnam Deputy Managing Director, Ho Chi Minh City Office
[email protected]
93
Excellence · Creativity · Trust Since 1994
BANGLADESH www.dfdl.com
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INDONESIA
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LAO PDR
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MYANMAR
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SINGAPORE
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VIETNAM
VIETNAM RETAIL MARKET