HCMC Market Insights Q42015 (EN)

PERFORMANCE
The last quarter of 2015 saw improvement in rents across all grades,
reaching USD28/sqm/mth. Average net asking rents of Grade A increased
1.5% q-o-q to US36/sqm/mth as landlords adjusted rentals to take
advantage of limited prime office space and positive macro-economic
outlook. Grade B did not experience significant rent growth, staying at
USD20/sqm/mth. The market remains tight with average occupancy rate
of 95.7%. Grade A’s occupancy rate was up 1.3% q-o-q to 96.3% thanks
to strong leasing activities at new office buildings. Grade B’s occupancy
nominally went up to 95.2% as landlords tried to fill up vacant space
before the year end.
SUPPLY
While CBD supply pipeline remained unchanged, non-CBD stock added
30,000 NLA from the opening of Pearl Plaza. The city currently has 11
Grade A and 57 Grade B office buildings, providing approximately 1,331,347
sqm GFA. In 2016, Grade B will take the lead in new supply with nearly
77,000sqm NLA from 4 projects. No Grade A projects will come online
until 2017 when Saigon Centre (phase 2) and Deutsches Haus are due for
completion providing an additional 65,859 sqm NLA.
DEMAND
Demand for office space in Ho Chi Minh City will be strengthen by the
economic recovery, controlled inflation and interest rates, rapidly improving
infrastructure and a more supportive legal framework. In addition,
recent free trade agreements such as the Trans-Pacific Partnership are
anticipated to enlarge the number of multinational corporations and small
and medium sized enterprises, which may in turn trigger a healthy rise in
office demand.
In terms of tenant profile, finance, banking and service sectors are large
space occupiers in most Grade A office buildings and is likely to expand
more in the coming years.
OFFICE SECTOR
Q4 2015 | MARKET INSIGHTS
HO CHI MINH CITY
DAVID JACKSON
General Director
david.jackson@colliers.com
PLEASE CONTACT US FOR ANY INFORMATION
Table 1: Future Supply
ECONOMY OVERVIEW
In 2015, Vietnam has benefited from stability in the macroeconomic
environment and grown considerably compared with previous years.
Gross Domestic Product (GDP) in Q4 2015 increased 7.01% year on year
(y-o-y), bringing the overall GDP growth rate in 2015 to 6.68% which is
the highest growth rate since 2008.
The Consumer Price Index (CPI) increased nominally at 0.2% y-o-y in
Q4 2015 which resulted in a 0.63% increment over the whole year.
Foreign Direct Investment (FDI) of newly registered and supplementary
capital rose 12.5% from a year ago to USD22.67 billion, with strong
inflows into the manufacturing sector and production of export goods.
Total retail sales and consumer services in the last three months of 2015
were estimated at USD148 billion, up 9.8% compared to the same period
last year.
Vietnam’s economy is expected to continue growing at a solid pace after
the country has steadily opened its market and reduced other tariff
and non-tariff barriers through the Trans-Pacific Partnership (TPP)
and the ASEAN Economic Community (AEC).
www.colliers.com/vietnam
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©2016 Colliers International Research
Figure 2: Average occupancy rate
OUTLOOK
In anticipation of the future metro system, new clusters of residential
projects have arisen along the lines. It is expected that condominium
supply in District 2 and District 9 will surge by 58% and 200% in
2017 respectively. In addition, selling prices and transaction numbers
are expected to surge once the metro line are come into operation.
Since the recovery of the market, developers have shifted their
interest to high-end segment. The city has an abundant supply of
high-end apartments but is in shortage of mid-end and affordable
products. As medium and low-income people have the largest
housing demand, developers should focus more on this market
segment.
Source: Colliers International Research
Figure 1: Average asking rents
HA VO
Senior Research Analyst
ha.vo@colliers.com
Building name District Grade
NLA
(sqm)
Completion
year
Hai Quan Tower 1 B 30,000 2016
Royal Tower 7 B 21,852 2016
Saigon Giai Phong 3 B 16,392 2016
The Waterfront Saigon 1 B 8,822 2016
Saigon Center Phase 2 1 A 35,859 2017
Deutsches Haus 1 A 30,000 2017
Maple Tree Business Center 7 B 24,154 2017
0
20
40
60
80
100
120
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1F
2011 2012 2013 2014 2015 2016
Grade A Grade B
%
0
10
20
30
40
50
60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1F
2011 2012 2013 2014 2015 2016
US$/sqm/month
Grade A Grade B

PERFORMANCE
As of Q4 2015, the average net asking rent across all retail segments is
stable at USD59/sqm/mth. Rents in non CBD area remained unchanged at
USD36/sqm/mth at despite new stock entering the market.
Average occupancy rate maintained its high level at 92%, up 2ppts q-o-q.
Most of retail developments in the city center have been fully occupied
thanks to their prime location. Thao Dien Megamall and Pearl Plaza, two
new shopping centers on the outskirts of Ho Chi Minh City also recorded
impressive occupancy rate of 95% and 90% respectively due to their great
efforts in securing pre-committed tenants.
SUPPLY
Three new shopping centers in suburban area have come online in the
review quarter, adding a total of 105,000 GFA to the current stock.
Vincom Thao Dien Mega Mall in District 2 and Pearl Plaza in Binh Thanh
District are developed to take advantage of the future metro line no.1. Being
one-stop-shop destinations for customers, both of them are believed to
achieve a good business performance. Meanwhile, the Korean retail chain
Emart has been established to meet the growing population and fast rising
retail demand in Go Vap Distict.
DEMAND
It is forcasted that the middle and affluent class in Vietnam with income
from USD714 and above a month will triple in size until 2020. This group
is considered as key potential customers for both local and international
retailers.
Locally, Ho Chi Minh City retail market is very promising with total retail
sales in 2015 reaching more than USD30 billion, up 10.5% y-o-y. The
growing number of international arrivals to the city also assists the local
retail market, which in turn will trigger more space demand.
RETAIL SECTOR
HO CHI MINH CITY
Figure 3: Supply by District
DAVID JACKSON
General Director
Figure 2: Occupancy Rate
OUTLOOK
The EU Vietnam Free Trade Agreement, the TPP and AEC integration
will all profoundly attract more foreign participation in Vietnam’s
retail market. In addition, the introduction of metro lines is expected
to improve the ability of the population to access retail activities.
Hence, new retail developments at the extremities of the metro line
are attracting huge interest. Retail supply will be ample through
2020 when over a million square meters of new supply will be added
to the market.
Figure 1: Average Asking Rent
HA VO
ha.vo@colliers.com
ECONOMY OVERVIEW
The Consumer Price Index (CPI) increased nominally at 0.2% y-o-y in Q4
2015 which resulted in a 0.63% increment over the whole year.
capital rose 12.5% from a year ago to USD22.67 billion, with strong inflows
into the manufacturing sector and production of export goods.
last year.
80
85
90
95
100
-20,000
0
20,000
40,000
60,000
2011 2012 2013 2014 2015 %
sqm
Net Absorption Occupancy Rate
0
20
40
60
80
100
120
140
160
180
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1F
2011 2012 2013 2014 2015 2016
USD/sqm/month
CBD NON-CBD
District 1
51%
District 3
12%
Tan Binh
10%
District 7
7%
Phu Nhuan
6%
Others
14%

PERFORMANCE
High absorption rates were reported in projects with strategic locations and
developed by prestigious developers. More than 8,000 apartments were
sold in Q4 2015, an increase 2% q-o-q. The year 2015 has witnessed the
recovery of the property market, supporting by marcoeconomic stability,
ongoing construction of metro lines and upgraded transport infrastructure.
There was a remarkable rise in the average sale price as the high-end
segment took high proportion in the supply pipeline. While the primary price
across all segments increased 4.4% y-o-y, that of high-end properties
surged 8.3%, reaching USD2,030/sqm on average. Besides, sale price
of new and under construction projects grow stronger than those of
completed ones.
SUPPLY
To catch up with the recovery of the real estate market, a large number of
property products were marketed in the year 2015. 80 new launches were
recorded, providing approximately 41,000 units and the high-end segment
continued to dominate new supply. Notable projects in the review quarter
are the Nassim in District 2, City Garden Phase 2-Promenade in Binh Thanh
District, Charmington La Pointe in District 10, etc.
Taking advantage the strategic position as a gateway to the city and
southern provinces, the eastern area of Ho Chi Minh City has attracted
huge interest from developers and homebuyers. Significant investment in
infrastructure, housing, and commercial projects has been generated in the
area, accounting for 47% of total new supply in this quarter.
DEMAND
Demand for housing in Ho Chi Minh City remains high. The city’s
population is growing fast when more migrants from other parts of the
country are coming here for work. As home loans with low interest rates
can be accessible, young people with stable income can afford to buy
a condominium. Since the relaxation of regulations on foreign property
ownership, there has been notable interest from overseas.
CONDOMINIUM SECTOR
HO CHI MINH CITY
ECONOMY OVERVIEW
(y-o-y), bringing the overall GDP growth rate in 2015 to 6.68% which
is the highest growth rate since 2008. The Consumer Price Index (CPI)
increased nominally at 0.2% y-o-y in Q4 2015 which resulted in a 0.63%
increment over the whole year. Foreign Direct Investment (FDI) of newly
registered and supplementary capital rose 12.5% from a year ago to
USD22.67 billion, with strong inflows into the manufacturing sector and
production of export goods. Total retail sales and consumer services in
the last three months of 2015 were estimated at USD148 billion, up 9.8%
compared to the same period last year.
DAVID JACKSON
General Director
However, to make more foreign transactions happen, the
market needs clearer legal guidelines from the government.
OUTLOOK
In anticipation of the future metro system, new clusters of
residential projects have arisen along the lines. It is expected
that condominium supply in District 2 and District 9 will
surge by 58% and 200% in 2017 respectively. In addition,
selling prices and transaction numbers are expected to
surge once the metro line are come into operation.
Since the recovery of the market, developers have shifted
their interest to high-end segment. The city has an abundant
supply of high-end apartments but is in shortage of mid-end
and affordable products. As medium and low income people
have the largest housing demand, developers should focus
more on this market segment.
HA VO
ha.vo@colliers.com
Figure 3: Sold Units
Figure 2: Net Absorption rate by segment
Figure 1: Sale Price in 2015 (USD/sq m)
<1000
10%
1000-1300
30%
1300-1800
18%
1800-2300
32%
>2300
10%
0
5000
10000
15000
20000
25000
30000
35000
40000
2006 2007 20082009 2010 2011 2012 2013 2014 2015
units
0%
50%
100%
150%
200%
250%
2011 2012 2013 2014 2015
Luxury High-end Mid-end Affordable

PERFORMANCE
The villa and townhouse segment performed well in Q4 2015 thanks
to improved buyer confidence. The transaction volume increased with
a growth rate of 5% q-o-q and 76% y-o-y. District 9 and District 7 had
the strongest performance, accounting for approximately 41% and 29%
of sales respectively.
Taking advantage of the economic recovery and rising market sentiment,
new launched projects increased their primary average asking price to
USD3,000-3,600/sqm. As supply on the secondary market is limited,
prices appreciated 5%-6% compared those on the primary market.
SUPPLY
Five new villa and townhouse projects entered the market in Q4 2015,
providing approximately 1,105 dwellings to the primary market. The
existing supply pipeline comprises approximately 8,300 villas and
townhouses from 56 projects.
Decentralised districts, especially District 2 and District 9 took a large
proportion of the market share thanks to their large land bank, completed
infrastructure and improving connectivity to the city center.
DEMAND
Aspersonalwealthandlivingstandardincreaseinrecentyears,Vietnamese
people will save more and look to invest. Besides condominiums, landed
property has become one of the favourite investment channels in 2015.
There have been an increasing number of investors attracting to this
market segment due to its easy-to-resell feature and high capital gain.
Buy-to-let is a popular trend, accounting for 50-70% of total transactions
while end-users only took a small proportion in buyer profile.
VILLA/TOWNHOUSE SECTOR
HO CHI MINH CITY
ECONOMY OVERVIEW
last year.
DAVID JACKSON
General Director
OUTLOOK
More landed property projects will enter the east and south
area of the city. Price growth will continue on both primary and
secondary markets as more investors will be interested in this
segment.
Projects with completed internal facilities, strategic locations,
affordable selling prices and developer reliability will be
attractive to purchasers.
Figure 2: Supply by Year
Figure 3: Current Supply by District
Figure 1: Historical Performance
HA VO
ha.vo@colliers.com
0
2000
4000
6000
8000
10000
12000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F
Existing supply New supply
dwellings
0
200
400
600
800
Dist. 9 Dist. 2 Go
Vap
Nha
Be
Dist. 7 Binh
Thanh
Thu
Duc
Dist.
12
Binh
Tan
Binh
Chanh
dwellings
No. of townhouses No. of villas
0
1000
2000
3000
4000
5000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014 2015
USD/sqm
District 7 District 9 District 2 Others

PERFORMANCE
The average net asking rent was softened in Q4 2015 as Grade A and
Grade B’s recorded a nominal drop of 1.2% and 3.8% q-o-q respectively.
In the CBD, the average rental rate was US$3,052/ unit/mth for a typical
2-bedroom unit in a popular area with sizes ranging from 80 sqm to 140
sqm.
Occupancy improved on the back of short-term stays during Christmas
and New Year holiday. Grade A Grade A and Grade B occupancy increased
10% and 3.6% q-o-q.
SUPPLY
In 2015, the market added 89 Grade A units from The Reverie Residence
and 52 Grade B units from Diamond Island Luxury Residence.
Another Grade A project will enterthe market in the second half of 2016. The
Ascot Waterfront Saigon developed by Canh Hung Hai Thanh Corporation
is coming to its final completion, proving 222 serviced apartments. Grade
B stock will be ample in 2016 with expected completion from four projects
which are Saigon Plaza, C.T Plaza, Viettel Tower and New Pearl.
DEMAND
Demand for serviced apartments in Ho Chi Minh City will be boosted
after the government promoted an effective environment for trade and
investment relations.
The advent of the ASEAN Economic Community (AEC) on 31 Dec 2015
and the conclusions of Trans Pacific Partnership (TPP) and other trade
agreements in 2015 are expected to bring in more FDI, foreign investors
and business travelers to Ho Chi Minh City.
SERVICED APARTMENT SECTOR
HO CHI MINH CITY
ECONOMY OVERVIEW
last year.
Figure 2: Occupancy Rate by Grade
Table 1: Significant future projects under construction
DAVID JACKSON
General Director
HA VO
ha.vo@colliers.com
OUTLOOK
In the next three years, the market will have 12 projects providing
2,200 units.
Due to limited new supply in the city core in the short term, rents
and occupancy rates of existing projects will experience positive
correction. Demand continues to be strong from expatriates and
MNCs.
Figure 1: Average Asking Rent by Grade
0
10
20
30
40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013 2014 2015
USD/sqm/month
Grade A Grade B
70
75
80
85
90
95
100
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013 2014 2015
%
Grade A Grade B
Project name District Grade
Total
units
Expected
Completion
Ascott Waterfront Saigon 1 A 222 2H 2016
Saigon Plaza 1 B 119 3Q 2016
Saigon South Place 7 A 480 4Q 2016
Saigon Center Phase 2 1 A 216 2017

PERFORMANCE
The occupancy and rent rates are stable. Gross asking rent ranges from
USD60- USD286/sqm/term with an average rate is at USD120/sqm/
term. The remaining Land Use Right year terms range from 26-43 years.
Average occupancy rate is 67.2%.
Rental rate of “ready built factory” ranges from USDD400- USD800/
month for a whole 300sqm-450sqm factories, or USD880- USD2500/
month for 500sqm-1200sqm factories.
SUPPLY
Southern Economic Zone include HCM city and surrounding provinces
such as Long An, Dong Nai, Ba Ria – Vung Tau, Binh Duong. Tay Ninh. The
economic zone has 106 active IPs with total leasable areas of 33,500ha.
Ho Chi Minh city and Hanoi are two cities which comprise the highest
number of IPs in Vietnam.
Ho Chi Minh City has 3,920ha industrial area which are allocated in 18 IPs.
No new supply was delivered during the last quarter of 2015. The leasable
area is estimated to be about 67% of the total industrial land area, which
is equivalent to 2,637ha. There is a shortage of ready- built factories
which are bigger than 2000sqm.
DEMAND
From a real estate point of view, companies from non- TPP member
nations - such as China, Korea, India…- would relocate their operations
and factories to Vietnam in order to gain tax exemptions for their products.
Foreign investments, especially from the U.S and Japan, will also flow
into Vietnam more heavily to take advantage of Vietnam’s labour force and
domestic market. These factors positively contribute to the demand for
industrial land, factory, warehouse and offices. Investors and developers
aim to focus on clear lands and areas locating near traffic hubs like ports,
airports, metro systems.
INDUSTRIAL SECTOR
HO CHI MINH CITY
ECONOMY OVERVIEW
last year.
Figure 1: Market Performance
Table 1: Future Supply
DAVID JACKSON
General Director
HA VO
ha.vo@colliers.com
OUTLOOK
By 2030, there will be 12 more industrial parks in HCMC which
would increase the total number of IPs to 30. The total industrial
area is projected to be 3,000ha. Prices and occupancy rate are
expected to increase steadily.
There is a shortage of skilled and English –capable workers in IPs
in Ho Chi Minh city.
Figure 2: Supply by District
Dist. 9
22%
Cu Chi
23%
Binh Chanh
16%
Binh Tan
10%
Dist. 7
8%
Nha Be
8%
Others
13%
0%
20%
40%
60%
80%
100%
120%
0
50
100
150
200
250
300
Binh Tan Dist. 7 Binh Chanh Thu Duc Nha Be Dist. 2 Cu Chi Dist. 9 Dist. 12 Tan Binh
USD/sqm/month
Average Asking Rent Occupancy Rate
Industrial Park Name District
Launched
Year
GFA
(ha)
Phuoc Hiep Industrial Park Cu Chi 2015 200
Bau Dung Industrial Park Cu Chi 2015 122
Vinh Loc 3 Industrial Park Binh Chanh 2016 210
Le Minh Xuan 2 Industrial Park Binh Chanh 2017 338
Linh Trung 3 Export Processing Zone Binh Chanh 2017 250
Xuan Thoi Thuong Industrial Park Hoc Mon 2019 380

HCMC Market Insights Q42015 (EN)

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