What do we need to get right
next time for a sustainable
property market in Vietnam?
Presented by:
Marc Townsend
Managing Director
Monday 21st September 2009
CB RICHARD ELLIS VIETNAM
2Where are we going? What have we learned? |September 2009
Risks
-Inflation
-Infrastructure
-Transparency
-The past was too good to give up
-NPLs
-Valuations
-Capital gains tax issues on the transfer of property
-Speculation is so easy
-Land clearance and tender and auction process
CB RICHARD ELLIS VIETNAM
3Where are we going? What have we learned? |September 2009
Asia economic outlook - 2009
Clouds over growth but
positive prospect
Clouds over growth and
dimmer prospect
Recent deterioration and
uncertain outlook
Continued deterioration
GDP growth
CHINA
SOUTH
KOREA
JAPAN
TAIWAN
HONG
KONG
PHILLIPPINES
VIETNAM
THAILAND
INDIA
MALAYSIA
SINGAPORE INDONESIA
6.5%
3.5%
-3.1%
1.4%
-2.5%
-6.5% 2.8%
-5.6%
-2.5%
-3.1%
-5.3%
6.0%
Source: IMA (April 2009)
CB RICHARD ELLIS VIETNAM
4Where are we going? What have we learned? |September 2009
Asia economic outlook - 2010
Clouds over growth but
positive prospect
Clouds over growth and
dimmer prospect
Recent deterioration and
uncertain outlook
Continued deterioration
GDP growth
Source: IMA (April 2009)
CHINA
SOUTH
KOREA
JAPAN
TAIWAN
HONG
KONG
PHILLIPPINES
VIETNAM
THAILAND
INDIA
MALAYSIA
SINGAPORE INDONESIA
7.5%
4.9%
2.9%
3.0%
2.1%
3.0% 4.5%
-0.5%
3.6%
3.2%
-1.0%
7.0%
CB RICHARD ELLIS VIETNAM
5Where are we going? What have we learned? |September 2009
Linked Markets
Real estate capital values trend closely with domestic gold and stock prices
VN Index
Closed at
556.75
15 Sept 2009
130%
Source: HSC Securities
Vietnam Gold
15%
Source: Giavang
CB RICHARD ELLIS VIETNAM
6Where are we going? What have we learned? |September 2009
Office Rent Cycle
CB RICHARD ELLIS VIETNAM
7Where are we going? What have we learned? |September 2009
Complexity of deals
Investment Sales change shape
Foreigners to Locals
Locals to Foreigners
Sale of Shares of single asset companies
En-bloc Sales during construction
Sale of the Retail Podium of mixed-use developments
Sale of 1 tower (out of several)
MORE assets have changed hands but transactions are below the radar screen
More inside deals
Investors have become more particular with their requests and have tighter budgets
No A.A. in Vietnam
CB RICHARD ELLIS VIETNAM
8Where are we going? What have we learned? |September 2009
Increased competition
Pressure on owners, land lords and investors
Little differentiation of design, style and the theme
Commoditization of small office buildings
Stand out in the crowd
Small tenants still looking for space
Pay fees
CB RICHARD ELLIS VIETNAM
9Where are we going? What have we learned? |September 2009
Yields
Yield compression as rents fall
Tighter expected spreads
Longer paybacks
Developers will need creativity to create more value but compared to
Singapore, Hong Kong and China, they are still high
CB RICHARD ELLIS VIETNAM
10 Where are we going? What have we learned? |September 2009
Adding Value
Building Design
Refurbishment options
Example of retail developers in Causeway Bay (HK)
and Ginza (Tokyo)