CBRE HCMC Office Services
2010 Tenants Evening Part I:
2010Are we in for a happy ending?
Tuesday 26th January 2010
Presented by:
Mr. Chris Currie
Associate Director
Office Services
Market Overview Q1 2010
2009 supply has filled up quicker than previously thought
Signs of companies revising 2010 headcounts upwards
Vietnamese tenants financially strong and less risk averse
CBRE Monthly enquiries are increasing
Rents appear to be bottoming out after 2009 falls
Pushback from some Landlords
Sense of realism - Asking vs. Achievable now around 10%
CBRE Absorption level of 154,000sm in 2009
Cluster of deals being done ~ US$30++ sm/month
CB Richard Ellis | Page 2
Recent headlines Asia strong
CB Richard Ellis | Page 3
Indices 12 months
VN Index
497.90
26 January
2010
58%
Source: HSC Securities
S&P
32%
Source: FT.com
CB Richard Ellis | Page 4
Commodities YTD
Vietnam Gold
40%
Source: SJC
NYMEX Crude
28%
Source: FT.com
CB Richard Ellis | Page 5
The devaluing dong The hidden cost
Vietnam Will Probably Devalue Dong 4% by Year-end
Tamara Henderson, Australia & New Zealand Banking Group Ltd September ,
2009
Currency Caps between
10 15%
Advance Rent Payments
at fixed exchange rates
VND denominated lease
agreements
Date
Exchange
USD
Effective
VND
%
increase
June 1 2009
VND 17,785.00
$25.00
$25.00
VND 444,625.00
January 26 2010
VND 18,469.00
$25.00
$25.96
VND 461,725.00
3.84%
December 1 2010
VND 20,000.00
$25.00
$28.11
VND 500,000.00
12.45%
For indicative purposes only forecast for 2009 and 2010
CB Richard Ellis | Page 6
Asian Office Market Rent Cycle, Q4 2009
As of Q4 2009
Rental Growth
Accelerating
Rental Growth
Slowing
Jakarta
Taipei
Seoul
J
Rents
Bottoming
Out
Rents
Falling
T
S
Bangkok
Kuala
Lumpur
K
M Manila
G Guangzhou
Tokyo
Singapore
Hanoi
Beijing B
Mumbai
Shang
S
hai
HCM City H
M
H
Hong Kong
New Delhi N
Bangalore
NB. Markets do not necessarily move along the curve in the same direction or at the same speed.
The rental cycle is intended to display the trend in net effective rents
CB Richard Ellis | Page 7
Major Buildings
HTMC 2H 2011
Saigon Trade Center
Saigon Tower
Centec
Kumho Asiana Plaza
CT Group Building 1H 2011
Diamond Plaza
Metropolitan
Existing Future
Le Meridian 1H 2011
Vincom Tower 2H 2010
Me Linh Point
SJC Tower - 2012
Times Square 2H 2011
Saigon Centre
Sun Wah
Bitexco Financial Tower 2H 2010
A&B Tower
CB Richard Ellis | Page 8
M&C Tower 2H 2011
Vincom Center Office Tower
Fitting Out Q1 2010
Commitment 20%
Curtain Wall going up
CB Richard Ellis | Page 9
Bao Viet
Fitting Out Q1 2010
Commitment - 40% (Landlord
Occupies)
Finalizing exterior faade,
windows going-in
CB Richard Ellis | Page 10
Bitexco Financial Tower
Fitting Out April 2010
Commitment - 18%
Curtain wall in-line with
construction, up to the 45th
level (out of 68 Level)
CB Richard Ellis | Page 11
A&B Tower
Fitting Out Q2 2010
Commitment 47%
Curtain Wall nearly
completed
CB Richard Ellis | Page 12
HCMC Power Company
Fitting Out Q2 2010
Commitment - 30%
(Landlord Occupies)
Curtain Wall going up
CB Richard Ellis | Page 13
Occupancy Rates & Vacant Space in Major Buildings
Occupancy
Available Net
Vacant Space*
Kumho
65%
9,000
Metropolitan
98%
1,000 - GFA
Sun Wah Tower
98%
1,000 - GFA
Saigon Tower
89%
1,700 - GFA
Diamond Plaza
100%
Saigon Centre
95%
500 - SGFA
CENTEC
85%
4,100
Me Linh Point Tower
98%
400
Saigon Trade Center
85%
5,600
Sailing Tower
100%
Royal Centre
80%
2,300
CentrePoint
60%
11,500
Approximate TOTAL
37,100sm
Estimate only according to information obtained from landlords and agents
CB Richard Ellis | Page 14
* Unless otherwise stated
2010 Major New Supply
Commitment
Available Net
Vacant Space*
Vincom Center
20%
51,600
A&B Tower
47%
9,000
HCMC Power Company
30%(LL Occupies)
13,700
Bao Viet Building
40%(LL Occupies)
7,000
The Flemington D11
0%
21,806
Bitexco Financial Tower
18%
30,922
Approximate new space
134,028sm
Plus current vacant space
37,100sm
Approximate TOTAL space available end 2010
170,000sm**
Estimate only according to information obtained from landlords and agents
Unless otherwise stated
**Approx NET square metres
CB Richard Ellis | Page 15
Demand Which areas of the market
Financials (Banks) / Insurance /
Securities / Education / Oil & Gas / Software /
Call Centre's
CB Richard Ellis | Page 16
HCMC Net Absorption of Office Space
Net Take
of
HCMC
Net Up
Absorption
Office Space (all grades)
156,000
G FA (s q m)
154,000
152,000
150,000
148,000
146,000
144,000
2007
2008
2009
Source: CBRE (Vietnam)
CB Richard Ellis | Page 17
Regional Net Absorption
CB Richard Ellis | Page 18
C u r r e n t A s k i n g R e n ts (e x c l . S e r v i c e
C h a rg e a n d V A T )
Current Asking Rents
$75
$70
$65
$60
$55
$50
$45
$40
$35
$30
$25
$20
$15
Kumho
Metropolitan
Sun Wah
Saigon Centre
Saigon Tower
Diamond Plaza
Me Linh Point
CENTEC
Saigon Trade Center
Sailing Tower
Q1 2009
Kumho
Metropolitan
Kumho
Metropolitan
Sun Wah Tower
Saigon Centre
Saigon Tower
Diamond Plaza
Me Linh Point
CENTEC
Saigon Trade Center
Sailing Tower
CENTEC
Saigon Trade Center
Sailing Tower
Apr-09
Jun-09
Sun Wah Tower
Saigon Centre
Saigon Tower
Diamond Plaza
Me Linh Point
Kumho
Metropolitan
Vincom Center
Sun Wah Tower
Saigon Centre
Saigon Tower
Diamond Plaza
Me Linh Point
Bao Viet
CENTEC
A&B Tower
Saigon Trade Center
CentrePoint
Jan-10
Source: CBRE (Vietnam)
*Buildings are not listed in any particular order within rental ranges.
CB Richard Ellis | Page 19
GRADE B BUILDING CLOSING RENTS (NET AREA)
Jun
2002
Apr
2005
Jul
2005
Dec
2006
Dec
2007
May
2008
Jan
2009
Jan
2010
Doubled and halved
Low Zone
14
16
18
22
48
50
42
27
Mid zone
17
20
23
26
49
52
44
31
High Zone 20.5
24
28
28
50
54
46
32
Notes: Rents excl SC & VAT
CB Richard Ellis | Page 20
Tenants View of the Office Market
Strengths
Weaknesses
Increased Supply = Increased
Options
Better Quality
Rents are down
Flexibility Landlords
Landlords are moving quickly
Parking
Quality of Amenities
Infrastructure Access
Efficiencies
Opportunities
Threats
Consolidation
zLonger term leases / strata title
zUpgrade in quality / grade
zNewer, more efficient space
z
CB Richard Ellis | Page 21
Decreased Landlord leverage
zRents increasing
zDemand outstripping supply
zDelays in completion
z
Summary
If demand exceeds 2009 levels, rents may pick up
in 2011
Vietnamese tenants will continue to dominate the
market
More long term leases / strata titled office space
Occupancy levels critical to leverage
Realism takes hold
Happy Endingyou may not get it your own way!
CB Richard Ellis | Page 22
Quarterly Reports for Ho Chi Minh City and Hanoi
Covers:
National and City
Economic
Overview
Office
Retail
Hotel
Residential for Sale
Investment
Serviced
Apartments
[email protected] Construction Costs
Available for each city, in English or
Vietnamese
CB Richard Ellis | Page 23
www.cbrevietnam.com
Over 300 markets in more than 50 countries
49
Thank You
33
We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no
guarantee, warranty or representation about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other
conditions, prior sale, lease or financing or withdrawal without notice. We include projections, opinions, assumptions or estimates for
example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct
your own investigation of the property and transaction.
CB Richard Ellis | Page 24
