Click here
 

Cushman & Wakefield Research

When Published, Singapore
City and market analytical reports covering emerging markets in the Asia Pacific region by global real estate solution provider Cushman & Wakefield
 

MarketBeat Ho Chi Minh City Serviced Apartment Report - 3Q 2011

Nov 02, 2011
  • Print

MARKETBEAT
ENTER MARKET APARTMENT REPORT HCMC SERVICEDNAME OFFICEREPORT
A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION

3Q11
ECONOMIC INDICATORS 2010
GDP Growth CPI Growth Unemployment

ECONOMY
Vietnam GDP in the first nine months of 2011 increased 5.67% when compared to the same period last year. Early 2011, the Government set GDP growth target at 7 to 7.5% for Vietnam. However, this indicator has been adjusted down twice to 6.5% and 6% due to the difficulties of the economy. The economy still struggles with high inflation. CPI in September increased 22.42% over the same period last year and the index for the first nine months increased 18.16% year-on-year. September, FDI in Vietnam reached around US$9.9 billion which equates to 72.5% in comparison with the same period of 2010. FDI capital disbursed in nine months was estimated at US$8.2 billion, up 1.9% year-on-year. Cash deposit interest rates at banks since September 2011 are not exceed 14% per annum, while lending interest rates fluctuate around 17% - 19% per annum. However, mortgage consumers and developers face many difficulties in accessing loans from banks due to the credit growth restrictions and Vietnams difficult investment regime.
2011F 6% 18.8% 5% 2012F 6.3% 12.1% 5%

6.78% 9.19% 2.88%

Source: GSO

MARKET FORECAST ABSORPTION: gradually recover. Absorption will

CONSTRUCTION: In 2011, there will be approximately 650 units of new supply in the city. OVERALL RENTAL: Rental prices will be stable through to the end of the year.

OVERVIEW
The Ho Chi Minh City Serviced Apartment market has shown stable growth and positive market signals over the last quarter. Occupancy of Grade A and B projects increased by 3% compared with the second quarter of 2011. Grade A occupancy grew from 91% in 2Q 2011 to 95% in 3Q 2011 and Grade B from 85% to 88%. In terms of rental levels, both Grade A and Grade B showed no significant change. Grade A remained at US$32/sqm/mth and Grade B remained at US$27/sqm/mth. However, actual executed transactions are eventuate to record a 5% decrease overall and this will be monitored in Q4. During this quarter there were 72 units added to the existing supply from Saigon Mansion in District 3.
35 30 25 20 15 10

GRADE A&B OVERALL RENTAL VS. OCCUPANCY RATES
100% 90% 80% 70% 60% 50%
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11

OUTLOOK
In total there is an additional supply of 650 units expected to be launched into the market during 2011. This will increase total supply by 17% in the city, presenting possible downward pressure on the stability of this market sector. The Vincom Centre has now confirmed the release of at least 90 apartments that are fully serviced along with a further 250 units released at The Vista towards the end of the year. The fact that Grade A occupancy rates have bounced back demonstrates there is still an appetite for these products. The trend of tenants relocating from existing Grade C to newly completed Grade B developments will continue into Q4 2011 as the product quality in this Grade improves and provides an attractive alternative for tenants who desire better value for money.
HCMC SERVICEDMARKET NAME OFFICE 3Q11 ENTER APARTMENT REPORT REPORT 3Q11 1

Grade A- Rent Grade A- Occupancy

Grade B- Rent Grade B- Occupancy

ENTER MARKET NAME OFFICE REPORT 3Q10
MARKET RATES
LOCATION GRADE A B OCCUPANCY 91% 85% ASKING RENTS $29-$34 $25- $29 ACTUAL RENTS $28-$32 $23- $26

HCMC SERVICED APARTMENT REPORT 3Q2011

CBD/CBD FRINGE

MARKET HIGHLIGHTS
BUILDING INTERCONTINENTAL ASIANA SAIGON RESIDENCES MICRO MARKET TOTAL UNITS CORE CBD 260 TYPE 5-star serviced apartments COMMENTS Maintained average occupancy rate .

MARKET PIPELINE
BUILDING VINCOM CENTER, DISTRICT 1 THE VISTA MICRO MARKET CORE CBD DISTRICT 2 TOTAL UNITS 120 250 TYPE Serviced Apartments Serviced Apartments COMMENTS Launching October 2012 To be launched Q4 2011

HO CHI MINH CITY SERVICED APARTMENT SUPPLY

5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1995 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (est) 2012 (est)
www.cushmanwakefield.com/knowledge

Additional annual completed units

Accumulated completed units

The serviced apartment sector has in general over the previous 3 quarters shown stable occupancy and rental rates. The GFC and Japanese tsunami has had an underlying affect on rental budgets and although rents are expected to stay stable there will be pressure on building managers to maintain quality of accommodation and service.
FOR INDUSTRY-LEADING INTELLIGENCE TO SUPPORT YOUR REAL ESTATE AND BUSINESS DECISIONS, GO TO CUSHMAN & WAKEFIELD'S KNOWLEDGE CENTER AT:

*Market terms & definitions based on BOMA and NAIOP standards. This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ę2011 Cushman & Wakefield, Inc. All rights reserved. Please consider your environmental responsibility before printing this report.

Cushman & Wakefield of California, Inc. 601 South Figueroa Street, 47th Floor Lic. # 00616335 Los Angeles, California 90017 (213) 955-5100

HCMC RESIDENTIAL LEASING REPORT 3Q11 2