Thi Truong Bds 2008.eng

P R E S S

R E L E A S E

CB Richard Ellis (Vietnam) Co., Ltd. Floor 12A, Vincom City Towers 191 Ba Trieu, Hai Ba Trung Dist Hanoi, Vietnam T 844 220 0220 F 844 220 0210 www.cbrevietnam.com

FOR IMMEDIATE RELEASE – Friday, 15 February 2008 For further information: Marc Townsend General Director CB Richard Ellis (Vietnam) Ltd. Tel: +84 8 824 6125 [email protected]

Patti Joslin Banh Senior Manager CB Richard Ellis (Vietnam) Ltd. Tel: +84 8 824 6125 [email protected]

Linh Nguyen Public Relations Manager CB Richard Ellis (Vietnam) Ltd. Tel: +84 4 220 0220 [email protected]

VIETNAM PROPERTY MARKET REVIEW 2007 AND FEARLESS FORECASTS FOR 2008 Vietnam closes 2007 on a high; the economy is booming, FDI is at record highs, WTO entry has meant many more companies are entering and will enter Vietnam, and people’s wealth and spending power is increasing. The property market for residential is hot and capital values are rising. State Owned Companies are privatizing and demanding quality office space adding further pressure to the market; the office, hotel, retail, industrial and serviced apartment sectors need more quality supply urgently as demand is ever increasing. It’s a fantastic time to invest in the real estate sector with 2008 expected to see continued growth. CB Richard Ellis is now putting forth their market predictions for 2008. Review of real estate market in 2007. The property market has growth outpacing supply leaving unmet demand. As such there is an unavoidable market fever with prices climbing up in the market. Stock market volatility has led to greater amounts of capital flowing into the real estate market as investors turn toward the best returns with the least risk. High economic growth, WTO access, improved living standards, and higher incomes with greater amounts of disposable income have created investment opportunities for both foreign and local investors to meet the huge demand on property and to participate in the overall growth of the property markets.

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3 Outstanding Facts from Vietnam’s Property Market 2007 -

The never-ending lines trying to buy apartments in projects like Vista, Sky Garden , Hoang Anh Gia Lai and others in Ho Chi Minh City mid-last year. This chaos demonstrated the strong demand in the condominium market which continues to support growing prices.

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Decree 84 supported and encouraged foreign investment in the property market by extending the period of land use right certificates in some instances for investors (including foreigners) from 50 to 70 years. More significantly leases that have held on a “long and stable basis” will automatically renew for an additional 50 to 70 years at no extra cost (closest option to perpetuity). It also listed cases in which the Government has the responsibility for land clearance before land is handed over to investors in order to hasten the investing process.

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The drafting of legislature allowing for overseas Vietnamese and foreigners living and working in Vietnam to purchase property freehold (for owner occupation only) in the same manner as local Vietnamese. Thereby relaxing and simplifying a process that currently exists in a modified form.

Global Economic Environment 2008 At the moment, the real story in property will be driven by global economic conditions. As concerns grow about a slow down in the US markets, which began in the residential property markets with the sub-prime mortgage crisis, the US government has stepped in to adjust interest rates and introduce tax breaks in an effort to jump start the market. From the end of 2007, and into 2008, global oil and gold prices have hit record highs with the dollar falling against the Euro and the Pound. How will these global indicators affect Vietnam’s Property market? Historically we know that in such circumstances people diversify risks, shifting capital out of developed markets which face slumps and into new and developing markets preferably those with strong economic growth and stable political landscapes, and less dependent on the US economy. With its unmet property demands in all sectors and appreciation of capital values, Vietnam continues to offer investors growth opportunities not available in other markets.

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General Market Trends - 2008 The real estate market in 2007 saw strong demand in all sectors. continue but the landscape is changing.

In 2008, this will

Increased development in some sectors will

relieve the supply crunch in the future. Important projects are not just taking place in the two main cities of Hanoi and HCM City, but they also extend to other growing cities like Hai Phong, Da Nang, Nha Trang, and Can Tho. Demand is great but buyers are becoming more discriminating in what is being offered. The queues to purchase seen in 2007 for such developments as Capitaland’s Vista, Keppel and Tien Phuoc’s Estelle, Hoang Anh Gia Lai’s developments (several), and Phu My Hung’s developments show that well priced, quality developments are and will remain the top sellers. What may change is the property market in Hanoi, which up to now has not seen such strong reactions to the residential markets. Hanoi is currently under rated but the city’s potential is growing with projects such as Golden Westlake, Hanoi Indochina Plaza, Keangnam, and Hanoi Landmark on the horizon. Office and retail space continues to remain limited throughout the country causing pricing to increase and companies to consider alternative solutions;

decentralization into outer CBD areas and retailer’s to

secure space earlier or securing space en masse. Residential leasing has seen limited serviced apartment stock introduced in 2007 with nothing new in HCMC for 2008 leaving a shortage for those seeking apartments which has helped to drive the Buy-to-Let market (individual investors who purchase units with the express purpose of leasing them back to expats). In Hanoi, two more anticipated Serviced Apartments are scheduled to open in 2008. The hotel resort market suffers with lack of supply growth in the larger cities, as developers turn their attentions to resort locations such as Danang / China Beach, Phu Quoc, and up and comers Long Hai, Ha Long Bay, and Hue. Lastly, the least talked about industrial property market, the workhorse of property which accounts for nearly 60% of FDI! This market will see continued growth as more and more investors, particularly from the US seek to enter Vietnam to take advantage of its young, skilled population and favorable government policies. With gaps in infrastructure, both the central government and provincial governments are seeking to overcome these challenges in 2008.

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On the commercial front, large-scale complexes and multi-functional projects will be developed to the outside of the city center like Tan Binh District (C.T Plaza), District 11 (Saigon Palace) and District 7 (Phu My Hung Area with 10 buildings coming) in Ho Chi Minh City and the areas of Ha Tay and My Dinh in Hanoi with the Keangnam Hanoi Landmark Tower on Pham Hung Street, The Landmark on Lieu Giai Street, and Hanoi Indochina Plaza on Xuan Thuy street. This outward movement will become the general trend as Hanoi moves west and Ho Chi Minh City moves outward in several directions. Such decentralized expansion offers new solutions to those seeking to reduce office rents and find larger floor plates. Although with hundreds of smaller office buildings under construction, both local and international companies may chose space in non-graded locally developed buildings with smaller floor plates helping to relieve some space requirements but which will not solve the overwhelming demand in the short term. As larger stock comes on line, barring construction slippage, the crunch for space will be met but this will not happen in 2008! Meaning continued increase in rents. CB Richard Ellis fearlessly forecasts rents from US$ 65 – 70 / sqm. / month for Grade A buildings for net area exclusive of service charge and VAT. This is high for Vietnam but over a hundred dollars (!) below rents in such landmark buildings as Two IFC in Hong Kong (at US$ 242 / sqm.) and One Raffles Quay in Singapore (at $159 / sqm.). The retail market in Vietnam is fast becoming one of the most attractive markets to foreign investors with its young population and growing disposable income. Famous retail groups like Central from Thailand, Carrefour from France, Takashimiya from Japan, and WalMart from the US have been reviewing the market while Lotte from Korea and Parkson from Malaysia are taking action now with multiple developments throughout Vietnam, Hanoi, HCM City and even Hai Phong. As such, pressure on retail locations is causing rental prices to increase. CB Richard Ellis fearlessly forecasts average rental rates in 2008 for purpose built retail on the ground floors reaching US$ 200 / sqm. / month.

In 2008,

Ho Chi Minh City has only one new development in District 1 opening, Saigon Happiness (due to be re-branded), with all retail outlets opening in outer districts, Tan Binh, District 11, and Saigon Paragon in District 7. Hanoi also finds the market short in supply and high in demand. There are currently no shopping malls in Hanoi; the largest shopping centre has 130,000sqm for retail, seeing rental as high as US$ 120 / sqm. / month,

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achievable as of the end of 2007. CB Richard Ellis expects even higher rental in prime locations in the CBD in 2008. In 2009, following the agreement with the WTO, retailers will be entitled to 100% foreign ownership which will cause even greater pressure on a market that suffers from lack of space. With the growth of the economy, more expatriates enter Vietnam to live which has resulted in high occupancy rates of serviced apartments. Hanoi has two internationally branded buildings bringing quality and name to the market.

Ascott and Frasers, both have

buildings opening in 2008 and will bring a total of 463 apartments to the market at US$ 30 - 45 / sqm.

With no new stock slated to open in Ho Chi Minh City, prices at

established branded units will rise to US$ 40 – 45 / sqm. with premiums for smaller sized units as these are most desirable. Unable to meet this supply, the residential for sale market enters providing units under Buy-to-Let where individual investors purchase units with the intent to lease to expatriates. It is this section of the market that is supplying housing to incoming expats but also helping to fuel sales of residential units. With capital values increasing, and rental rates remaining high, this is becoming a popular method of holding wealth. CB Richard Ellis fearlessly forecasts Hanoi as an under developed market with excellent potential. Some very long awaited projects are scheduled to be handed over to owners this year namely Saigon Pearl. With strong demand for units, driven by fear and greed, many people are eager to purchase and with prices rising buyers are constantly on the look out for quality, well priced developments. This means more than the best prices, it means people are looking at the developer, the history, the development and its layout and services. Several international developers have chosen to enter the market by planning townships rather than just a single building providing additional security in quality and layout.

Any way you look at it the residential market in Vietnam offers excellent

opportunities for savvy investors, from Hanoi to Hai Phong to Danang, Nha Trang, and Ho Chi Minh City. As the government continues to review and amend its policies with Decrees 84 and 153, more developers and investors will be attracted to this market.

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Hotel and resort markets are also attracting big international Hotel groups both as Investors and Developers. Since last year, there have been five 5-star hotel projects in the My Dinh area of Hanoi that have foreign investors. Ho Chi Minh City with 11 five star hotels supplying approximately 3,611 rooms is leading the country’s top-tier hotel sector together with numerous upgrading and new developments underway and on planned, yet none are coming on-line in 2008. Some prominent new five-star hotels that will be open from 2009 comprise of the Intercontinental in Asiana Plaza, Times Square and Saigon Happiness Square (of the second phase). We estimate that Vietnam’s largest city will require approximately 10,000 hotel rooms over the next 4 years across all grades. At the same time, a series of hotel and resort projects are being developed in Da Nang and Nha Trang by international groups.

In Da Nang, according to our research, there

are twenty resort, hotel, golf course, and premier villa projects, which are primarily driven by foreign investors. It is clear that the “Hidden Charm“ of Vietnam has been revealed to the international hotel operators. They are looking at various strategies to enter the market, buying and rebranding, developing, and partnering with locals to develop. Guoman, Hilton, Omni, Sheraton, InterContinental, Sofitel and Novotel in Dalat and Novotel in Phan Thiet all changed hands. Movenpick took over the Omni in HCMC and Guoman in Hanoi and Parkroyal took over the Novotel in Saigon, we see the rebranding of existing hotels. With its urban centers booming and fresh resort locations, Vietnam is an attractive market for the vacation and second home market as its coastal locations namely Nha Trang, Cam Ranh, China Beach, Lang Co, Con Dao and Phu Quoc Islands have the potential to join the infamous world’s paradises of Southeast Asian, Bali and Phuket. Overall, 2007 and 2008 has seen the start of many important projects throughout the country. In 2–3 years, when these projects are completed and put into use, major market changes will occur.

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Investment into the Property Markets – Foreign & Local The wave of foreign investment continues to pour into Vietnam’s real estate market, even with potential global slow downs, the market is attractive enough to maintain its current development albeit it may occur at a slower pace. We are currently working with global investors from East Asia and the Middle East who seek diversification into the growing property markets of Vietnam.

Interest can be found in all sectors, international hotel

groups like Accor and InterContinential, large-scale investors like IFA and Kingdom Hotel Investment, construction and investment groups from Japan and Korea, and even internationally backed investment funds located in Vietnam with strong financial backings like Indochina Capital and VinaCapital.

All have their own property investment plans

which span years into the future. Despite increases in foreign investment, local investors are not intimidated or deterred and are pushing ahead full throttle with their development plans. Some famous local names like FPT, Viglacera, Lilama, Hapro, and Bitexco have recently set up companies to focus on investing and developing real estate breaking from the past, where companies held real estate often conflicting with traditional business operations, and spinning off new ventures in line with international business styles. These developers already have ownership of land in good locations and the reputation, experience in the market (not always property experience), relationship networks, and expertise in Vietnamese working style and expenditure culture.

CB Richard Ellis has developed successful partnerships with such

groups and is implementing many new projects such as Vincom City Towers, Viglacera Tower, CEO Tower, Kinh Do Tower, Viet Tower, and Opera Business Centre. As this style of business becomes more mainstream, we expect to see the strong growth of local investors and the birth of new developers allowing for future partnerships which will further uplift and strengthen the property market in Vietnam. Challenges in the Property Market •

Limited land in the city centre, high prices for land

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Infrastructure problems, transportation, project approach

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Procedure problems for foreign investors

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Capital problems for local investors

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Challenges as such apply across the board for all participants in the property market, foreign or local, to varying degrees.

It is very important for the Government to have

comprehensive, transparent policies and plans for dealing with such obstacles which will help all investors to develop the property market leading to beneficial growth in other areas. For example, HCMC’s peoples committee has recently published the list of 20 “golden sites” in the city center and brought this land to public tender. Implementing policies that bring opportunities equally for all foreign and local investors have a positive effect on the state of the market. CB Richard Ellis Vietnam’s activities in 2007 and plan for the future. Our revenue for 2007 doubled from that of 2006. Further raising the bar, our goal for 2008 is to reach 2.2 times 2007 revenue.

Paralleled with revenue growth is the

development of staff and expansion of activities in Hanoi and HCM city. CB Richard Ellis has increased over 50% in size with staff reaching upwards of 170 and with plans to expand beyond 200 by Q3 2008 to support all activities. We are also in the process of officially expanding into other markets, moving from simple project offices into full fledged licensed locations in such locations as Hai Phong, Da Nang, Nha Trang and Can Tho. Not satisfied to just expand in scale, we are also developing new business lines which will be introduced throughout the year. The first ‘launch’ of such will take place in February as we officially introduce our brokerage line offering the sales of homes on the secondary market allowing owners to sell their homes through an international broker, CB Richard Ellis and our professional standards and services. As we grow, we help Vietnam grow and are proud to be named one of the top 40 Best Performing Foreign Invested companies in Vietnam by Saigon Times. CB Richard Ellis is confident about Vietnam’s growth and our ability to grow with the market providing new services for buyers, sellers, and investors and expanded service areas into Danang, Hai Phong, Nha Trang so as to ensure our position as the leading Property Services Provider in the Vietnam, and the world.

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About CB Richard Ellis CB Richard Ellis Group, Inc. (NYSE:CBG), an S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2006 revenue). With over 24,000 * employees, the Company serves real estate owners, investors and occupiers through more than 300 offices worldwide (excluding affiliate and partner offices). CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. In 2007, CB Richard Ellis was named one of the 50 “best in class” companies by BusinessWeek, and one of the 100 fastest growing companies by Fortune. Please visit our Web site at www.cbre.com. * Excludes 4000 affiliates