QUARTERLY MARKET REVIEW - AusCham Vietnam...QUARTERLY MARKET REVIEW HANOI Q4/2016 QUARTERLY MARKET...
Transcript of QUARTERLY MARKET REVIEW - AusCham Vietnam...QUARTERLY MARKET REVIEW HANOI Q4/2016 QUARTERLY MARKET...
QUARTERLY MARKET REVIEWHANOI Q4/2016
QUARTERLY MARKET REVIEWHCMC Q1/2017
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$1.9Bil
In Q1’17
~5%Highest in 3 years
~26,480Increased 11% YoY
$40.4bil
growth 6% YoY
5.1%(0.4) ppts
}
11%1ppt YoY
Exchange rate
22,8004% YoY
~3.2mil
Increased 29% YoY
ECONOMIC OVERVIEW
GDP: lowest Q1 rate in 3 years Retail Sales: lowest Q1 real growth in 3 years Exchange rate
FDI: impressive growth of registered capitalTrade deficit CPI
International visitors Mortgage rate
73% YoYregistered
capital
3% YoYFDI
disbursement
Newly established businesses
3.7%Real Estate
Korea48% contribution
Supply
Opened: 1 shopping centre and 3 supermarkets
One supermarket closed.
Total stock: ~1.1 million m2, stable QoQ, 10% YoY
Market performance
Avg. occupancy: 94%, stable QoQ, YoY
Avg. gross rent: US$53/m2/mth, 1% QoQ, stable YoY
• Shopping centre: US$51/m2/mth, 2% QoQ, 1% YoY
• Department store: US$63/m2/mth, 2% QoQ, 7% YoY
• Retail podium: US$37/m2/mth, 1% QoQ, 7% YoY
Outlook
2017: ~170,000 m2
2018-2020: ~610,000 m2
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RETAIL
Crescent MallSaigon CentreCrescent MallSaigon CentreSaigon Centre
Supply
1 new Grade C project (~4,400 m2)
2 Grade C buildings closed (~7,300 m2)
Total stock: ~1.6 million m2, stable QoQ, 1% YoY
Market performance
Avg. occupancy: 97%, stable QoQ, 2 ppts YoY
Avg. gross rent:
• Grade A: US$49/m2/mth, 2% QoQ, 7% YoY
• Grade B: US$28/m2/mth, stable QoQ and YoY
• Grade C: US$19/m2/mth, stable QoQ, 2% YoY
Office Index: 87, 1 ppt QoQ, 3 ppts YoY
Outlook
9M/2017: ~123,000 m2
Q2/2017 – 2019: ~390,000 m2
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OFFICE
Saigon Centre
Supply
One new Grade C project (65 units)
Two existing Grade B projects adjusted supply
Total stock: >4,600 units, 2% QoQ, 6% YoY
Grade A (7), Grade B (25) and Grade C (52)
Market performance
Avg. occupancy: 87%, stable QoQ, 5 ppts YoY
Avg. gross rent:
• Grade A: US$32/m2/mth, stable QoQ, 4% YoY
• Grade B: US$26/m2/mth, 1% QoQ, 3% YoY
• Grade C: US$17/m2/mth, 1% QoQ, 7% YoY
Outlook
9M/2017: >540 units
Q2/2017-2019: ~ 1,800 units
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SERVICED APARTMENT
Ibis Saigon Airport
Supply
Opening: one 3-star and one 4-star (303 rooms)
Closure of one 3-star (50 rooms)
Total stock: ~16,200 units, 2% QoQ, 8% YoY
5-star (20), 4-star (24), 3-star (87)
Market performance
Average occupancy: 68%, 1ppt QoQ, stable YoY
Average room rate by grade:
• 5-star: US$121/room/night, 3% QoQ and YoY
• 4-star: US$69/room/night, stable QoQ and YoY
• 3-star: US$47/room/night, stable QoQ, 7% YoY
Outlook
Q2/2017-2018: ~2,000 rooms
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HOTEL
Central Palace Saigon
Supply
Twelve new projects and next phase of one active project
(~5,200 units)
Primary stock: ~42,500 units, 6% QoQ, 14% YoY
Secondary stock: ~145,000 units, 6% QoQ
Market performance
Transaction volume: ~8,800 units, 13% QoQ, 40%YoY
Absorption rate: 21% 1 ppt QoQ, 4 ppts YoY
Transaction volume by grade:
• Grade A: 50% QoQ, 10% YoY
• Grade B: 35% QoQ, 1% YoY
• Grade C: 10% QoQ, 78% YoY
Apartment Index: 92 unchanged QoQ, 1 points YoY
Outlook
Q2/2017-2019: 62,200 units
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APARTMENT
Serenity
Mid-Town
Villas & townhouses
7 new projects (~590 dwellings)
Primary stock: ~2,600 units, 14% QoQ, 25% YoY
Absorption rate: 34%, 1 ppt QoQ, 12 ppts YoY
Transaction volume: ~880 units, 11% QoQ, 94% YoY
Land plot
Six new projects plus launch of 1 active project
(~710 plots)
Primary stock: ~2,100 plots, 13% QoQ, 53% YoY
Absorption rate: 44%, 1 ppt QoQ, 17 ppts YoY
Transaction volume: ~910 plots, 12% QoQ, 23% YoY
Outlook
Q2/2017-2019: ~ 14,100 dwellings/plots
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VILLA | TOWNHOUSE
Merita
Valora Kikyo
QUARTERLY MARKET REVIEWHANOI Q4/2016
TOURISM AND HOSPITALITY
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Competitiveness index:
• Ranked 6th in ASEAN
• Government spending prioritization: marketing
campaigns and National branding
• Less international openness: Visa exemption
policy, VN (23) vs. Thailand (58)
• Air transport & Tourist service infrastructure
International arrivals:
• Ranked 5th in ASEAN
• Strong potential: 26% growth0
1
2
3
4
5
6
7
Business
enviroment
Safety &
security
Health &
hygiene
Human
resources
ICT readiness
Prioritization of
tourism
International
openess
Price
competitiveness
Environmental
sustainability
Air transport
Ground & port
infrastructure
Tourist service
infrastructure
Natural
resources
Cultural
resources &
business travel
ASEAN Vietnam
Source: Weforum, 2016
Tourism competitiveness, 2015
0%
10%
20%
30%
0
5
10
15
20
25
30
35
Thailand Malaysia Singapore Indonesia Viet Nam Phillipines Cambodia
Number of arrivals (mil)-LHS Tourism growth (%)-RHS
International arrivals, 2016
Source: Statistics agencies of surveyed countries
VIET NAM COMPETITIVENESS
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China:
• 1st source market: 2.7 mil arrivals
• Middle class high affordable demand
• Strong fluctuating growth (50% YoY)
Russia:
• Ruble depreciation driving destination choice
• Stable growth, nearly 30% pa
Domestic tourism:
• Booming demand: affluent class to double;
middle class increase by half by 2020
• Low-cost airlines growth
0%
20%
40%
60%
0
1
2
3
East Asia
(other than
China)
China Europe Asean Russia Others
Tourist (mil)-LHS Growth rate (%)-RHS
Source markets, 2016
Source: VNAT
0
10
20
30
40
50
60
70
2011 2012 2013 2014 2015 2016
Airline passengers Domestic trips
Airline capacity and domestic (million trips)
Source: GSO and VNAT
SOURCE MARKETS
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HCMC & HN: highest arrivals
• Economic hubs: MICE and business travelers
• Gateways to Sapa, Ha Long Bay, Mekong
delta
Coastal cities: outperforming growth
• International airports
• Nha Trang: tops supply and performance
• Da Nang leads arrivals volume
• Phu Quoc: Early-development stage (40%
YoY)
• LOS: Nha Trang 3.5 days vs Da Nang 2.8 days
vs Phu Quoc 2.6 days
0%
10%
20%
30%
40%
50%
60%
0
1
2
3
4
5
6
HCMC Ha Noi Da Nang Nha Trang Phu Quoc
International arrival (million trips)-LHS Growth rate (%)-RHS
Source: Provincial tourism departments
International arrivals to major cities, 2016
50%
60%
70%
80%
90%
0
5,000
10,000
15,000
20,000
HCMC Ha Noi Da Nang Nha Trang Phu Quoc
Hotel supply (rooms)-LHS Occupancy (%)-RHS
Hotel market performance, 2016
Source: Savills Research & Consultancy
SUB-MARKETS
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Airports under pressure:
• HCMC 130%, Nha Trang 320%, Da
Nang 113%
Government efforts:
• TSN airport: upgrading 25 to 38 mill
pax/year
• Da Nang airport: an additional 4-6 mill
pax/year
• Cam Ranh airport: 1.5 to 2.5 mill
pax/year.
US$5.6 bill required to 2020
• Government budget?
• HCMC, Da Nang and Nha Trang supply
increases 30% pa in three years
• Hospitality development evaluation?
0%
50%
100%
150%
200%
250%
300%
350%
0
5
10
15
20
25
30
35
HCMC Ha Noi Da Nang Nha Trang Phu Quoc
Airport capacity (million passengers)-LHS Operating capacity (%)-RHS
Airport capacity
Source: ACV and other sources
AIRPORT CAPACITY
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Vietnam has come a long way in only 7 years
Then (2010) Now (2016)
5 MillionInternational tourist arrivals
10 MillionInternational tourist arrivals
28 MillionDomestic tourist arrivals
62 MillionDomestic tourist arrivals
35.5 Million passengersTotal capacity of 5 main airports
60 Million passengersTotal capacity of the same 5 main airports
40 International direct flight routesOperated by 3 domestic carriers
70 International direct flight routesOperated by the same 3 domestic carriers
5 International airportsHCMC Hanoi Danang
Cam Ranh Hai Phong
9 International airportsHCMC Hanoi Danang Hue Phu Quoc
Cam Ranh Hai Phong Can Tho Vinh
Restrictive visa policy- Visa exemptions: 15 countries
- Onerous and expensive visa application
Relaxed visa policy- Visa exemptions: 22 countries
- e-visa system: 40 countries eligible
- Visa fee reduction of 40% compared to 2010
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Hospitality Development – Proceed with caution
0
5,000
10,000
15,000
20,000
25,000
2015 2016 2017 2018 2019
Su
pp
ly (
Ro
om
s)
Nha Trang & Cam Ranh Hotel & Resort Supply
(Midscale to Luxury Segment)
Existing Supply Future Supply
-20
-10
0
10
20
30
40
50
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
Dec-
14
Jan
-15
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec-
15
Gro
wth
Rate
y-o
-y (
%)
International Tourist Arrivals Growth Rate (Month on Month)
The Hospitality Market is Volatile
Demand & Supply Dynamics: Very strong supply growth but is demand keeping up?
Source: Vietnam Tourism Department
Arrivals CAGR ▲15%(2013 – 2016)
0
5,000
10,000
15,000
20,000
25,000
2015 2016 2017 2018 2019
Su
pp
ly (
Ro
om
s)
Da Nang Hotel & Resort Supply
(Midscale to Luxury Segment)
Existing Supply Future Supply
18%
14%
42%
36%
16%
57%
0
5,000
10,000
15,000
20,000
25,000
2015 2016 2017 2018 2019
Su
pp
ly (
Ro
om
s)
Phu Quoc Hotel & Resort Supply
(Midscale to Luxury Segment)
Existing Supply Future Supply
65%15%
7%
Arrivals CAGR ▲21%(2013 – 2016)
Arrivals CAGR ▲33%(2013 – 2016)
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Hospitality Development – Proceed with caution
(*) Coastal Destinations include: Da Nang, Khanh Hoa, Phu Quoc, Ho Tram, Ha Long & Quang Nam.
56%
44%
Second Home vs Hotel and Resort Future Supply
Coastal Destinations (2017 - 2019)
Second Home Hotel & Resort
0
5,000
10,000
15,000
20,000
25,000
30,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Second Home Supply in Coastal Destinations
(Launched vs Completed Units)
Accumulated Launched Units Accumulated Completed Units
65%17%
3%
15%
Second Home Supply
Coastal Destinations by Type (Forecast 2019)
Condotel Second Home Condominium
Branded Villa Non-Branded Villa
17
Hospitality Development – Proceed with caution
-5
0
5
10
15
20
25
1 2 3 4 5 6 7 8 9 10
-10
-5
0
5
10
15
20
1 2 3 4 5 6 7 8 9 10
Lo
ss
The false perception many condotel developers have of project GOP
Typical Guaranteed Returns:
• Vietnam: 10% for 5 - 10 years
• Phuket: 7% for 3 - 5 years
• Bali: 7% for 2 - 3 years
Operational Year
Beak even with guarantee return
The likely reality of project Gross Operational Profit (GOP)
Beak even0
P
rofi
t
Beak even with guarantee return
Beak even
Operational Year
Lo
ss0
P
rofi
t
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Everyone wants a piece of Vietnam Hospitality
Notable Hotel M&A Transactions in 2016
Deal S
ize
2010 2016
30 Branded Properties 57 Branded Properties
(27 additional properties with
many new brands)
Hotel Operators Investors
World Leaders Kong
US$ 1
00M
US$ 7
4.9
M
US$ 4
9M
US$ 4
8.7
M
US$ 4
6.7
M