QUARTERLY MARKET REVIEW HANOI Q4/216 QUARTERLY MARKET REVIEW HCMC Q1/217
ECONOMIC OVERVIEW Exchange rate GDP: lowest Q1 rate in 3 years Retail Sales: lowest Q1 real growth in 3 years Exchange rate 5.1% (.4) ppts 3.7% Real Estate $4.4bil growth 6% YoY 22,8 4% YoY Trade deficit CPI FDI: impressive growth of registered capital $1.9Bil In Q1 17 ~5% Highest in 3 years 73% YoY registered capital Korea 48% contribution 3% YoY FDI disbursement International visitors } Mortgage rate Newly established businesses ~3.2mil 11% ~26,48 Increased 29% YoY 1ppt YoY Increased 11% YoY 2
RETAIL Supply Opened: 1 shopping centre and 3 supermarkets One supermarket closed. Total stock: ~1.1 million m 2, stable QoQ, 1% YoY Saigon Centre Crescent Saigon Centre Mall Market performance Avg. occupancy: 94%, stable QoQ, YoY Avg. gross rent: US$53/m 2 /mth, 1% QoQ, stable YoY Shopping centre: US$51/m 2 /mth, 2% QoQ, 1% YoY Department store: US$63/m 2 /mth, 2% QoQ, 7% YoY Retail podium: US$37/m 2 /mth, 1% QoQ, 7% YoY Outlook 217: ~17, m 2 218-22: ~61, m 2 3
OFFICE Supply 1 new Grade C project (~4,4 m 2 ) 2 Grade C buildings closed (~7,3 m 2 ) Total stock: ~1.6 million m 2, stable QoQ, 1% YoY Saigon Centre Market performance Avg. occupancy: 97%, stable QoQ, 2 ppts YoY Avg. gross rent: Grade A: US$49/m 2 /mth, 2% QoQ, 7% YoY Grade B: US$28/m 2 /mth, stable QoQ and YoY Grade C: US$19/m 2 /mth, stable QoQ, 2% YoY Office Index: 87, 1 ppt QoQ, 3 ppts YoY Outlook 9M/217: ~123, m 2 Q2/217 219: ~39, m 2 4
SERVICED APARTMENT Supply One new Grade C project (65 units) Two existing Grade B projects adjusted supply Total stock: >4,6 units, 2% QoQ, 6% YoY Grade A (7), Grade B (25) and Grade C (52) Ibis Saigon Airport Market performance Avg. occupancy: 87%, stable QoQ, 5 ppts YoY Avg. gross rent: Grade A: US$32/m 2 /mth, stable QoQ, 4% YoY Grade B: US$26/m 2 /mth, 1% QoQ, 3% YoY Grade C: US$17/m 2 /mth, 1% QoQ, 7% YoY Outlook 9M/217: >54 units Q2/217-219: ~ 1,8 units 5
HOTEL Supply Opening: one 3-star and one 4-star (33 rooms) Closure of one 3-star (5 rooms) Total stock: ~16,2 units, 2% QoQ, 8% YoY 5-star (2), 4-star (24), 3-star (87) Central Palace Saigon 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 Q2/217-218: ~2, rooms 6
APARTMENT Supply Twelve new projects and next phase of one active project (~5,2 units) Primary stock: ~42,5 units, 6% QoQ, 14% YoY Secondary stock: ~145, units, 6% QoQ Market performance Transaction volume: ~8,8 units, 13% QoQ, 4%YoY Absorption rate: 21% 1 ppt QoQ, 4 ppts YoY Transaction volume by grade: Grade A: 5% QoQ, 1% YoY Serenity Mid-Town Grade B: 35% QoQ, 1% YoY Grade C: 1% QoQ, 78% YoY Apartment Index: 92 unchanged QoQ, 1 points YoY Outlook Q2/217-219: 62,2 units 7
VILLA TOWNHOUSE Villas & townhouses 7 new projects (~59 dwellings) Primary stock: ~2,6 units, 14% QoQ, 25% YoY Absorption rate: 34%, 1 ppt QoQ, 12 ppts YoY Transaction volume: ~88 units, 11% QoQ, 94% YoY Merita Land plot Six new projects plus launch of 1 active project (~71 plots) Primary stock: ~2,1 plots, 13% QoQ, 53% YoY Absorption rate: 44%, 1 ppt QoQ, 17 ppts YoY Transaction volume: ~91 plots, 12% QoQ, 23% YoY Valora Kikyo Outlook Q2/217-219: ~ 14,1 dwellings/plots 8
QUARTERLY MARKET REVIEW HANOI Q4/216 TOURISM AND HOSPITALITY
VIET NAM COMPETITIVENESS Tourism competitiveness, 215 Competitiveness index: ASEAN Vietnam Ranked 6 th in ASEAN Natural resources Cultural resources & business travel Business enviroment 7 6 5 4 Safety & security Health & hygiene Government spending prioritization: marketing campaigns and National branding Less international openness: Visa exemption policy, VN (23) vs. Thailand (58) Air transport & Tourist service infrastructure 3 International arrivals: Tourist service infrastructure 2 1 Human resources Ranked 5 th in ASEAN Strong potential: 26% growth Ground & port infrastructure ICT readiness International arrivals, 216 35 3 3% Air transport Prioritization of tourism 25 2 15 1 2% 1% 5 Environmental sustainability International openess Thailand Malaysia Singapore Indonesia Viet Nam Phillipines Cambodia % Price competitiveness Number of arrivals (mil)-lhs Tourism growth (%)-RHS Source: Weforum, 216 Source: Statistics agencies of surveyed countries 1
SOURCE MARKETS Source markets, 216 3 2 6% 4% China: 1 st source market: 2.7 mil arrivals Middle class high affordable demand Strong fluctuating growth (5% YoY) 1 East Asia (other than China) Source: VNAT China Europe Asean Russia Others Tourist (mil)-lhs Growth rate (%)-RHS Airline capacity and domestic (million trips) 7 2% % Russia: Ruble depreciation driving destination choice Stable growth, nearly 3% pa Domestic tourism: Booming demand: affluent class to double; middle class increase by half by 22 Low-cost airlines growth 6 5 4 3 2 1 211 212 213 214 215 216 Source: GSO and VNAT Airline passengers Domestic trips 11
SUB-MARKETS International arrivals to major cities, 216 6 5 4 3 2 1 HCMC Ha Noi Da Nang Nha Trang Phu Quoc International arrival (million trips)-lhs Growth rate (%)-RHS Source: Provincial tourism departments Hotel market performance, 216 2, 6% 5% 4% 3% 2% 1% % 9% 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 (4% YoY) LOS: Nha Trang 3.5 days vs Da Nang 2.8 days vs Phu Quoc 2.6 days 15, 8% 1, 7% 5, 6% HCMC Ha Noi Da Nang Nha Trang Phu Quoc 5% Hotel supply (rooms)-lhs Source: Savills Research & Consultancy Occupancy (%)-RHS 12
AIRPORT CAPACITY Airport capacity 35 3 25 2 15 1 5 35% 3% 25% 2% 15% 1% 5% Airports under pressure: HCMC 13%, Nha Trang 32%, 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. % HCMC Ha Noi Da Nang Nha Trang Phu Quoc Airport capacity (million passengers)-lhs Operating capacity (%)-RHS US$5.6 bill required to 22 Government budget? Source: ACV and other sources HCMC, Da Nang and Nha Trang supply increases 3% pa in three years Hospitality development evaluation? 13
Vietnam has come a long way in only 7 years Then (21) Now (216) 5 Million International tourist arrivals 28 Million Domestic tourist arrivals 35.5 Million passengers Total capacity of 5 main airports 4 International direct flight routes Operated by 3 domestic carriers 5 International airports HCMC Hanoi Danang Cam Ranh Hai Phong Restrictive visa policy - Visa exemptions: 15 countries - Onerous and expensive visa application 1 Million International tourist arrivals 62 Million Domestic tourist arrivals 6 Million passengers Total capacity of the same 5 main airports 7 International direct flight routes Operated by the same 3 domestic carriers 9 International airports HCMC Hanoi Danang Hue Phu Quoc Cam Ranh Hai Phong Can Tho Vinh Relaxed visa policy - Visa exemptions: 22 countries - e-visa system: 4 countries eligible - Visa fee reduction of 4% compared to 21 14
Supply (Rooms) Supply (Rooms) Supply (Rooms) Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Growth Rate y-o-y (%) Hospitality Development Proceed with caution The Hospitality Market is Volatile International Tourist Arrivals Growth Rate (Month on Month) 5 4 3 2 1-1 -2 Source: Vietnam Tourism Department Demand & Supply Dynamics: Very strong supply growth but is demand keeping up? 25, Nha Trang & Cam Ranh Hotel & Resort Supply (Midscale to Luxury Segment) 16% 25, Da Nang Hotel & Resort Supply (Midscale to Luxury Segment) 25, Phu Quoc Hotel & Resort Supply (Midscale to Luxury Segment) 2, 57% 2, 42% 2, 15, 18% 15, 36% 15, 1, 1, 14% 1, 65% 7% 15% 5, 5, 5, 215 216 217 218 219 215 216 217 218 219 215 216 217 218 219 Existing Supply Future Supply Arrivals CAGR 15% (213 216) Existing Supply Future Supply Arrivals CAGR 21% (213 216) Existing Supply Future Supply Arrivals CAGR 33% (213 216) 15
Hospitality Development Proceed with caution Second Home vs Hotel and Resort Future Supply Coastal Destinations (217-219) 44% 56% Second Home Hotel & Resort Second Home Supply Coastal Destinations by Type (Forecast 219) 15% 3% 3, 25, 2, Second Home Supply in Coastal Destinations (Launched vs Completed Units) 17% 65% 15, 1, 5, 21 211 212 213 214 215 216 217 218 219 Condotel Second Home Condominium Branded Villa Non-Branded Villa Accumulated Launched Units Accumulated Completed Units (*) Coastal Destinations include: Da Nang, Khanh Hoa, Phu Quoc, Ho Tram, Ha Long & Quang Nam. 16
Loss Profit Loss Profit Hospitality Development Proceed with caution 25 The false perception many condotel developers have of project GOP 2 15 1 5 Beak even with guarantee return Typical Guaranteed Returns: Vietnam: 1% for 5-1 years Phuket: 7% for 3-5 years Bali: 7% for 2-3 years -5 2 Beak even 1 2 3 4 5 6 7 8 9 1 Operational Year The likely reality of project Gross Operational Profit (GOP) 15 1 5 Beak even with guarantee return Beak even -5-1 1 2 3 4 5 6 7 8 9 1 Operational Year 17
US$ 1M US$ 74.9M US$ 49M US$ 48.7M US$ 46.7M Deal Size Everyone wants a piece of Vietnam Hospitality Hotel Operators 21 216 3 Branded Properties 57 Branded Properties (27 additional properties with many new brands) Investors Notable Hotel M&A Transactions in 216 World Leaders Kong 18