2018越南房地产市场展望（英文版）_26页_3mb

2018 Vietnam Real Estate Market Outlook Summary

Core Content

The 2018 Vietnam real estate market outlook highlights a positive economic environment, supported by strong foreign investment (FDI) flows, favorable trade agreements, and continued infrastructure development. The market is expected to maintain steady growth, particularly in the office and retail sectors, with a focus on quality supply and strategic location advantages.

Main Points

• Economic Growth: Vietnam's economy is expected to continue positive growth, driven by strong FDI inflows and trade agreements such as the CPTPP and EVFTA. The GDP growth in 2017 was 6.8%, and the economy is projected to remain stable with controlled inflation and interest rates.
• Trade Agreements: The signing of the CPTPP and the expected passage of the EVFTA will provide Vietnam with access to larger markets, especially for its footwear, textiles, and electronics exports.
• Infrastructure Development: Vietnam has been investing heavily in infrastructure, with an average of 5.7% of GDP allocated to public and private projects, higher than in other Southeast Asian countries. Major cities like HCMC and Hanoi are seeing significant infrastructure projects, including metro lines, which are expected to drive real estate development in previously remote areas.
• Office Market:
  • HCMC and Hanoi office markets showed positive performance in 2017, with rental growth and improved occupancy rates.
  • HCMC's rents remained significantly higher than Hanoi's, with a 50% gap for both Grade A and B.
  • In 2018, no new Grade A office supply is expected, which will support rental growth of 2%.
  • Grade B supply will be limited, but the segment is expected to show flat performance due to increased competition.
  • In 2020, Grade A supply will increase with projects like Tax Centre and Spirit of Saigon, expected to boost rental growth and average rents to US$40 psm.
• Retail Market:
  • The retail sector in 2017 was vibrant, with M&A, FDI, and international brand entries. Vietnam ranked 6th in the Global Retail Development Index (GRDI).
  • CBD retail supply is limited, with less than 100,000 sm NLA available and vacancy rates under 5%. Anchor tenants and creative formats will be key to attracting foot traffic.
  • Non-CBD areas are expected to see significant new supply, with retail podiums becoming more prevalent. These areas are attracting developers and retailers due to growing residential clusters and better accessibility.
  • Vacancy rates in non-CBD areas are projected to rise to 20% by 2020, with competition forcing developers to adjust rental expectations and lease structures.
• Consumer Trends:
  • Vietnamese consumers are increasingly valuing convenience, experience, and health and wellness benefits. This is reflected in the growing demand for retail formats that offer these aspects.
  • The country has a young population (40% under 25) and a growing middle class, which supports retail expansion and increased consumer spending.
  • The Consumer Confidence Index reached a 5-year high in 2017, indicating a strong willingness to spend on items such as travel, fashion, and technology.
• Logistics Sector:
  • The logistics market is expected to see strong demand due to the growth of manufacturing and e-commerce. Key drivers include the expansion of international retailers and the rise of convenience stores.
  • The preferred locations for logistics facilities are HCMC, Binh Duong, Hanoi, Bac Ninh, and Dong Nai.
  • The industrial revolution 4.0 is influencing the logistics sector, with a focus on automation and technology integration in warehouse operations.
  • Rents are expected to rise in both the Northern and Southern regions due to increased demand and limited supply.

Key Information

• FDI: Reached a record high of US$36 billion in 2017, with US$21 billion of newly licensed capital.
• GDP Growth: 6.8% in 2017, positioning Vietnam among the fastest-growing economies in Asia.
• Trade Agreements: CPTPP (signed March 8, 2018) and EVFTA (expected to be passed in 2018) will enhance Vietnam's export potential.
• Inflation: Expected to slightly increase in 2018 but remain under the 4% target.
• Stock Market: VN-Index and market capitalization saw a 48% and 73% year-on-year increase in 2017, respectively.
• Infrastructure Investment: Averaged 5.7% of GDP in recent years, the highest in Southeast Asia.
• CBD Retail: Limited supply and low vacancy (under 5%) are expected to continue, with high asking rents.
• Non-CBD Retail: Expected to see a large increase in supply, with 375,000 sm coming online over the next three years. However, vacancy rates may rise due to competition.
• Office Supply: Expected to be limited in 2018, with a focus on Grade A and B developments in previously remote areas.
• Consumer Behavior: Shift from saving to spending, with 63% of Vietnamese consumers using spare cash for consumption, a 13% drop from the previous year.
• Sustainability: Vietnamese consumers are more socially-conscious, with 86% willing to pay more for sustainable products, compared to 76% in the Asia-Pacific region.
• E-commerce Growth: Expected to drive warehouse demand, with major international players like Alibaba, JD.com, and Amazon entering the market.
• Logistics Trends: Emphasis on automation, logistics robots, and technology integration in warehouse operations.

Summary

The 2018 Vietnam real estate market outlook is optimistic, with economic growth, FDI inflows, and trade agreements providing a strong foundation for continued development. The office and retail sectors are expected to benefit from limited supply, improved infrastructure, and increased demand from both domestic and international tenants. The logistics market is also projected to grow, driven by manufacturing expansion and the rise of e-commerce. Overall, the market is showing signs of maturity and sustainability, with a focus on quality and strategic location advantages.