Savills Vietnam

Thursday, 09 Mar 2017

In 2016, GDP growth achieved 6.2% with the real estate industry expanding 4% to a 5-year high.
New annual records were set in foreign-exchange reserve, FDI disbursement and newly established businesses. Real estate ranked 1st in newly established businesses with over 3,100 registered and ranked 2nd in newly registered FDI capital with US$1.5 billion. The total retail sales of goods was more than US$117 billion, up 10% YoY.

Viet Nam recorded the highest ever growth of international arrivals with over 10 million visitors, increasing 26% YoY.



1. RETAIL: Softer Performance

In Q4/2016, the total retail stock was approximately 186,000 m², increasing 5.4% quarter-on-quarter (QoQ) and 10.7% year-on-year (YoY) due to the reopening of Nguyen Kim supermarket after its three-quarter renovation. Hai Chau was the largest supplier with a 35% share, followed by Thanh Khe with 30 percent.
The average ground floor rent decreased -7.9% QoQ and -4.2% YoY, while occupancy decreased -2.2 ppts QoQ and -1.7 ppts YoY.
Retail market performance




Source: Savills Research & Consultancy
In 2017, the market is expected to receive approximately 14,500 m².
2. OFFICE: Lack of Grade A Supply
In Q4/2016, the total office stock was approximately 85,000 m² from 24 buildings, decreasing -2% YoY as one project with over 1,000 m2 was razed and removed from the market. Currently, there is only one Grade A office building in Da Nang.
The average occupancy increased 7 ppts YoY to 93% but the average rent decreased -9 percent. To attract tenants, a number of buildings reduced rents by up to -30 percent.

Office market performance





Source: Savills Research & Consultancy
In 2017, many large infrastructure projects are expected to complete in preparation for the Asia-Pacific Economic Cooperation (APEC) meetings, bolstering further demand for office space.

3. HOTEL: Increased ARR in all segments
In Q4/2016, due to the entry of four new projects, serviced apartment stock reached 4,028 units, up 5% QoQ and 9% YoY.
Hotel market performance




Source: Savills Research & Consultancy
The average occupancy exceeded 87%, increasing 0.4 ppt both QoQ and YoY. The average room rate (ARR) was down -2.1% QoQ and -2.4% YoY due to sharp Grade B decrease of -4.8% QoQ and -4.5% YoY. Take-up was positive across all grades totalling more than 190 units.
Da Nang continues to establish itself as a competitive coastal location for both domestic and international tourists. In 2016, there were 5,510,000 visitors, up 18% YoY, of which 1,660,000 were international, up 13% YoY.
In 2017, nine 4 to 5-star hotels supplying approximately 2,200 rooms will come.


4. APARTMENT | CONDOTEL: Growing condotel supply
In Q4/2016, the condotel stock was approximately 3,910 units from 10 projects, of which 1,325 remained in the primary. Son Tra was the largest supplier with a 50% share, closely followed by Ngu Hanh Son with 44 percent.
Apartment | Condotel market performance



Source: Savills Research & Consultancy
The total apartment stock was 3,495 units from 15 projects, of which 520 remained in the primary. Ngu Hanh Son was the largest supplier with a 30% share of total stock, followed by Son Tra, Hai Chau and Thanh Khe.
Guaranteed returns are offered in many condotel projects’ pre-sales programs. APEC 2017 will likely increase condotel performance and spur a rush of investments.


5. SECOND-HOME VILLA: High absorption
In Q4/2016, the total villa stock was 774 dwellings from 14 projects, of which 153 remained in the primary. Ngu Hanh Son was the largest supplier with 728 dwellings (94% share) from 12 projects, followed by Son Tra district with 46 dwellings (6% share) from 2 projects.
Second-home villa for sale performance



Source: Savills Research & Consultancy
As of Q4/2016, the market-wide absorption was 80 percent. Among the 14 projects, 6 were fully sold.
Developer reputation, guaranteed returns and proximity to the beach were the key success factors of all projects.