BMI Vietnam Real Estate Report Q2 2014

Q2 2014
www.businessmonitor.com
VIETNAM
REAL ESTATE REPORT
INCLUDES 5-YEAR FORECASTS TO 2018
ISSN 2040-770X
Published by:Business Monitor International
Vietnam Real Estate Report Q2

2014
INCLUDES 5-YEAR FORECASTS TO 2018
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International
Copy deadline: March 2014
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Vietnam Real Estate Report Q2 2014
CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Political ................................................................................................................................................. 11
Economic ............................................................................................................................................... 12
Business Environment .............................................................................................................................. 13
Industry Forecast .............................................................................................................. 14

Office ................................................................................................................................................... 15
Table: Forecast Rental Costs, 2013-2014 (US$ per m2/month) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table: Forecast Net Yield, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Retail ................................................................................................................................................... 16
Table: Forecast Net Yield, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Industrial .............................................................................................................................................. 18
Table: Forecast Net Yield, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Construction And Infrastructure Forecast Scenario ........................................................................................ 20

Table: Construction And Infrastructure Industry Data (Vietnam 2012-2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table: Construction And Infrastructure Industry Data (Vietnam 2018-2023) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table: Factbox - Key Elements Of Vietnam's Revised Land Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Macroeconomic Forecasts ............................................................................................... 33

Economic Analysis ................................................................................................................................... 33
Table: Vietnam - Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Industry Risk Reward Ratings .......................................................................................... 37

Asia - Risk/Reward Ratings ....................................................................................................................... 37
Table: Asia Real Estate Risk/Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Vietnam - Risk/Reward Ratings .................................................................................................................. 38
Market Overview ............................................................................................................... 40

Office .................................................................................................................................................... 44
Table: Historic Rental Costs, 2012-2013 (US$ per m2/month) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Table: Net Yields, 2011-2012 (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Table: Terms Of Rental Contract/Leases, H113 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Retail .................................................................................................................................................... 47
Table: Historic Rental Rates, 2012-2013 (US$ per m2/month) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Table: Net Yields, 2012-2013 (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Industrial ............................................................................................................................................... 50
Table: Historic Rental Costs, 2012-2013 (US$ per m2/month) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Net Yields, 2012-2013 (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Page 4

Competitive Landscape .................................................................................................... 53

Company Profile ................................................................................................................ 56
Becamex IDC Corp ..................................................................................................................................
Nam Cuong ............................................................................................................................................
Song Da Construction Corporation .............................................................................................................
Vinaconex ..............................................................................................................................................
Vingroup ................................................................................................................................................
56
58
60
62
64
Demographic Forecast ..................................................................................................... 66

Table: Vietnam's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Table: Vietnam's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Table: Vietnam's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Methodology ...................................................................................................................... 70
Industry Forecast Methodology ................................................................................................................ 70
Sources ................................................................................................................................................ 71
Risk/Reward Ratings Methodology ............................................................................................................ 71
Table: Real Estate Risk/Reward Ratings Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Page 5
BMI Industry View

BMI View: We are increasingly positive regarding the long-term strength of Vietnam's commercial real
estate sector. Although we are expecting some softness to continue in the market in the short-term, due to
oversupply in some sectors and cities, in the long term the strength of the country's economy and
manufacturing base, as well as its youthful demographic, will drive the commercial real estate market.
Various factors combine to mean that we are optimistic for Vietnamese commercial real estate in the long
term. Firstly, the economy is now on a firmer footing, with growth of 5.9% forecast for 2014, and this will
provide a healthier environment for commercial real estate investment. Secondly, we expect increased
foreign direct investment into the country, and into the real estate sector. Draft legislation currently under
consideration would make it easier for foreign investors to buy property in the country.
We are expecting demand for Vietnamese exports to pick up, particularly boosting the industrial and office
real estate sub-sectors, while the country's young and increasingly urbanised population will ensure
continued strong demand for high quality retail real estate.
Meanwhile, the central bank has relaxed interest rates in mid-2013, and we see them remaining stable over
our forecast period to 2018.Efforts to reduce capital controls and lending restrictions have met with mixed
success as the government continues its efforts to attract foreign investment through industrial park (IP) and
Economic Zone (EZ) development.
While office and industrial rents have remained low through 2013, demand for retail space has outstripped
supply and has outperformed other sectors as an increasingly middle income urbanised class boosts overall
consumption rates. Top priorities through 2014 will be economic, increasing GDP growth and attracting
more diversified sustained investment, as the market continues to relax restrictions on property and firm
ownership.
Recent Developments:
There has been limited activity in the office real estate market over the past few months. In mid2013 the
Center Point building in Phu Nhuan was sold, while later in the year the Gemadept building also changed
hands. Both properties are in Ho Chi Minh City.
Vingroup opened to large-scale malls in Hanoi in 2013, Vincom Mega Mall Times City and Vincom
Mega Mall Royal City, the largest mall in Vietnam. Meanwhile, MGR expansions continued throughout
2013, with Son Ha and Ocean Retail among those opening new stores.
Page 7
Key BMI Forecasts
We are forecasting that rental rates for office real estate in Hanoi will fall by 5% in 2014, while we see a
more significant fall, of between 5% and 10%.
We see office and retail rental costs remaining static in Da Nang in 2014.
We forecast that office rental costs will rise slightly, by 1%, in Ho Chi Minh City in 2014, while retail
costs will rise by 2%
We see industrial rental costs remaining static in 2014 in all three cities that we cover.
Page 8
SWOT
Vietnam Real Estate SWOT
Strengths
Growing investor interest and foreign direct investment into Vietnam.
Real GDP growth of 5.4% in 2013, as well as lower inflation, indicates the economy is
back on a firmer footing.
Development of industrial parks (IPs) and export processing zones (EPZs) is a

significant part of the country's move to modernisation and industrialisation.
With slow growth or stagnation in other areas of the world, notably Europe, investors
may increasingly turn to Vietnam for opportunities.
Weaknesses
Oversupply in all real estate sub-sectors due to an earlier construction boom.
Access to credit for real estate development is restricted.
Continued rent decline has forced landlords to create extended incentive packages to
maintain market rates.
Corruption, especially regarding land disputes, continues to affect the business

environment.
Opportunities
Foreign interest and FDI in property is projected to rise.
In cities, consumer demand is high, driven by increasingly affluent urban population

with larger disposable incomes which have benefited Vietnam's retail sector.
The country is an increasingly important export-oriented manufacturing hub, which

should benefit the industrial and office real estate sub-sectors.
Tourism is a growing industry, with significant investment into tourist-related real

estate. This should have a positive impact on retail real estate.
The State Bank continues to conduct a review of financing of the property market,
with a view to increasing crucially needed credit flows to the real estate sector which
has suffered due to a lack of financing options for new developments.
Page 9
Vietnam Real Estate SWOT - Continued
To source financing independently of banks, developers are seeking partners as joint

venture partners or for the sale of projects.
Improved relations with the US and increased US investment have shown promise as
the country attempts to balance its growing geopolitical tensions with China.
Threats
FDI remains dominated by Japan, with over 50% total share representing a
dependency risk should major economic changes occur with a new Japanese
government.
Tensions with China over maritime and territorial disputes continue to strain relations
between the two countries, though a recent meeting between leaders has improved
economic cooperation.
Page 10
Political
SWOT Analysis
Strengths
The Communist Party of Vietnam remains committed to market-oriented reforms and

we do not expect major shifts in policy direction over the next five years. The oneparty system is generally conducive to short-term political stability.
Relations with the US have witnessed a marked improvement, and Washington sees
Hanoi as a potential geopolitical ally in South East Asia.
Weaknesses
Corruption among government officials poses a major threat to the legitimacy of the
ruling Communist Party.
There is increasing (albeit still limited) public dissatisfaction with the leadership's tight
control over political dissent.
Opportunities
The government recognises the threat corruption poses to its legitimacy, and has
acted to clamp down on graft among party officials.
Vietnam has allowed legislators to become more vocal in criticising government

policies. This is opening up opportunities for more checks and balances within the
one-party system.
Threats
Macroeconomic instabilities continue to weigh on public acceptance of the one-party

system, and street demonstrations to protest economic conditions could develop into
a full-on challenge of undemocractic rule.
Although strong domestic control will ensure little change to Vietnam's political scene
in the next few years, over the longer term, the one-party-state will probably be
unsustainable.
Relations with China have deteriorated over recent years due to Beijing's more
assertive stance over disputed islands in the South China Sea and domestic criticism
of a large Chinese investment into a bauxite mining project in the central highlands,
which could potentially cause wide-scale environmental damage.
Page 11
Economic
SWOT Analysis
Strengths
Vietnam has been one of the fastest-growing economies in Asia in recent years, with
GDP growth averaging 7.1% annually between 2000 and 2012.
The economic boom has lifted many Vietnamese out of poverty, with the official
poverty rate in the country falling from 58% in 1993 to 20.7% in 2012.
Weaknesses
Vietnam still suffers from substantial trade and fiscal deficits, leaving the economy
vulnerable to global economic uncertainties. The fiscal deficit is dominated by
substantial spending on social subsidies that could be difficult to withdraw.
The heavily-managed and weak currency reduces incentives to improve quality of

exports, and also keeps import costs high, contributing to inflationary pressures.
Opportunities
WTO membership and the upcoming ASEAN AEC in 2015 should give Vietnam
greater access to both foreign markets and capital, while making Vietnamese
enterprises stronger through increased competition.
The government will in spite of the current macroeconomic woes, continue to move
forward with market reforms, including privatisation of state-owned enterprises, and
liberalising the banking sector.
Urbanisation will continue to be a long-term growth driver. The UN forecasts the

urban population rising from 29% of the population to more than 50% by the early
2040s.
Threats
Inflation and deficit concerns have caused some investors to re-assess their hitherto
upbeat view of Vietnam. If the government focuses too much on stimulating growth
and fails to root out inflationary pressure, it risks prolonging macroeconomic
instability, which could lead to a potential crisis.
Prolonged macroeconomic instability could prompt the authorities to put reforms on

hold as they struggle to stabilise the economy.
Page 12
Business Environment
SWOT Analysis
Strengths
Vietnam has a large, skilled and low-cost workforce, which has made the country
attractive to foreign investors.
Vietnam's location - its proximity to China and South East Asia, and its good sea links
- makes it a good base for foreign companies to export to the rest of Asia, and
beyond.
Weaknesses
Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
Vietnam remains one of the world's most corrupt countries. According to

Transparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123
out of 176 countries.
Opportunities
Vietnam is increasingly attracting investment from key Asian economies, such as

Japan, South Korea and Taiwan. This offers the possibility of the transfer of high-tech
skills and know-how.
Vietnam is pressing ahead with the privatisation of state-owned enterprises and the
liberalisation of the banking sector. This should offer foreign investors new entry
points.
Threats
Ongoing trade disputes with the US, and the general threat of American
protectionism, which will remain a concern.
Labour unrest remains a lingering threat. A failure by the authorities to boost skills
levels could leave Vietnam a second-rate economy for an indefinite period.
Page 13
Industry Forecast
BMI View: We are increasingly optimistic on the
Rising GDP, Stable Inflation
long-term health of Vietnam's commercial real

estate market; although we warn that rental rates
Real GDP Growth And Consumer Price

Inflation, 2008-2018 (% change y-o-y)
could continue falling in some sub-sectors in the

short term.
30
Real GDP growth came in at 5.4% in 2013, and we
20
10
see this rate improving by half a percentage point to

5.9% in 2014, boosted by improvements in
(CPI) to average 5.8% in 2014, down from 6.6% in

2013, 9.3% in 2012 and 18.7% in 2011.
Economic growth in 2014 will be partly driven by an

increase in FDI inflows, which we believe will
2018f
2017f
2016f
2015f
2014f
2013
2012
2011
2010
2009
Meanwhile, we expect consumer price inflation
2008
increased foreign direct investment (FDI).
2007
employment and manufacturing output, as well as
Real GDP growth, % y-o-y (LHS)

Consumer price inflation, % y-o-y, average (LHS)
e/f = estimate/forecast. Source: Asian Development Bank,

General Statistics Office, BMI
create new investment opportunities for both foreign

and local enterprises, including in the commercial real estate sector. According to the Foreign Investment
Agency (FIA), the total value of new FDI reached US$21.6bn in 2013, which translates into a stellar 54.5%
increase from 2012.
Page 14
In general, the macroeconomic conditions mean we

are optimistic for the Vietnamese commercial real
estate sector. Although we believe that residential
prices still have some way to fall, as demand is far
stronger at the bottom than the top of the market, we
note continued demand for retail real estate and
ongoing strength in hospitality-related ventures. We
believe that although in the short term office and
industrial real estate will continue to underperform,
in the longer term, as FDI increases along with
manufacturing and trade,
Office
Stable Interest Rates

State Bank Of Vietnam's Policy Rate,
2008-2018 (end of period)
17.5
15
12.5
Office rents are set to see a moderate increase in Ho

Chi Minh City (HCMC) in the short term, decline
10
7.5
significantly in Hanoi and stay much the same in Da

2018f
2017f
2016f
2015f
2014f
2013
2012
2011
2010
on the wave, or lack thereof, of new developments in
2009
5
2008
Nang. These differing forecasts for 2014 are based
the office real estate sector. New builds in Hanoi are

forcing down rents, while the rising economic
e/f = estimate/forecast. Source: State Bank of Vietnam,
stability of the country is beginning to be felt in
BMI
HCMC, where rising demand will be met by

increased supply, is keeping vacancy rates stable in that city, with rents expected to rise slightly.
Table: Forecast Rental Costs, 2013-2014 (US$ per m2/month)
October 2013-March 2014
2014
Min
Max
Trend
% change
Hanoi
16.50
33.00
Decrease
Da Nang
10.50
17.50
Same
Ho Chi Minh City (Saigon)
19.25
45.50
Increase
Source: BMI
According to our in country sources, in Hanoi, 'rental rates have been down in 2013 owing to high supply
and low demand; it is expected to remain steady in H213'. Rentals are expected to decrease further in 2014
as there will be excess rental space owing to current projects under construction. However, these
developments are a long way from completion. Also, recently many companies have moved out of Vietnam.
Page 15
This led to a 40% vacancy rate in Hanoi towards the end of 2013, further driving down rents. Our incountry sources ascribe this to the unstable economy.
We also note that in Hanoi, this issue is exacerbated by the fact that many companies only stay for short
periods, to work on a particular project or deal and then leave the country again. According to in country
sector sources 'only a few private companies and big corporations remain active in office markets'.
Table: Forecast Net Yield, 2011-2018
Hanoi
Da Nang
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
8-10
5-8
8-10
8-10
8-10
8-10
8-10
8-10
5-8
8-14
7-8
7-8
7-8
7-8
7-8
7-8
8-10
8-15
8.0
8.0
8.0
8.0
8.0
8.0
e/f = BMI estimate/forecast. Source: BMI
Retail
Vietnam's retail sector has been a strong performer as an increasing urban middle class and younger
generations with access to disposable income have stimulated demand, especially for international brands.
However, conditions for foreign investment remain depressed as low returns in addition to increased
financing controls have limited investment opportunity.
Favourable demographics and robust economic growth largely underpin our optimism in the Vietnamese
MGR growth story. According to our estimates, Vietnam's population is roughly 89mn and is forecast to
grow at a healthy clip of 0.9% per annum to 2021. More importantly, Vietnam has a youthful demographic
profile, implying attractive opportunities in the mass-market.
Moreover, Vietnam's rapid economic development should assist the emergence of a new consumer class - in
major urban centres at least - which has an interest and can afford to participate in modern consumption
methods such as mass grocery retailing. GDP per capita in Vietnam is forecast to more than double from an
estimated level of US$1,517 in 2012 to US$4,348 by 2021. This rise in purchasing power will only trigger a
swathe of consumer spending across the country's retail scene.
The stabilising economy is benefiting the retail sector in Vietnam. This is having a concomitant impact on
the retail rates as rising demand for large shopping complexes and designer boutiques is driving up rates in
Page 16
some areas. This is particularly true in HCMC, which will see rental rates rise by 2% over 2014. However,
at the opposite end of the spectrum, Hanoi is still plagued by a large supply, which is depressing rates. We
expect these to see a decline of 5-10% over 2014. Our in-country sources put vacant retail space at around
25% in Hanoi, and only 10% in HCMC. Meanwhile, Da Nang has a vacancy rate of about 27%.
2014
Min
Max
Trend
% change
Hanoi
25.00
46.00
Decrease
5-10
Da Nang
8.50
26.50
Same
0.0
60.50
103.50
Increase
2.0
e/f = BMI estimate/forecast. Source: BMI
In Hanoi, the maximum rental rate is US$50 per square meter per month. About two years back, the rentals
were as high as US$70 per square meter per month. The market is going down as business has become
tough in Hanoi with growing competition. There are limited retail projects for 2014 and no new investments
expected in the near future. The current unstable economy is expected to start improving only by 2015.
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Hanoi
8-10
4-8
8-10
8-10
8-10
8-10
8-10
8-10
Da Nang
7-10
8-14
5-8
5-8
5-8
5-8
5-8
5-8
8-10
8-15
8.0
8.0
8.0
8.0
8.0
8.0
e/f = estimate/forecast. Source: BMI
Planned developments include Rose Rock Group and Vung Ro Petroleum's US$2bn Vung Ro Bay
mixed-use tourism, residential and retail development, which is expected to have 200,000 square metres (sq
m) of retail space, according to a January 2014 report in Travel Daily Media. Vung Ro is equidistant from
Da Nang and HCMC.
Page 17
Industrial
A poor 2012 and the resulting lack of FDI over 2013 hurt the industrial sector in Vietnam, resulting in the
suspension of many planned industrial parks and economic zones in 2012 and 2013. Despite this, some
projects have attracted investment from neighbouring countries such as Japan and South Korea.
The sharp increase in FDI inflows more recently bodes well for activity in the industrial construction sector.
2014
Min
Max
Trend
(% change)
Hanoi
03.38
09.25
Same
Da Nang
02.50
05.00
Same
04.75
09.00
Same
Source: BMI
However, in the interim, industrial rents will remain largely unchanged from 2013 levels as concerns over
demand levels for Vietnam's export-driven economy, especially a Chinese economic slowdown, have
limited investment attractiveness.
HCMC in particular was highlighted by our in country sources as offering less opportunities for new build
developments than its peers as its industrial vacancy rates are already quite high at around 30%.
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
4-8
4-8
7-8
7-8
7-8
7-8
7-8
7-8
13-14
13-14
6-7
6-7
6-7
6-7
6-7
6-7
8-15
8-15
7.0
7.0
7.0
7.0
7.0
7.0
Hanoi
Da Nang
e/f = estimate/forecast. Source: BMI
We are seeing increasing FDI into industrial real estate. For example, according to a report in VietNamNet
Bridge in February 2014, China's Texhong Group is planning an industrial zone in Quang Ninh province,
Page 18
while Thailand's Amata Group is planning a high-tech zone, also in Quang Ninh. Meanwhile, a high-tech
park developed with funding from the Vietnamese government and a grant from South Korea is being built
in Can Tho.
Page 19
Construction And Infrastructure Forecast Scenario
Table: Construction And Infrastructure Industry Data (Vietnam 2012-2017)
2012
2013e
2014f
2015f
2016f
2017f
Construction industry value,

VNDbn
179,301.00
191,631.00
213,842.25
238,725.87
265,584.74
295,006.60
Construction industry value,

US$bn
8.6
9.2
10.4
11.7
13.1
14.8
Construction Industry Value,

Real Growth, % y-o-y
2.09
5.83
5.83
6.39
6.25
6.18
Construction Industry Value,

% of GDP
5.5
5.3
5.2
5.2
5.2
5.2
785,337.34
871,493.55
1,013,908.67
1,195,195.54
1,393,000.40
1,589,848.08
Total capital investment, US

$bn
37.62
41.70
49.30
58.79
68.91
79.49
Total capital investment, % of

GDP
24.20
23.90
24.80
26.10
27.17
27.79
Capital investment per capita,

US$
414.38
454.83
532.73
629.53
731.59
837.10
1.87
4.10
10.00
12.00
11.00
8.80
3,183.5
3,423.9
3,678.0
3,972.9
4,279.9
4,602.4
2.52
7.55
7.42
8.02
7.73
7.53
64,081.40
64,820.11
65,485.17
66,093.66
66,647.27
67,144.29
Construction industry
employees as % of total
labour force
4.97
5.28
5.62
6.01
6.42
6.85
Infrastructure industry value,

% of total construction
32.7
33.8
33.5
33.1
32.8
32.4

VNDbn
58,653.25
64,809.31
71,579.65
79,046.81
87,054.98
95,588.78

US$bn
2.81
3.10
3.48
3.89
4.31
4.78
Infrastructure industry value

real growth, % y-o-y
0.9
3.9
4.7
5.2
5.1
4.9

% of GDP
1.8
1.8
1.8
1.7
1.7
1.7
Residential and Nonresidential Building Industry

Value As % of Total
Construction
67.29
66.18
66.53
66.89
67.22
67.60

Value, VNDbn
120,647.75
126,821.69
142,262.60
159,679.06
178,529.76
199,417.82
Total capital investment,

VNDbn
Real capital investment

growth, % y-o-y
Construction sector
employment, '000
employment, % y-o-y
Active population, total, '000
Page 20
Construction And Infrastructure Industry Data (Vietnam 2012-2017) - Continued
2012
2013e
2014f
2015f
2016f
2017f

Value, US$bn
5.78
6.07
6.92
7.85
8.83
9.97

Value Real Growth (%)
1.02
-1.48
6.41
6.99
6.81
6.80

Value as % of GDP
3.72
3.48
3.48
3.49
3.48
3.49
Cement production (including

imported clinker), tonnes
47,900,158
49,755,167
54,456,929
60,661,903
67,032,460
72,690,571
Cement production (including

imported clinker), tonnes, %
y-o-y
1.8
3.9
9.4
11.4
10.5
8.4
Cement consumption, tonnes
47,137,388
48,919,480
53,549,192
59,675,315
65,956,456
71,513,269
1.4
3.8
9.5
11.4
10.5
8.4
Cement net exports, tonnes
762,769
835,687
907,737
986,588
1,076,004
1,177,302
Cement net exports, tonnes,

% y-o-y
28.3
9.6
8.6
8.7
9.1
9.4
Cement consumption,
tonnes, % y-o-y
e/f=estimate/forecast, Source: National Sources/BMI
Table: Construction And Infrastructure Industry Data (Vietnam 2018-2023)
2018f
2019f
2020f
2021f
2022f
2023f
value, VNDbn
327,200.51
362,647.35
401,855.54
444,790.98
492,279.29
544,276.11
value, US$bn
16.5
18.5
20.7
23.0
25.6
28.4
Construction Industry
Value, Real Growth, % yo-y
6.01
6.03
6.01
5.98
5.98
5.96
5.1
5.1
5.1
5.1
5.1
5.0

VNDbn
1,801,170.68
2,019,760.76
2,260,645.51
2,523,110.97
2,816,049.20
3,139,996.24

US$bn
90.97
103.05
116.23
130.39
146.29
163.97

% of GDP
28.20
28.39
28.57
28.75
28.93
29.10
950.59
1,069.03
1,197.53
1,334.90
1,488.72
1,659.41
Construction Industry
Value, % of GDP
Capital investment per

capita, US$
Page 21
2018f
2019f
2020f
2021f
2022f
2023f
8.00
7.00
6.80
6.60
6.60
6.60
4,935.6
5,290.0
5,664.5
6,059.7
6,478.0
6,920.2
7.24
7.18
7.08
6.98
6.90
6.83
Active population, total,

'000
67,594.92
68,011.07
68,401.62
68,772.11
69,122.44
69,448.57
employees as % of total
labour force
7.30
7.78
8.28
8.81
9.37
9.96
Infrastructure industry
value, % of total
construction
32.0
31.6
31.2
30.8
30.4
30.1
value, VNDbn
104,761.46
114,611.61
125,304.45
136,917.43
149,642.49
163,654.20
value, US$bn
5.29
5.85
6.44
7.08
7.77
8.55
value real growth, % y-oy
4.7
4.6
4.5
4.6
4.6
4.8
value, % of GDP
1.6
1.6
1.6
1.6
1.5
1.5
Residential and Nonresidential Building

Industry Value As % of
Total Construction
67.98
68.40
68.82
69.22
69.60
69.93

Industry Value, VNDbn
222,439.05
248,035.74
276,551.09
307,873.55
342,636.80
380,621.91

Industry Value, US$bn
11.23
12.65
14.22
15.91
17.80
19.88

Industry Value Real
Growth (%)
6.64
6.71
6.70
6.63
6.59
6.49

Industry Value as % of
GDP
3.48
3.49
3.50
3.51
3.52
3.53
78,287,306
83,577,075
89,075,636
94,775,641
100,851,880
107,329,187
7.7
6.8
6.6
6.4
6.4
6.4
76,998,573
82,162,136
87,525,398
93,020,216
99,001,095
105,242,755
Real capital investment

growth, % y-o-y
Construction sector
employment, '000
employment, % y-o-y
Cement production
(including imported
clinker), tonnes
Cement production
(including imported
clinker), tonnes, % y-o-y
Cement consumption,
tonnes
Page 22
2018f
2019f
2020f
2021f
2022f
2023f
7.7
6.7
6.5
6.3
6.4
6.3
Cement net exports,

tonnes
1,288,733
1,414,938
1,550,238
1,755,425
1,850,785
2,086,432
Cement net exports,

tonnes, % y-o-y
9.5
9.8
9.6
13.2
5.4
12.7
Cement consumption,
tonnes, % y-o-y
e/f=estimate/forecast, Source: National Sources/BMI
BMI View: The outlook for Vietnam's construction sector continues to be increasingly positive. This is
primarily due to government policy, where the adoption of a loose monetary policy, revisions to the
regulatory framework for land acquisition and the restructuring of state-owned enterprises are increasing
the potential for greater construction investment over the coming years. This potential for greater
construction activity is reflected in our projections, with our real growth forecasts for the sector revised up
to 5.8% in 2014 (previously 5.4%) and averaging 6.2% per annum between 2015 and 2018 (previously
6.0%).
Construction activity in Vietnam has continued to recover from the lows of 2011. Latest data from the
Vietnam General Statistics Office reveals that the construction sector grew by 5.8% in real terms in 2013,
faster than the -1.0% and 2.1% print in 2011 and 2012 respectively. This is in line with our view that the
recovery in Vietnam's construction sector will be sustained in the next few quarters.
Page 23
On The Path To Recovery

Vietnam - Quarterly Construction Industry Value, VNDbn
Source: General Statistics Office, State Bank of Vietnam
Page 24
On The Path To Recovery

Construction Industry Value LHS And Real Growth RHS (2012-2023)
600,000
500,000
6
400,000
300,000
200,000
2
100,000
2023f
2022f
2021f
2020f
2019f
2018f
2017f
2016f
2015f
2014f
2013
0
2012
Construction industry value, VNDbn (LHS)

Construction Industry Value, Real Growth, % y-o-y (RHS)
e/f=estimate/forecast, Source: Vietnam General Statistics Office, BMI
Looking beyond 2013, the outlook for Vietnam's construction sector continues to be increasingly positive.
This is reflected in our projections, with our real growth forecasts for the sector revised up to 5.8% in 2014
(previously 5.4%) and averaging 6.2% per annum between 2015 and 2018 (previously 6.0%).
Page 25
Not Like Before

Vietnam Construction (And Sum-Components) Industry Value Forecasts
e/f= BMI estimate/forecast. Source: General Statistics Office, State Bank of Vietnam, BMI
This relatively optimistic outlook is primarily driven by three main factors:
Conducive Monetary Conditions. The government is seeking to boost economic growth and has
maintained its policy rate at 7.00% since May 2013, the lowest policy rate since December 2009. Given the
lagged impact of monetary easing, any positive effects of this easing could last well into 2014. Moreover,
inflation remains relatively benign, leading us to expect the Vietnamese central bank to maintain an
accommodative policy stance throughout 2014 - we are forecasting the benchmark interest rate to remain at
7.00% by end-2014. This should be favourable for construction activity as Vietnamese companies would
benefit from a lower cost of capital - making them more inclined to take up new projects or carry out
capital-intensive construction works - while municipal and provincial governments could also find the
necessary financing for their infrastructure plans.
Page 26
A Loose Monetary Policy

Vietnam - Policy Rate, % & Headline CPI - Housing & Construction Materials, % y-o-y
Source: General Statistics Office, State Bank of Vietnam
Robust Foreign Direct Investment (FDI) Inflows. Foreign direct investment (FDI) inflows into the
country have accelerated across 2013. According to the Ministry of Planning and Investment, Total FDI
inflows into Vietnam grew by 54.5% to reach US$21.6bn in 2013, significantly surpassing the government's
full-year target of US$13bn.
The sharp increase in FDI inflows bodes well for activity in the construction sector. This is because we
believe a sizeable portion of these inflows were channelled into buildings and infrastructure. To be sure, the
real estate achieved the third highest amount of FDI inflows amongst the 18 sectors between January and
November 2013, while 84.1% of Japan's total investment capital into Vietnam, the country's largest foreign
investor, was channelled into manufacturing and processing projects, according to the Ministry of Planning
and Investment. Meanwhile, we have seen several agreements signed with Asian companies over the course
of 2013 for the development of transport and power infrastructure projects in Vietnam (see 'High Tariffs
And Deregulation Bearing Fruit', October 17 2013). Financing from European banks - a major source of
finance for Vietnamese infrastructure - has also stabilised at a relatively positive growth rate of 6.5% yearon-year in Q213.
Page 27
Limited Upside
Vietnam - Foreign Claims From European Banks, US$mn And % chg y-o-y
Source: Bank For International Settlements (January 2014), BMI
Revised Land Law. On November 29 2013, the Vietnamese government approved an amendment in its
Land Law (see 'Revised Land Law A Major Step In Tackling Corruption', December 9 2013). The revised
legislation, which takes effect on July 1 2014, is aimed at limiting land disputes by prohibiting the
government from appropriating land for socio-economic development unless such projects have been
approved by the prime minister and the Vietnamese parliament. From our perspective, the revised law is a
major step in strengthening the regulatory framework with regards to land transfer and entitlement while
increasing the transparency of economic development projects that are implemented under the direction of
the provincial government. This strengthening of the regulatory framework for land acquisition and
resettlement could help to reduce the risk of project delays that are brought on by long and costly disputes
over compensation.
Page 28
Table: Factbox - Key Elements Of Vietnam's Revised Land Law
The revised Land Law is effective from July 1 2014.
Land is owned by the people and managed by the State.
Land prices are required to be valued by independent agencies based on market prices at the time of assessment as
well as land use purpose and duration.
New provisions provided on issue relating to ownership and usage of land as well as on compensation and
resettlement of residents subject to relocation.
The regulation requiring the release of the government's land price list on January 1 of every year is abolished.
The concession for all types of farming land has been increased from 20 to 50 years.
Source: BMI
Non-Residential Sector: Rising Domestic Demand
There are also sub-sectoral factors that are driving our positive outlook for Vietnam's construction sector. In
the non-residential building sector, we have seen a recovery in Vietnam's manufacturing production
activity, with the HSBC Purchasing Managers' Index above 50.0 level since September 2013 (a signal of
expansion in the manufacturing sector). While we remained concerned about the potential for deterioration
in external trade activity (particularly the potential for a renewed downturn in the Chinese economy), the
growing domestic demand for manufacturing goods could increase demand for non-residential buildings to
support production activity.
Page 29
Staying Strong
Vietnam - Purchasing Managers' Index
Source: BMI, Markit/HSBC
Residential Sector: Early Signs Of Recovery
The residential building sector is also showing early signs of improvement (see 'Early Signs Of A Recovery,
But No Property Market Boom In Sight', August 14 2013). Although the sector is still suffering from
significant oversupply and falling prices, unsold inventory of new residential units have fallen back to more
moderate levels by historical standards. Unsold apartments as a share of total units under construction fell
from 30.3% in Q412 to 27.7% in Q213, while unsold villas and townhouses fell from 54.3% to 10.7% over
the same period. In addition, the rate of decline in housing prices is slowing down, which could indicate
growing demand for property. As the accompanying chart shows, the Vietnam Real Estate Index, which
tracks transaction prices of highly liquid apartments in Hanoi and Ho Chi Minh City, fell by 8.2% y-o-y in
August 2013, significantly lower than the contraction of 15.2% y-o-y in August 2012.
Page 30
Signs Of Bottoming
Vietnam - Real Estate Index
Source: BMI, Bloomberg
Lastly, the government's plan to increase the supply of social housing to low-and middle-income groups is
accelerating, with several large-scale social housing programmes and projects being implemented. In
August 2013, the Ministry of Construction announced that there were 50 projects, valued at around US
$1bn, registered to convert 34,000 units of commercial houses to social houses.
Infrastructure Sector: Unlocking Capital
In the infrastructure sector, the Vietnamese government is also making progress with the use of publicprivate partnerships (PPPs) for infrastructure development. The government launched the initial tendering
stage for its first road PPP project in September 2013 and there could be other infrastructure projects offered
as PPPs over the near term (see 'Skeptical Over Dau Giay-Phan Thiet PPP Timeline', December 6 2013).
We have long highlighted that the Vietnamese government does not have sufficient funds to meet the
country's infrastructure needs and the use of PPPs could aid in meeting this deficit (see 'Construction
Recovery On Track', July 14 2013). According to the Ministry of Planning and Investment, Vietnam will
Page 31
need US$16-17bn per annum for infrastructure development over the next decade, but the capital raised
from traditional channels can only meet 50-60% of the funds needed.
Most importantly, the government has taken an aggressive stance in restructuring its state-owned enterprises
(SOEs, see 'Privatisation of SOEs Highly Positive For The Economy', January 8 2014). We believe this
restructuring is crucial in unlocking investment for infrastructure development in Vietnam. This is because
it could not only allow the Vietnamese government to raise funds for investment through the privatisation of
these SOEs, but also attract greater FDI due to a less protectionist investment climate. Vietnam's SOEs have
been a leading contributor of the misallocation of capital in the country, due to corruption and a lack of
competition and oversight. This has, in turn, resulted in mounting losses for public sector firms (see 'More
Restructuring To come For SOEs', September 26 2013). Due to these losses, a number of these SOEs are
unable to repay their debts, which the Vietnamese government is obliged to repay. This has undermined the
country's fiscal position and limited the government's ability to finance infrastructure projects.
Page 32
Macroeconomic Forecasts
Economic Analysis
BMI View: Vietnam's latest real GDP reading, which showed that the economy expanded by 6.0% year-onyear (y-o-y) in Q413, has reaffirmed our conviction that the Vietnamese economy will begin 2014 on a
strong note. Not only are we witnessing more evidence of a sustained pick-up in production activity and
employment in the manufacturing sector, but we also expect foreign direct investment (FDI) inflows to
accelerate as the economic recovery gathers pace over the coming quarters. We forecast real GDP growth
to come in at 5.9% in 2014, versus Bloomberg consensus of 5.5%.
In line with our view that the Vietnamese economy would accelerate forcefully into the final months of the
year (see 'Economy Picking Up Pace', October 4 2013), latest data released by the General Statistics Office
(GSO) showed that the economy expanded by 6.0% year-on-year (y-o-y) in Q413. This translates into fullyear growth of 5.4% for 2013, just slightly above our forecast of 5.3%. The latest GDP reading, combined
with the strong set of economic data we have seen in recent weeks (accelerating foreign direct investment
inflows, remittances, and merchandise trade exports), have reaffirmed our conviction that the Vietnamese
economy will begin 2014 on a strong note.
Page 33
Looking At A Strong Start For 2014

Vietnam - Real GDP Growth, % (LHS) & Contribution By GFCF & Private Consumption, pp (RHS)
Source: BMI, General Statistics Office. (e = estimates, f = BMI forecasts)
Signs Of Improvement
Despite the lack of progress with regards to banking sector reforms and efforts to ease lending conditions
(credit growth is estimated to have expanded by around 9% in 2013, well under the State Bank of Vietnam's
initial target of 12%), the economy appears to be holding up well. Not only are we witnessing more
evidence of a sustained pick-up in production activity and employment in the manufacturing sector (see
'Strong PMI Reading Reinforces Outlook On Growth', November 5 2013), but we also expect foreign direct
investment (FDI) inflows into the export sector to accelerate as the economic recovery gathers pace over the
coming quarters.
Private Sector Investment To Drive Recovery
According to figures published by GSO, FDI-related exports made up an estimated 67% of the country's
total exports for the first 11 months of the year. Thus, although increased FDI inflows could potentially
result in a temporary deterioration in the country's trade and current account dynamics due to a burst of
Page 34
capital goods imports in the near term, we believe that this is a long-term positive for the economy.
Furthermore, we view FDI inflows as a crucial source of economic growth over the coming quarters given
that the Vietnamese government is struggling to unlock domestic lending. We forecast real gross fixed
capital formation (GFCF) growth to come in at around 10% in 2014, contributing around 2.7 percentage
points (pp) to our real GDP growth forecast of 5.9%.
Expenditure Breakdown
Private Consumption: We expect private consumption to grow at a relatively resilient pace of 6.5% in
2014. However, we note that the risk of further bankruptcies among SMEs could potentially lead to
widespread job losses, especially in export-driven sectors. Uncertainties over the outlook for employment
could, in turn, prompt households to cut back on spending.
Gross Fixed Capital Formation: We foresee a pickup in private sector investment growth in 2014, partly
led by increased foreign direct investment inflows. We believe lending rates will gradually ease over the
coming months as the effect of rate cuts in 2013 by the SBV begins to kick in. We are also seeing evidence
that credit conditions are improving. Accordingly, we expect gross fixed capital formation growth to
accelerate substantially from 4.1% in 2013 to 10.0% in 2014.
Public Spending: We expect total public spending to remain relatively resilient in 2014, expanding at a
respectable pace of 6.5%. However, there is limited room for the government to increase spending further
owing to concerns over the need to finance a potential bailout of ailing state-owned commercial banks.
Net Exports: Net exports remain the biggest downside risk to our outlook for the Vietnamese economy,
although we expect external demand to pick up in 2014. Vietnam's trade account has fallen back into
deficits in recent months, but we see the case for a substantial pickup in external demand on the back of a
rebound in regional growth over the coming quarters. Accordingly, we still expect exports to expand at a
moderate pace of 5.6% in 2014.
Page 35
Table: Vietnam - Economic Activity
2011
Nominal GDP,
VNDbn 3
Nominal GDP,
US$bn 3
2012
2013e
2014f
2015f
2016f
2017f
2018f
2,779,880.2 3,245,419.2 3,584,261.0 4,012,847.7 4,494,844.6 5,033,219.9 5,616,365.8 6,269,265.3

134.6
155.6
170.6
195.1
221.1
249
280.8
316.6
6.2
5.2
5.4
5.9
6.4
6.6
6.4
6.4
GDP per capita,

US$ 3
1,497
1,713
1,860
2,108
2,368
2,643
2,957
3,309
Population, mn 4
89.9
90.8
91.7e
92.5
93.4
94.2
95
95.7
Industrial
production, %yo-y, ave 1,5
10.9
7.0
5.9
7.7
8.4
8.6
8.6
8.5
Unemployment,
% of labour
force, eop 2,6
3.6
3.2
3.7e
3.5
3.5
3.6
3.5
3.5
Real GDP
growth, %y-o-y 3
Notes: e BMI estimates. f BMI forecasts. 1 at 1994 prices; 2 Urban Area Only. Sources: 3 Asian Development Bank,
General Statistics Office; 4 World Bank/UN/BMI; 5 General Statistics Office; 6 General Statistics Office/BMI.
Page 36
Industry Risk Reward Ratings

Asia - Risk/Reward Ratings
The Real Estate Risk/Reward Ratings provide a regional country-by-country comparison of the risks and
rewards for the real estate market. They evaluate the industry's current size and growth potential, and take
into account issues that could affect the industry's development, such as commercial bank lending, financial
infrastructure, per capita GDP, urbanisation, real estate prices and lending rates. The score also covers
country- and industry-specific factors, such as political and economic stability, that could inhibit or
encourage development in the real estate sector.
Table: Asia Real Estate Risk/Reward Ratings
Industry
rewards
Country
rewards
Rewards
Industry
risks
Country
risks
Risks
Overall realestate rating
rank
South Korea
55.0
74.6
61.9
93.3
69.7
85.1
73.5
China
80.0
48.4
68.9
90.0
50.1
76.0
72.5
Australia
65.0
91.6
74.3
60.0
74.7
65.1
69.7
Hong Kong
52.5
91.7
66.2
63.3
74.6
67.3
66.7
Malaysia
55.0
59.5
56.6
83.3
60.1
75.2
65.9
India
87.5
37.2
69.9
73.3
38.4
61.1
65.5
Singapore
55.0
97.6
69.9
46.7
82.3
59.2
64.5
Taiwan
60.0
67.0
62.4
70.0
59.2
66.2
64.3
Japan
57.5
84.6
67.0
53.3
73.7
60.5
63.7
Indonesia
80.0
35.3
64.4
73.3
37.6
60.8
62.6
10
Philippines
65.0
37.4
55.4
73.3
51.3
65.6
60.5
11
Pakistan
70.0
29.3
55.8
76.7
43.4
65.0
60.4
12
Thailand
45.0
40.1
43.3
83.3
63.4
76.3
59.8
13
Vietnam
65.0
20.0
49.3
73.3
50.5
65.3
57.3
14
Scores out of 100, with 100 the best. Source: BMI
Page 37
Vietnam - Risk/Reward Ratings

BMI View: Vietnam achieves a score of 57.3 out of 100 in BMI's Asia Pacific Real Estate Risk/Reward
Ratings (RRRs), unchanged from last quarter and last out of the 14 countries surveyed.
Despite this low score, and the mixed fortunes of the commercial real estate market over the recent past,
BMI believes that Vietnam's real estate market is actually one of the fastest-moving business environments
in the region. Rapid expansion has moved ahead of the regulatory environment and the country is a clear
outperformer among the emerging South East Asian countries in rewards analysis. However, prolonged
instability in the banking sector, corruption and delays to project development continue to represent
significant downside risk.
Rewards
Industry Rewards
Vietnam scores 65 in this category, the same as last quarter. This is indicative of a dynamic emergent
market and reflects our view that Vietnam will continue to be one of the most active and attractive
infrastructure markets in the region. Demand for new developments, especially in the retail sector, continues
to outpace supply as the population becomes more urbanised and disposable incomes grow. While many
projects faced setbacks during the economic contraction in 2012, the government is working hard to attract
additional foreign investment, particularly promoting new industrial parks and economic zones. Meanwhile,
the booming tourism real estate market should have a positive impact on retail real estate.
Country Rewards
In terms of country structure components, which include financial and labour market infrastructure,
Vietnam scores well below the regional average, on only 20 out of 100. The predominant cause is a lack of
sufficient financial infrastructure. Lending in Vietnam is characterised by poor operating standards and
dominated by the four state-owned banks, further complicating access to foreign capital. Government
attempts to combat inflation saw interest rates rise to historic highs in 2012. Although this subsided in 2013
and rates have returned to normal, many banks remain unwilling to lend to foreign investors to protect their
interests. Sub-optimal lending standards have also resulted in very high loan to deposit ratios in Vietnam's
banking sector. In the event of a liquidity shortage, or insolvency triggered by economic stress, a financial
crisis would be a plausible scenario, further restricting funding to the construction sector. Despite these
challenges, the government recently introduced a proposal to remove foreign ownership restrictions on
Page 38
publicly-traded companies, a move widely seen as an attempt to boost the country's stock market and attract
increased FDI into a stabilising economy.
Risks
Industry Risks
Although there is definite optimism that economic conditions will improve in 2014, after the economy grew
by 5.4% in 2013, after many projects stalled in 2012 investors remain wary of a second downturn. Office
and retail rents slid to historic lows and increasingly favourable incentives were required to boost long-term
occupancy rates, although we believe the sector may have turned a corner. On the plus side, foreign direct
investment (FDI) from regional partners such as Japan, Singapore and South Korea remain strong and the
country is increasing its economic ties with China and the US. Vietnam scores 73.3 in this indicator.
Country Risk
Instability in the banking sector including prevalent bad debts and geopolitical tensions in the South China
Sea remain the most significant country risks. Corruption also remains a large issue, contributing to the poor
scores within the country risk ratings. Investors see official corruption as one of the biggest hindrances to
running a business in Vietnam, with anecdotal evidence suggesting that 30% of a project's value is pocketed
by the contractor to pay bribes to relevant parties. However, the long-term economic outlook is improving
and legislative structure governing the infrastructure and real estate sectors is also improving, providing a
higher score for country risks than previously, at 50.5, up from 48.4 last quarter.
Page 39
Market Overview
BMI View: Recently characterised by high interest
GDP, Inflation And Interest Rates
rates, problematic inflation, real estate oversupply
Real GDP Growth (% y-o-y), Consumer Price

Inflation (% change, end of period) And
Central Bank Policy Rate, 2008-2018
and government imposed capital controls, Vietnam's

property market remains significantly affected by
economic declines and government crisis
20
management that is only beginning to relent.
20
10
10
Although the fundamentals for economic growth

look favourable for 2014, we note the impediments
economy, rising tensions with China, and questions

of long term Japanese investment, have furthered
2018f
2017f
2016f
2015f
2014f
2013
2012
2011
2010
0
2009
difficulties. The ongoing gloom in the European
0
2008
of an unstable banking sector and project financing
Real GDP growth, % y-o-y (LHS)

Consumer price inflation, % y-o-y, eop (RHS)
Central bank policy rate, % eop (LHS)
dampened a real estate sector dependent upon

investment within an export-led economy.
e/f = estimate/forecast. Source: Asian Development Bank,
General Statistics Office, State Bank of Vietnam
Nevertheless, the government has achieved

significant progress in addressing the deep
macroeconomic imbalances in Vietnam, which has
helped to curb inflation, reinforce confidence in the currency and led to the country's first trade surplus
since 1993. This will be of particular benefit to the retail real estate sector as rising incomes boost retail
spending, and have a corresponding benefit for retail rent rates. It will also benefit the industrial sector as
we believe rising consumer demand for manufactured goods will act as the impetus to spur the development
of Vietnam's domestic manufacturing industry, this will entail additional industrial spaces be built to meet
this burgeoning demand.
In 2013 the economy grew by 5.4% year-on-year (y-o-y), boosted by Q413 GDP growth of 6.0%, and with
accelerating foreign direct investment inflows, remittances, and merchandise trade exports, we have a
positive near-term outlook for the Vietnamese economy, which is translating into optimism in the real estate
market.
Page 40
Positive economic growth, the curbing of inflation
FDI Growing
and stable interest rates mean that there is increasing

private investment in Vietnam, and in particular
foreign direct investment, including into the real
estate sector. Vietnam Plus reported that in January
Inward FDI, 2002-2012 (US$mn and % change

y-o-y)
100,000
40
50,000
20
2014 there was US$176.3mn of FDI into Vietnam's

real estate sector, the second highest proportion
(after processing and manufacturing).
The government is committed to spending on
economic zones (EZs) and remains committed to
2012
2011
2010
2009
2008
2007
2006
2005
2004
0
2003
the development of industrial parks (IPs) and
0
2002
industrial parks. The country has invested heavily in
Inward FDI stock, US$mn (LHS)

Inward FDI stock, % change y-o-y (RHS)
attract in a more diversified portfolio of foreign

investment, especially from the US and China.
Foreign investments in Vietnam's industrial parks
Source: UNCTAD, BMI
(IPs) and economic zones (EZs) reached more than

US$110bn by the end of June 2013. Vietnam has 289 IPs, 15 coastal EZs and 28 border EZs. IPs attracted
around 4,665 foreign direct investment (FDI) projects totalling US$70bn, while coastal EZs and border EZs
had drawn around US$40bn and US$700mn investments respectively. Total aggregated registered capital
reached US$7.9bn in H113, representing more than 80% of the new investment capital. Vietnamese
investors invested more than US$713.9mn in the country's IPs and EZs in H113. IPs and EZs' contribution
to the state budget has increased 26% y-o-y to around US$1.4bn.
Page 41
Another area that is benefiting the retail real estate
Steady Growth
market is tourism. The country is becoming an

increasingly popular tourism destination, and the
number of hotels and tourist complexes is rising,
with accompanying significant investment from
Tourist Arrivals, 2008-2018 ('000 and % change

y-o-y)
10,000
property developers. As these are often mixed use,

25
and as Vietnam increasingly has sophisticated,

Western-style malls, tourist spending on retail will
5,000
surely rise.
real estate can have a bearing on investor

confidence. The residential market is affected by
2018f
2017f
2016f
2015f
2014f
2013e
2012
2011
2010
2009
which although not directly linked to commercial
0
2008
It is also worth mentioning the housing market,
Total arrivals, '000 (LHS)

Total arrivals, % y-o-y (RHS)
oversupply at the luxury end of the market, with

developers increasingly interested in social housing.
Meanwhile, demand at the lower end of the market
e/f = estimate/forecast. Source: General Statistics Office of

Vietnam, Vietnam National Administration of Tourism, BMI
is high, and average selling prices have been falling

in the residential market. This may in turn drive
investor interest in commercial real estate, which is in a more healthy state across the country.
Page 42
Hanoi
The capital of Vietnam, Hanoi, is the country's second largest city. Hanoi is set to be the fastest growing
city in terms of GDP when measured between 2008 and 2025. Industry and trade are important facets of
Hanoi's economic makeup, which has historically benefited the industrial rental sector.
The city's central business district (CBD) is centred on the Hoan Kiem neighbourhood, with Trung Hoa
Nhan Chinh emerging as a site for development in the south west of the city. According to Do Thi
magazine, the latter was named as the urban area most in demand in Vietnam before the property market
slump. At present, continued office construction in the city's outskirts, most notably the Cau Giay district,
may reduce demand for CBD space where rents are significantly higher.
Recently completed developments include the Keangnam Hanoi Landmark Tower in addition to the
recently renovated Trang Tien Plaza shopping mall, both located in Hanoi's CBD.
Ho Chi Minh City
HCMC is the largest economic centre in Vietnam with its primary industry being the services sector,
followed by the construction industry. In addition to being the most populous city in the country, HCMC is
a transport, trade and commercial hub both domestically and as a trade gateway to the international arena,
particularly South East Asia. In spite of the currently subdued real estate market, the city is well positioned
to weather the current tumult in the real estate market, with prime retail rents showing particular resilience.
Previously, it was reported that companies are returning to the centre of HCMC as office rentals continue to
plunge in value. However, companies that signed leases at the height of the property market boom in
Vietnam are now considering breaking their contracts and accepting the penalties in order to move to
downtown buildings with better facilities. The second half of 2013 continued to be a tenants market,
especially for large corporations looking to secure favourable long-term leases with upfront cash deals. As
with Hanoi, construction on the city outskirts have continued to suppress CBD rents as companies take
advantage of even lower rents in outer developments. However, much of the construction planned for
HCMC office developments was put on hold during 2012 and has yet to fully resume.
Page 43
Da Nang
Da Nang is a major transport hub with important commercial links due to its port on the South China Sea,
and is the leading industrial area in Vietnam. Historically, the industrial real estate sector is particularly
vulnerable to rental depression when the export-led economy is suffering. Despite the country's first trade
surplus in 20 years, international demand is not forecast to improve in the near future, making it unlikely
that this sub-sector will see a dramatic recovery.
The Da Nang commercial property market remains a bright spot in the Vietnamese real estate sector as
growth, especially in the hospitality centre, continues as international hotel chains capitalise on Da Nang's
tourist friendly location and historically low rents. The city's central location and access to costal and
cultural landmarks has attracted increasing levels of foreign investment, especially from South Korea, Japan
and Singapore. The Da Phuoc International New Town, a $250mn planned urban area on reclaimed land, in
addition to the recently completed Hyatt Regency Da Nang Resort and Spa, are prime examples of this
trend.
Because of its bright prospects, Da Nang is expected to draw people from Hanoi and HCMC. It has
relatively low real estate prices. It offers social stability and is a region of commercial growth.
Office
BMI View: Although rents in the office sector have been declining, we believe the sub-sector is beginning
to turn a corner. Having said that, the fall since the global financial crisis has been a steep one, and we
continue to expect a trend for active deal searching among tenants including relocation and quality
upgrades.
It has been reported that rates in Ho Chi Minh City (HCMC)'s central business district (CBD) have halved
since their pre-global financial crisis peaks, and in general the Vietnamese market has become much more
tenant-favourable.
Supply And Demand
Despite increased incentives for large-scale leasing, occupancy rates in all major central business districts
have not increased, our in-house sources out Hanoi's occupancy rate at 60%, with the threat of more
Page 44
pressure from planned developments outside city centres. Many of these projects, initially stalled due to
financing issues, have now resumed construction.
In HCMC we note the lack of new supply coming online or in the pipeline, which should make the market
turn more favourable to landlords, potentially driving rents up and vacancy rates down in the longer term.
In Da Nang, meanwhile, one of the main drivers of the office market is companies looking to downsize to
smaller premises, which is holding up the lower end of that city's market.
Table: Historic Rental Costs, 2012-2013 (US$ per m2/month)
January-June 2012
July-December 2012
January-September 2013
Min
Max
Min
Max
Min
Max
Hanoi
20.00
58.00
15.50
43.50
17.50
35.00
Da Nang
8.00
20.00
10.50
17.50
08.50
15.50
18.00
50.00
13.50
45.00
19.00
45.00
Source: BMI
Rents And Yields
While rents at the top end of the market have been falling over our review period, notably in Hanoi, where
they fell from US$58 per square metre (sq m) per month in H112 to US$35 in the first nine months of 2013,
rents at the bottom end are beginning to pick up, although only slowly. Hanoi's bottom end rents grew from
US$15.50 in H212 to US$17.50 in the first nine months of 2013, while in HCMC rents rose considerably,
from US$13.50 to US$19.00. Only in Da Nang did we see another fall, but this was after a rise between
H112 and H212.
In HCMC, as a result of new supply, we are expecting a slight increase in rents of 1% in 2014, and we see
flat rental rates in Da Nang over 2014, although we do see scope for Hanoi's rents to fall further.
Yields narrowed again in late 2012, after widening in the first half of the year in Da Nang and HCMC.
Meanwhile, yields overall rose in Hanoi over the same period, from 5-8% to 7-8%. Although yields in all
three cities are down markedly from 20% in the first half of 2011, we believe that they are now set for more
stability.
Page 45
Table: Net Yields, 2011-2012 (%)
January-June
2011
July-December
2011
January-June
2012
July-December
2012
Hanoi
20
8-10
5-8
7-8
Da Nang
20
5-8
8-14
8-10
20
8-10
8-15
8-10
Source: BMI
Recent Events
The falling rental rates and stalled real estate projects in Vietnam over the past few years have meant only
limited activity in the office real estate market. We note that according to press reports in mid-2013 the
Center Point building in Phu Nhuan, HCMC, was sold to Mapletree Vietnam.
In late 2013 Gemadept Corp sold the Gemadept building in HCMC to subsidiaries of South Korean firm CJ
Group.
Table: Terms Of Rental Contract/Leases, H113
Hanoi
Da Nang
Lease terms, years
Rent-free months,
if any
1-45
1-3
2-5
1-2
1-50
1-2
Source: BMI
Page 46
Retail
BMI View: The retail sector in Vietnam has notably
Rising Income And Spending
outperformed both the industrial and office sectors

as an increasingly urbanised young middle class has
Total MGR Sales (US$bn) And Gross Income

Per Household (US$), 2008-2018
raised both overall consumption and demand levels,

prompting increased investment from international
15
brands.
10,000
10
Supply And Demand

5
5,000
the most successful Vietnamese real estate

companies, for example, Vingroup, focus on retail
2018f
2017f
2016f
2015f
2014f
2013e
2011
2010
2009
demand for Western-style retail formats. Some of
0
2008
urbanised, as disposable incomes rise, so too does
2012e
The Vietnamese population is increasingly
Total mass grocery retail sales, US$bn (LHS)

Gross Income, per household, US$ (RHS)
real estate, and the number of shopping malls and

other Western-style outlets has risen dramatically.
e/f = estimate/forecast. Source: Company information,

Trade press, National statistics, BMI
Mass grocery retail (MGR) continues to be a

significant growth area, and we see sales in this area growing significantly over our forecast period, to 2018,
mirroring the rise we see in household incomes.
A number of Western operators now operate in Vietnam's MGR in the market. The latest Western MGR to
consider entering Vietnam is rumoured to be French major Auchan. Elsewhere in the retail sector, there are
significant levels of foreign investment, not only in terms of foreign real estate companies, but also foreign
retailers moving in to Vietnam. MacDonald's opened its first Vietnamese restaurant, in Ho Chi Minh City
(HCMC) in February 2014.
Page 47
Table: Historic Rental Rates, 2012-2013 (US$ per m2/month)
January-June 2012
July-December 2012
Min
Max
Min
Max
Min
Max
Hanoi
20.00
70.00
24.00
67.50
27.50
50.00
Da Nang
3.00
25.00
10.00
30.00
8.50
26.50
25.00
150.00
41.00
105.00
60.00
102.50
Source: BMI
Rents And Yields
Rental rates have had mixed fortunes over our review period, although have had a better showing than
office retail estate. HCMC remains the most expensive location for retail space, given that it is both the
largest city and economic centre in Vietnam. Rental rates at the lower end grew from US$25.00 per square
metre (sq m) per month in the early part of 2012 to US$60.00 in the first nine months of 2013. The increase
was significantly smaller in Hanoi, while in Da Nang, where rents have traditionally been lower than in the
other two cities we cover, there was a significant increase, although from a very low base. Da Nang was the
only city to see a rise in top-end rents, alghough only a slight one, while in Hanoi and HCMC rents fell.
However, optimism remains in the retail real estate market, and we note both that yields in this sub-sector
have fluctuated less than in the office sub-sector, and that there were several significant completions and
transactions in 2013.
January-June 2012
July-December 2012
January-September
2013
5-8
7-8
8-10
Da Nang
8-14
8-10
5-8
8-15
8-10
Hanoi
Source: BMI
Page 48
Recent Events
In late 2013 Vingroup's Vincom Mega Mall Times City, in Hanoi, opened. The mall contains 300 stores,
almost 90 restaurants, a cinema, acquarium and other attractions. Earlier in the year, in July 2013, the
company officially opened the Vincom Mega Mall Royal City, in Hanoi. The mall has more than 600 shops,
making it the largest mall in Vietnam, as well as an ice rink, more than 200 restaurants, a cinema complex
and other attractions.
Meanwhile, MGR expansions continued throughout 2013, with Son Ha and Ocean Retail among those
opening new stores, and Malaysia's Parkson and South Korea's Lotte opening new shopping centres.
Ramping up its presence in Vietnam, Japanese retailer Aeon is planning to build seven shopping centres in
the country, its first shopping mall due to be completed by early 2014. Aeon's announcement comes closely
after the Vietnamese government gave the regulatory nod for it to establish a local subsidiary in the country.
Aeon will be able to establish its own-branded supermarkets, shopping malls, department stores and
specialised stores. With competition quickly heating up in the Vietnamese mass grocery retail (MGR)
market, Aeon's plans to establish shopping malls should give it a greater control over its operating leases for
its grocery retail outlets and equip it with a strong competitive foothold.
Lease terms, years
Rent-free months, if any
Hanoi
1-10
1-3
Da Nang
3-10
1-3
1-50
1-2
Source: BMI
Page 49
Industrial
BMI View: The performance of the industrial sector throughout 2012 and into 2013 was understandably
influenced by significant macroeconomic uncertainty, with disappointing growth amid already low rates in
all three cities that we cover. However, we believe have a positive outlook for the industrial real estate
sector, driven by increasing foreign direct investment (FDI) into Vietnam and the country's growing status
as a manufacturing export hub
A continuing lack of confidence in the banking sector, despite decreases in inflation and lending
restrictions, prompted many overseas investors to look elsewhere in the short term. Indeed, financing
options, especially for foreign managed projects, remain problematic as many domestic banks are unwilling
to risk loans to previously postponed developments.
However, we note that FDI into Vietnam is increasing significantly, and is bringing increased demand for
industrial real estate. According to a report in Vietnam Plus, citing figures from the Ministry of Planning
and Investment, in January 2014 the manufacturing and processing industries attracted the largest
proportion of FDI, at US$189mn.
We also note that the government's continued support for the development of economic free zones and
industrial parts continues to create a sound basis for investment in industrial real estate.
Table: Historic Rental Costs, 2012-2013 (US$ per m2/month)
January-June 2012
July-December 2012
Min
Max
Min
Max
Min
Max
Hanoi
2.50
10.00
03.38
08.75
03.38
09.25
Da Nang
2.50
3.50
02.75
05.50
02.50
05.00
3.00
10.00
04.00
09.00
04.75
09.00
Source: BMI
Rents And Yields
Industrial rents are significantly lower than rents for the other two sub-sectors we cover. However, despite
the turbulence elsewhere in Vietnam's real estate industry over the past few years, industrial rents have
remained fairly flat at both the top and bottom ends of the market, and across all three cities that we survey.
Page 50
Rents are highest in Hanoi, at US$9.25 per square metre (sq m) per month at the top end, and lowest in Da
Nang, at US$2.50 at the bottom end.
Meanwhile, yields have narrowed considerably in all Da Nang, from 10-14% in H212 to 6-7% in the first
nine months of 2013, with a smaller narrowing seen in Ho Chi Minh City and stability in Hanoi.
January-June 2012
July-December 2012
January-September
2013
5-8
7-8
7-8
Da Nang
13-14
10-14
6-7
8-15
8-10
Hanoi
Source: BMI
Recent Events
We note that improvements to the country's infrastructure should boost its industrial sector, making exports
easier and cementing its appeal for foreign firms seeking a manufacturing base in the region.
Recent announcements on new road projects include the Phap Van-Cau Gie highway build-operate-transfer
(BOT) project, the expansion of the NH-1A Cam Ranh City-Cam Lam District (Khanh Hoa province) BOT
project, the Danang-Quang Ngai expressway and the Ho Chi Minh City (HCMC)-Long Thanh-Dau Giay
Expressway. Meanwhile, a north-south high-speed railway line is also a possibility, as is a high-speed line
connecting Laos and Vietnam.
Meanwhile, although curtailed, port development is still underway. The Vietnam Maritime Administration
announced in early 2013 that it would focus on building large deep-sea ports in Hai Phong's Lach Huyen
and Ba Ria-Vung Tau's Cai Mep-Thi Vai port complexes, as well as converting the remaining ports in the
central region and the Mekong Delta into special-use ports to transport materials for thermo-power plants.
Construction at Lach Huyen port project started in April 2013. The port, due for completion in 2016, will
have modern cargo handling equipment. It will be capable of handling container ships of up to 8,000
twenty-foot equivalent units (TEUs).
Page 51
Hanoi
Da Nang
Lease terms, years
Rent-free months, if any
1-50
1- 6
40-50
2-50
1-2
Source: BMI
Page 52
Competitive Landscape
BMI View: Vietnam's real estate sector has historically been dominated by state enterprises, but has been
opening up to private investment both from within Vietnam and internationally.
The real estate and construction markets consist of government-owned entities, listed corporations and
privately owned companies. Becamex IDC, Housing And Urban Development Corp (HUD) and the
Song Da Construction Corporation are state-owned. Private enterprise players include Vingroup,
COTECCONS Group, Nam Cuongm, Vinaconex and the Vietnam Construction And Machinery
Installation Corporation (Lilama).
After a period of loose lending standards in the real estate sector, the government, which aggressively
combated inflation through 2012, has tightened monetary policy and lending conditions, making it
increasingly difficult to fund real estate projects. As a result, developers have been forced to look beyond
banks to source funding. There is a trend for more mergers and acquisitions (M&A), and this is expected to
continue throughout 2014. Developers are also seeking joint venture (JV) partners or are looking to sell
property.
Meanwhile, a significant amount of foreign direct investment (FDI) into Vietnam's real estate sector comes
from overseas, notably Japan, South Korea and regional real estate leaders Singapore and Hong Kong. FDI
from China, an increasingly important investor in Vietnam, is rising.
With the eurozone sovereign debt crisis continuing and unfavourable growth outlook for most of the
Western world, investors and companies are increasingly looking to emerging markets for new
opportunities, and we expect foreign investment into Vietnam's real estate sector will increase. The fact that
the cyclical real estate market continues to soften in Vietnam means that the growth opportunities now
available due to the low base of affairs and stalled pipeline are dynamics that are investor-favourable for
those with adequate capital and patience to await the upturn in the market for almost guaranteed returns.
Real estate companies based in Singapore are showing sustained interest in investing in the Vietnamese
property market, according to the secretary-general of the Vietnam Real Estate Association, Phan Thanh
Mai. Singapore's CapitaLand, for example, is planning to boost its investments in Vietnamese real estate
projects to almost SGD2bn (US$1.55bn) from SGD400mn (US$310.3mn) over the next three to five years.
Page 53
Meanwhile, investors from South Korea and Israel, among others, have shown particular interest while
many domestic investors are looking to partner those from overseas. In June 2013 CBRE announced the
acquisition of its Vietnamese affiliate. CBRE Vietnam, which has been affiliated with CBRE for 10 years,
will become a fully integrated part of CBRE's South East Asian operations.
In light of increasing potential for FDI, the authorities in Vietnam are looking to capitalise on any emergent
investor interest.
A combination of push and pull factors are likely to see Chinese investment in Vietnam continue to rise
exponentially over the coming years. On the 'push' side, continued government support for outbound FDI by
the Chinese government will continue, while on the 'pull' side, Vietnam's infrastructure development will
allow companies to harness the country's improving relative competitiveness and strong economic growth
outlook.
Real Estate Investment Funds
Since September 2012 real estate investments fund (REIF) activity has been permitted in Vietnam. REIFs
allowed to invest in completed real estate developments, but are not allowed to develop of finance real
estate projects themselves.
HAGL Land, part of the HAGL Group, primarily develops apartment buildings, but also does some
commercial and office developments.
VinaCapital Real Estate Ltd is part of VinaCapital, and according to the company's website, 'provides
real estate advisory, development and management services for the property investments of VinaCapital
funds. VCRE has made real estate investments totaling over USD1.0 billion since 2003, primarily involving
the holdings of VinaCapital's flagship real estate fund, VinaLand Limited.' VinaCapital invests in a range
of real estate sub-sectors, including hotels, residential and office. VinaLand Ltd trades on the Alternative
Investment Market (AIM) in London, and invests in ' residential, office, retail, hospitality and township
projects'.
Indochina Land is part of Indochina Capital, and, according to its website, 'manages three private, closedended real estate funds with approximately US$500 million of committed capital, which translates into over
US$2 billion of projects currently in operation and under development in Vietnam.' The website goes on to
say that Indochina Land operates in numerous real estate areas, including office, retail, tourism and
residential.
Page 54
Son Kim Land, part of the Son Kim Group, is active in residential, office and retail real estate, and is
based in Ho Chi Minh City.
In terms of foreign investment in the sector, Japan Asia Vietnam, founded in 2008, operates in developing
and investing in real estate projects, including offices, hotels, residential projects. Singapore-based
Mapletree has a Vietnamese branch, It is active in logistics parks as well as office space.
Leading Vietnamese property developer Vingroup has five shopping malls in the country, Vincom Mega
Mall Times City (Hanoi), Vincom Mega Mall Royal Cityn (Hanoi), Vincom Center Long Bien, Vincom
Center Dong Khoi (Ho Chi Minh City) and Vincom Center Batrieu.
The Vietnam Infrastructure and Property Development Group is focus on Ho Chi Minh City, and has a real
estate portfolio that includes commercial, mixed-use, tourist and residential developments, mainly in Ho
Chi Minh City, but also elsewhere in Vietnam.
Tan Tao Investment and Industry Corp owns the Tan Tao Industrial Park, among other assets. The
company's main areas of interest are developing industrial parks and associated new urban areas,
developing infrastructure.
Page 55
Company Profile
Becamex IDC Corp

SWOT Analysis
Strengths
Weaknesses
State financed.
Over 35 years experience in the industry.
Diverse operations across a variety of construction and real estate sub-sectors.
Geographic limitations.
Business model and operations are subject to government reassignment or

modification.
Opportunities
Co-operation with BIDV for developments in Binh Duong.
Focus on the development of industrial and economic infrastructure.
Increasing regional partnerships with Japan and Singapore for investment and project
collaboration.
Threats
Company Overview
Susceptible to any vulnerability in the Vietnamese economy.
Structure may inhibit growth and increased foreign cooperation.
State-owned Becamex IDC, officially Investment and Industrial Development

Corporation, is structured as a parent-subsidiary corporation. It was established in 1976
and has its headquarters in Binh Duong province. It has 28 subsidiaries involved in,
among other areas, securities, finance, insurance, banking, construction and real estate.
Major activities include the development of residential and industrial parks, real estate
trading, civil construction and project investment.
According to its website, the company and subsidiaries are currently investing in and
managing six industrial parks in Binh Duong province, one industrial park in Binh Phuoc
and two parks in north Vietnam.
Page 56
It is also involved in residential developments, including Binh Duong New City and
Becamex City Centre.
Strategy
Becamex focuses its developments on its home province of Bing Duong, but also
operates across Vietnam. Its strategy is to become a limited liability company, in order
to maximise its potential.
According to its website, it hopes to 'develop multiple business lines, focus on the
development of industrial infrastructure - transportation - urban areas to lay the
foundation for promoting the development of other business lines.'
Particular areas of investment will include industrial infrastructure, including centralised
and specialised industrial zones, construction of urban developments, as the
development of health and education facilities.
Company Details
Becamex IDC Corp

230 Binh Duong Avenue
Thu Dau Mot City
Binh Duong Province
Vietnam
Tel: 84 650 382 2655
Fax: 84 650 382 2713
becamex.com.vn
Page 57
Nam Cuong
SWOT Analysis
Strengths
Engages in business across a range of construction and infrastructure sub-sectors.
Leading company in the field of urban development.
26 years of successful trading in the industry.
Weaknesses
Geographic limitations.
Opportunities
Expansion in the tourism sector.
Collaboration with international partners.
Modernisation and Industrialisation of Vietnam.
Threats
Increasing competition in the urban development sector.
Company Overview
Initially established in 1984 as a waterways transport company, Nam Cuong now

engages in residential, industrial and infrastructure construction, hotel management and
tourism, as well as trade and finance.
Nam Cuong has eight urban area projects in development, including several in Hanoi as
well as a major development in Hai Duong. It is also developing a number of new urban
areas in Hai Phong, Nam Dinh and Kien Giang.
Strategy
Through the building of infrastructure, urban development, hospitality and tourism, the
Nam Cuong Group aims to deliver quality investment and exceptional services to
contribute to the sustainable industrialisation and modernisation of Vietnam. This is
achieved through the company's 'six pillars' scheme, which aims to:
Produce quality of the highest standards;

Provide exceptional professional service;
Become respected as a trusted and valued partner;
Create an encouraging and productive working environment;
Uphold and adhere to social responsibility;
Build secure foundations for sustainable growth.
Page 58
Financial Data
The company does not release financial statements.
Operational Data
The company is privately owned and is not listed.
Company Details
Nam Cuong
70 Linh Lang St
Cong VI Ward
Ba Dinh District
Hanoi
Vietnam
Tel: +84 4 2766 4555
Fax: +84 4 3766 2438
www.namcuong.com.vn
Page 59
Song Da Construction Corporation

SWOT Analysis
Strengths
Breadth of experience across a wide range of construction sectors.
Over 50 years of market experience.
The company has a dedicated financial arm to supervise the financial health of the
company.
Weaknesses
Lack of geographic diversification.
Lack of timely financial reporting.

Opportunities
Modernisation and industrialisation of Vietnam.
Internationally funded opportunities such as the Truong Son Hydropower project

financed by the World Bank.
Threats
Company Overview
The Song Da Construction Corporation is a state-owned company, founded in 1960,

which undertakes various construction activities. Its areas of expertise include trading
real estate, building hydro-power plants, transport engineering, civil and industrial
works, installing power transmission lines and substations, producing construction
materials such as steel and cement, providing consultancy services in construction,
import and export of materials such as steel and cement, and construction technology.
Strategy
Song Da has set up a financial company to manage and enlarge its finances, which is
also responsible for listing the corporation's shares and for issuing corporate bonds.
The corporation has a number of power projects under way, including the 342megawatt (MW) Tuyen Quang Hydropower plant in Na Hang district. Total value of the
investment is around US$500mn. The project necessitates the resettling of up to 3,500
households.
Across the border in Laos, Song Da is heading the Viet-Lao Power Investment and
Development Joint Stock Company consortium to build the XE Kaman Power Plant. The
plant will have a capacity of 250MW, and is being developed under the build-operate-
Page 60
transfer model with a 30-year lifespan, including construction time. More than 4,000
Vietnamese workers will be moved to Laos to build the project.
Company Details
Song Da Construction Corp

Song Da Tower
Pham Hung St
Tu Liem District
Hanoi
Vientnam
Tel: +84 4 3854 1164
Fax: +84 4 3854 1164
www.songda.vn
Page 61
Vinaconex
SWOT Analysis
Strengths
One of the largest construction companies in Vietnam.
Experience across a breadth of industry sub-sectors.
Manages more than 40 subsidiaries.
Weaknesses
Relative newcomer to the market.
Opportunities
Modernisation and industrialisation of Vietnam.
Expansion into Africa and the Central and Eastern Europe to be further exploited.
Focus on two main business areas: property development and construction, which
are strengths and competitive advantages of the corporation.
Threats
Infrastructure project development was hard hit in 2012 by increased lending and
capital scarcity, with many projects yet to resume.
Company Overview
Vinaconex is one of the largest construction companies in Vietnam. Its areas of

operation include property development, construction, design, industrial production. It
works on both private and public sector projects, in Vietnam and overseas.
The company was established in 1998.
Overseas, the company has been involved in several projects such as Oran University in
Algeria; a subway system and a nuclear power plant in Bulgaria; and a number of
factories, hospitals and schools in the former Soviet Union.
Strategy
The company's mission is to build up Vinaconex as a leading group in the fields of

construction and property development, with effective operation, sustainable
growth, high awareness of corporate society responsibility, and active contribution to
the country's development.
Page 62
Company Details
Vinaconex
Vinaconex Tower
34 Lang Ha St
Dong Da District
Hanoi
Vietnam
Tel: +84 4 6284 9234
Fax: +84 4 6284 9208
www.vinaconex.com.vn
Page 63
Vingroup
SWOT Analysis
Strengths
One of Vietnam's largest real estate developers, and the largest registered on the
country's stock market.
Weaknesses
Opportunities
Threats
Diverse operations across a breadth of sub-sectors.
Strong financial capacity.
Board has two foreign directors as of June 2013.
Comparative newcomer to the market.
Perception of concentrated wealth and shares among family and friends of the owner.
Increased international investment, especially from the US and Japan.
Plans for internationalising shares through an IPO on an international stock market.
Future adjustment of available room of foreign ownership to above 49%.
Difficulties in the transition from domestic to international player.
Company Overview
Vingroup Joint Stock Company (formerly Vincom Joint Stock Company and the Vietnam
General Commercial Joint Stock Company) was established in 2002 and is
headquartered in Hanoi. Vingroup is publicly listed. Its initial public offering (IPO) was
carried out in 2007. The owner of Vingroup, Pham Nhat Vuong, is the country's first
billionaire.
Vingroup is one of Vietnam's largest real estate developers. It operates through
numerous subsidiaries to develop and construct offices, retail outlets and residential
projects, and to provide financial services. The company's key projects include the
Vincom Center in central Ho Chi Mih City (HCMC), the high-end Vincom Hai Phong
retail, office and residential complex in the heart of Hai Phong, the Vincom Financial
Tower in HCMH, which the company has touted as Vietnam's Wall Street, the Eco City
residential project in Hanoi and the upscale residential Royal City Project in Hanoi.
Page 64
At the end of 2013 the company had 44 subsidiaries.
Strategy
Vingroup has been striving to become the leading multisectoral business group in
VietNam and in the region.
Vingroup aspires to establish a Vietnamese brand, demonstrating Vietnamese
intellectual stature and pride in the international arena.
The group is planning to list overseas in 2014.
Recent
Developments
Most recently, July 2013 saw the completion of Vincom Mega Mall Royal City, listed by
Forbes Magazine as Asia's biggest underground retail and entertainment complex,
which includes over 600 shops in roughly 230,000sqm. The mall is part of the larger
Royal City project within Hanoi, and upscale urban development centre which will
feature retail, residential and office space when completed. The company also
announced plans for an international finance and banking sector in the Thu Thiem zone
of HCMC in late July.
Additionally, Warburg Pincus, the private equity owner of Neiman Marcus, plans to
invest up to US$325mn into Vingroup, including acquiring a 20% stake in the Retail
property unit. The move comes as Vietnam's finance ministry continues to push for
relaxed regulations on foreign ownership of publicly traded companies.
Financial Data
In unaudited results for 2013, the company reported gross revenue of VND736.6bn, an
operating profit of VND7,174.4bn and basic earnings per share of VND11,819.
For Q413 the company reported gross revenue of VND125.9bn, down 64.6% year-onyear (y-o-y), an operating profit of VND2,022.9bn, up 4995.6%, and basic earnings per
share of VND4,001.
Company Details
Vingroup
7 Bang Lang 1 St
Viet Hung Ward
Long Bien District
Hanoi
Vietnam
Tel: +84 4 3974 9999
Fax: +84 4 3974 8888
www.vingroup.net
Page 65
Demographic Forecast
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is
the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Vietnam's population pyramid for 2013, the change in the structure of the
population between 2013 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key datapoints from all of these charts, in addition to important metrics
including the dependency ratio and the urban/rural split.
Population Pyramid
2013 (LHS) And 2013 Versus 2050 (RHS)
Source: World Bank, UN, BMI
Page 66
Population Indicators
Population (mn, LHS) And Life Expectancy (years, RHS), 1990-2050
Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 ('000)
1990
1995
2000
2005
2010
2013e
2015f
2020f
68,910
76,020
80,888
84,948
89,047
91,680
93,387
97,057
0-4 years
9,315
9,323
7,128
6,898
7,229
7,152
7,012
6,575
5-9 years
8,606
9,212
9,253
7,023
6,791
7,052
7,181
6,968
10-14 years
7,857
8,541
9,162
9,117
6,899
6,619
6,757
7,147
15-19 years
7,359
7,788
8,492
9,050
9,011
7,686
6,866
6,726
20-24 years
6,644
7,222
7,673
8,333
8,874
9,148
8,936
6,802
25-29 years
6,006
6,470
7,065
7,471
8,112
8,528
8,772
8,837
30-34 years
5,138
5,890
6,352
6,910
7,286
7,703
8,022
8,680
35-39 years
3,888
5,065
5,803
6,242
6,763
7,011
7,208
7,940
40-44 years
2,463
3,826
4,994
5,719
6,147
6,472
6,685
7,127
45-49 years
2,017
2,409
3,753
4,935
5,648
5,894
6,054
6,589
50-54 years
1,968
1,959
2,346
3,700
4,855
5,306
5,521
5,926
55-59 years
2,046
1,891
1,885
2,237
3,542
4,278
4,677
5,330
60-64 years
1,669
1,934
1,790
1,734
2,068
2,795
3,352
4,444
65-69 years
1,412
1,522
1,771
1,610
1,562
1,673
1,906
3,104
70-74 years
1,028
1,216
1,322
1,530
1,399
1,360
1,379
1,695
Total
Page 67
Vietnam's Population By Age Group, 1990-2020 ('000) - Continued
1990
1995
2000
2005
2010
2013e
2015f
2020f
75-79 years
752
819
984
1,080
1,263
1,219
1,167
1,160
80-84 years
430
536
597
732
815
919
964
900
85-89 years
224
261
336
385
483
517
546
654
90-94 years
71
108
132
177
210
245
268
306
95-99 years
16
25
41
53
74
83
89
115
100+ years
12
17
21
24
30
e/f = BMI estimate/forecast. Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 (% of total)
1990
1995
2000
2005
2010
2013e
2015f
2020f
0-4 years
13.52
12.26
8.81
8.12
8.12
7.80
7.51
6.77
5-9 years
12.49
12.12
11.44
8.27
7.63
7.69
7.69
7.18
10-14 years
11.40
11.23
11.33
10.73
7.75
7.22
7.24
7.36
15-19 years
10.68
10.25
10.50
10.65
10.12
8.38
7.35
6.93
20-24 years
9.64
9.50
9.49
9.81
9.97
9.98
9.57
7.01
25-29 years
8.72
8.51
8.73
8.79
9.11
9.30
9.39
9.11
30-34 years
7.46
7.75
7.85
8.13
8.18
8.40
8.59
8.94
35-39 years
5.64
6.66
7.17
7.35
7.60
7.65
7.72
8.18
40-44 years
3.57
5.03
6.17
6.73
6.90
7.06
7.16
7.34
45-49 years
2.93
3.17
4.64
5.81
6.34
6.43
6.48
6.79
50-54 years
2.86
2.58
2.90
4.36
5.45
5.79
5.91
6.11
55-59 years
2.97
2.49
2.33
2.63
3.98
4.67
5.01
5.49
60-64 years
2.42
2.54
2.21
2.04
2.32
3.05
3.59
4.58
65-69 years
2.05
2.00
2.19
1.89
1.75
1.83
2.04
3.20
70-74 years
1.49
1.60
1.63
1.80
1.57
1.48
1.48
1.75
75-79 years
1.09
1.08
1.22
1.27
1.42
1.33
1.25
1.19
80-84 years
0.62
0.70
0.74
0.86
0.91
1.00
1.03
0.93
85-89 years
0.32
0.34
0.42
0.45
0.54
0.56
0.58
0.67
90-94 years
0.10
0.14
0.16
0.21
0.24
0.27
0.29
0.32
95-99 years
0.02
0.03
0.05
0.06
0.08
0.09
0.10
0.12
Page 68
Vietnam's Population By Age Group, 1990-2020 (% of total) - Continued
100+ years
1990
1995
2000
2005
2010
2013e
2015f
2020f
0.00
0.00
0.01
0.01
0.02
0.02
0.03
0.03
Table: Vietnam's Key Population Ratios, 1990-2020
Dependent ratio, % of total working age

Dependent population, total, '000
1990
1995
2000
2005
2010 2013e
75.8
71.0
61.3
50.8
42.9
41.4
2015f
2020f
41.3
41.9
29,712 31,567 30,734 28,617 26,741 26,860 27,293 28,655
Active population, % of total
56.9
Active population, total, '000
58.5
62.0
66.3
70.0
70.7
70.8
70.5
39,198 44,453 50,154 56,331 62,306 64,820 66,094 68,402
Youth population, % of total working age
65.8
Youth population, total, '000
60.9
50.9
40.9
33.6
32.1
31.7
30.2
25,778 27,076 25,544 23,038 20,918 20,822 20,950 20,690
Pensionable population, % of total working age

Pensionable population, total, '000
10.0
10.1
10.3
9.9
9.3
9.3
9.6
11.6
3,934
4,491
5,190
5,579
5,823
6,037
6,343
7,965
Table: Vietnam's Rural And Urban Population, 1990-2020
1990
1995
2000
2005
2010
2013e
2015f
2020f
Urban population, % of total
20.3
22.2
24.4
27.3
30.4
32.3
33.6
36.9
Rural population, % of total
79.7
77.8
75.6
72.7
69.6
67.7
66.4
63.1
Urban population, total, '000
13,958
16,867
19,716
23,175
27,064
29,632
31,384
35,771
Rural population, total, '000
54,952
59,153
61,172
61,773
61,983
62,048
62,003
61,286
Page 69
Methodology
Industry Forecast Methodology
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling and
causal/econometric modelling. The precise form of model we use varies from industry to industry, in each
case being determined, as per standard practice, by the prevailing features of the industry data being
examined.
Common to our analysis of every industry is the use of vector autoregressions. Vector autoregressions allow
us to forecast a variable using more than the variable's own history as explanatory information. For
example, when forecasting oil prices, we can include information about oil consumption, supply and
capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
BMI mainly uses OLS estimators and in order to avoid relying on subjective views and encourage the use
of objective views, we use a 'general-to-specific' method. BMI mainly uses a linear model, but simple nonlinear models, such as the log-linear model, are used when necessary. During periods of 'industry shock', for
example poor weather conditions that affect agricultural output, dummy variables are used to determine the
level of impact.
Effective forecasting depends on appropriately selected regression models. We select the best model
according to various different criteria and tests, including but not exclusive to:
R2 tests explanatory power; adjusted R2 takes degree of freedom into account;
Testing the directional movement and magnitude of coefficients;
Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value);
All results are assessed to alleviate issues related to auto-correlation and multi-collinearity.
Page 70
BMI uses the selected best model to perform forecasting.
Human intervention plays a necessary and desirable role in all of BMI's industry forecasting. Experience,
expertise and knowledge of industry data and trends ensure that analysts spot structural breaks, anomalous
data, turning points and seasonal features where a purely mechanical forecasting process would not.
Sector-Specific Methodology
In each of the countries surveyed, we have made contact with local sources (typically major commercial
real estate agents) and asked them 10 questions in relation to three sub-sectors:
Office
Retail
Industrial
We have combined the answers into the data tables and text that form part of the market overviews and
industry forecast scenario. In taking this 'grass-roots' approach, we believe we ensure that we identify, in a
timely fashion, key issues that will likely drive rents and yields over the short, medium and long term. We
have developed a framework that facilitates comparisons between cities and sub-sectors in different
countries.
In developing our long-term forecasts, we have focused on net yields. Our view is that as yields are driven
by both rentals and capital values the movements in yields provide a convenient short-hand for what is and
is not expected to be happening in markets.
Sources
Sources used in real estate reports include UN statistics, national accounts, housing and economy ministries,
officially released company results and figures, trade bodies and associations and international and national
news agencies.
Risk/Reward Ratings Methodology

BMI's Risk/Reward Ratings provide a comparative regional ranking system evaluating the ease of doing
business and the industry-specific opportunities and limitations for potential investors in a given
market. The system divides into two distinct areas:
Page 71
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development. This is further broken down into two sub categories:
Industry Rewards (this is an industry-specific category taking into account current industry size and
growth forecasts, the openness of market to new entrants and foreign investors, to provide an overall
score for potential returns for investors).
Country Rewards (this is a country-specific category, and factors in favourable political and economic
conditions for the industry).
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period. This is further broken down into two sub categories:
Industry Risks (this is an industry-specific category whose score covers potential operational risks to
investors, regulatory issues inhibiting the industry, and the relative maturity of a market).
Country Risks (this is a country-specific category in which political and economic instability,
unfavourable legislation and a poor overall business environment are evaluated to provide an overall
score).
We take a weighted average, combining industry and country risks, or country and industry rewards. These
two results in turn provide an overall Risk/Reward Rating, which is used to create our regional ranking
system for the risks and rewards of involvement in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall
Risk/Reward Rating a weighted average of the total score. As most of the countries and territories evaluated
are considered by BMI to be 'emerging markets', our ratings are revised on a quarterly basis. This ensures
that we draw on the latest information and data across our broad range of sources, and the expertise of our
analysts.
Sector-Specific Methodology
The following indicators have been used. Overall, the rating uses five subjectively measured indicators, and
over 20 separate indicators/datasets.
Page 72
Table: Real Estate Risk/Reward Ratings Indicators
Indicator
Rationale
Industry Rewards
Construction output, US$bn (previous year) Absolute size of construction sector used as proxy for size of real estate
sector.
Construction sector real growth,
compound annual growth rate (CAGR)
(previous year to three years hence)
Indicates prospects for, and confidence in, the construction sector, and
hence a proxy for prospects/confidence for real estate sector.
Total commercial bank lending, US$bn

(end previous year)
Real estate projects are long term and capital intensive, with most finance
obtained from commercial banks. Indicates funding availability.
Commercial bank lending, CAGR (previous This indicates prospects for the stability of finance and, implicitly, its cost. In
year to three years hence)
times of crisis, this is likely to be the most volatile indicator.
Country Rewards
BMI's BMI's Business Environment Rating
for financial infrastructure
This captures the efficiency of the commercial banking sector and other
elements of the financial services industry in making funding available to the
real estate sector.
Per capita GDP, US$
Higher per capita GDP correlates with the expansion of the middle classes,
which are the key market for residential real estate, and the users of
commercial and retail real estate.
Urbanisation, % of total population living in Urbanised states tend to be more conducive markets for real estate
urban areas
development, as they have deeper, more mature markets. That said, our
scoring methodology views favourably less urban, or even predominantly
rural, states that are characterised by persistently strong construction sector
growth.
Risks
Industry Risks
Lending risks, ratio of the growth in
nominal lending (ie by commercial banks to
non-bank customers) to the nominal
growth in GDP over a five-year period (last
year to current year plus three)
It is assumed that lending volumes and nominal GDP should, generally,

grow at the same rate. If lending growth substantially exceeds nominal GDP
expansion, this would suggest deterioration in risk standards by lending
institutions. Conversely, if nominal GDP rises substantially faster than bank
lending, the cost of finance for real estate ventures is likely to rise (affecting
profitability).
Financial institution confidence, change in This is used as a proxy for the stability of finance. Thus, a rapid decline in
the loan to deposit ratio over a five-year
the ratio (ie a lending squeeze) is penalised. Conversely, we are more
period (last year to current year plus three) tolerant of a rise in lending, as in itself, this may be positive for the industry.
High rates of lending growth are penalised as they could indicate an
investment bubble unless the state's Country Risk Short-Term Economic
Rating, a proxy for vulnerability to an economic shock, is very high.
Real estate prices, % change y-o-y
Where possible, we have identified a national index (usually for house

prices) and assess annual growth. The rating is symmetrical, in that high
growth (which indicates a bubble) is penalised, as is sharp price falls (which
indicates that bubbles have been burst). Where no real estate price index is
available, this indicator does not affect the overall score for this section.
Country Risks
BMI's long-term economic rating
A measure of long-term economic stability.
BMI's business environment legal

framework rating
Denotes the strength of legal institutions in each state. Security of

investment can be a key risk in some emerging markets.
Source: BMI
Page 73
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal
weight. Consequently, the following weight has been adopted.
Table: Weighting Of Indicators
Component
Rewards
Weighting (%)
50, of which
Industry Rewards
65
Country Rewards
35
Risks
50, of which
Industry Risks
65
Country Risks
35
Source: BMI
Page 74

BMI Vietnam Real Estate Report Q2 2014

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Q2 2014

Vietnam Real Estate Report Q2

Part of BMIs Industry Report & Forecasts Series

Business Monitor International

2014 Business Monitor International

Vietnam Real Estate Report Q2 2014

Industry Forecast .............................................................................................................. 14

Construction And Infrastructure Forecast Scenario ........................................................................................ 20

Macroeconomic Forecasts ............................................................................................... 33

Industry Risk Reward Ratings .......................................................................................... 37

Vietnam - Risk/Reward Ratings .................................................................................................................. 38

Market Overview ............................................................................................................... 40

Business Monitor International

Vietnam Real Estate Report Q2 2014

Competitive Landscape .................................................................................................... 53

Demographic Forecast ..................................................................................................... 66

Business Monitor International

Vietnam Real Estate Report Q2 2014

BMI Industry View

Business Monitor International

Vietnam Real Estate Report Q2 2014

Key BMI Forecasts

Business Monitor International

Vietnam Real Estate Report Q2 2014

Growing investor interest and foreign direct investment into Vietnam.

Development of industrial parks (IPs) and export processing zones (EPZs) is a

Oversupply in all real estate sub-sectors due to an earlier construction boom.

Access to credit for real estate development is restricted.

Corruption, especially regarding land disputes, continues to affect the business

Foreign interest and FDI in property is projected to rise.

In cities, consumer demand is high, driven by increasingly affluent urban population

The country is an increasingly important export-oriented manufacturing hub, which

Tourism is a growing industry, with significant investment into tourist-related real

Business Monitor International

Vietnam Real Estate Report Q2 2014

Vietnam Real Estate SWOT - Continued

To source financing independently of banks, developers are seeking partners as joint

Business Monitor International

Vietnam Real Estate Report Q2 2014

The Communist Party of Vietnam remains committed to market-oriented reforms and

Vietnam has allowed legislators to become more vocal in criticising government

Macroeconomic instabilities continue to weigh on public acceptance of the one-party

Business Monitor International

Vietnam Real Estate Report Q2 2014

The heavily-managed and weak currency reduces incentives to improve quality of

Urbanisation will continue to be a long-term growth driver. The UN forecasts the

Prolonged macroeconomic instability could prompt the authorities to put reforms on

Business Monitor International

Vietnam Real Estate Report Q2 2014

Vietnam remains one of the world's most corrupt countries. According to

Vietnam is increasingly attracting investment from key Asian economies, such as

Business Monitor International

Vietnam Real Estate Report Q2 2014

Rising GDP, Stable Inflation

long-term health of Vietnam's commercial real

Real GDP Growth And Consumer Price

could continue falling in some sub-sectors in the

Real GDP growth came in at 5.4% in 2013, and we

see this rate improving by half a percentage point to

(CPI) to average 5.8% in 2014, down from 6.6% in

Economic growth in 2014 will be partly driven by an

Meanwhile, we expect consumer price inflation

increased foreign direct investment (FDI).

employment and manufacturing output, as well as