C B R E R E S E A R C H | A P A C

REAL ESTATE
MARKET
OUTLOOK

VIETNAM
 TABL E OF CONTENT

03 06
ECONOMIC OUTLOOK OFFICE SECTOR

12 20
RETAIL SECTOR RESIDENTIAL SECTOR

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 ECONOMIC OUTLOOK
Vietnam’s economy to keep outperforming the region, despite
seeing slower growth
 ECO NO MIC OU TLOOK
VIETNAM
2018 was a year full of excitement for Vietnam as the economy reached a
new high and momentum is expected to carry forward in upcoming years.
Vietnam’s economy ended the year of 2018 with a very
impressive achievement. Despite many global economic
difficulties, such as the US-China trade conflict and the
rise of domestic economic protectionism, the Vietnamese
economy was still able to establish a new growth peak by
reaching the highest GDP growth rate in 10 years (7.1%),
with significant new records regarding trade balance,
foreign direct investment and efforts to manage inflation.
The economy also witnessed a deeper integration, not
only within the regional economy, but also the global one
by officially ratifying international trade agreements and
joining free trade areas such as Comprehensive and
Progressive Agreement for Trans-Pacific Partnership
(CPTPP) and potentially, Europe-Vietnam Free Trade
Agreement in 2019, thus, opening up opportunities for
better access into different markets.
The index of industrial production grew over 11.4% in
CBRE RESEARCH | © 2019 CBRE, Inc.
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2018. The processing and manufacturing industry
continued to grow impressively at 13.7%. Trade surplus
was at record high, equivalent to US$7.2 billion. Newly
established enterprises increased by 14.1% in total
registered capital. In addition, Vietnam also welcomed
approximately 15.5 million foreign visitors, an increase of
19.9% y-o-y.
The stock market experienced a volatile run in 2018, but
there were a number of successful IPOs, propelling
Vietnam to become the largest IPO fundraiser in
Southeast Asia. Vinhomes JSC, the largest real estate
developer in Vietnam, attracted US$1.35 billion, making
it the largest ever offering in the country. As the
government has plan to sell more of its stakes in state-
owned enterprises (SOEs), Vietnam will be an attractive
and buzzing market for equity fundraisers in the near
future.
ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
 ECO NO MIC OU TLOOK
VIETNAM
Credit growth, widely recognized as one of the main
drivers for economic growth in Vietnam, is expected to be
closely monitored in the upcoming years. As the
economy’s reliance on credit growth has lessened (as
demonstrated in Figure 1), its impact might become less
significant compared to past years, mostly due to a shift in
economic structure in recent years. The shift allows the
economy to attain sustainable growth and reduce the
pressure off the banking sector and inflation risks. On the
positive side, moderate credit growth helps solidify
fundamentals to brace for changes in the economic cycle.
In this context, the stock & bond market, an alternative
investment channel for capital seeking in the later stages
of growth cycles for domestic firms, will be closely
watched.
Figure 1: Credit Growth, Real GDP Growth & Inflation Rate, Vietnam
20%
15%
10%
5%
0%
2012 2013 2014 2015 2016 2017 2018 2019F
Credit growth GDP growth Inflation rate
Source: General Statistics Office
After a few years of hovering around 3.5%, the inflation
rate is expected to be slightly higher but still at an
acceptable range due to an increase in the basic salary
rate, electricity costs, education and medical fees as well
as some tax rates adjusting upward. Such an inflation
rate level would help ease the pressure off lending rates
and foreign exchange rates.
Foreign exchange rates should be stable in 2019 after the
Vietnam Dong depreciating 2.6% against the U.S. dollar
in 2018 due to rising foreign reserves. Foreign reserves
are forecasted to remain strong thanks to continuing
current account surplus, high FDI and foreign entities’
participation in sales of equity in state-owned
enterprises. Federal Reserve Board of the U.S. was open
to review its balance sheet normalization process, which
contributed to positive capital flows in emerging and
frontier markets
CBRE RESEARCH | © 2019 CBRE, Inc.
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in the first few months of 2019. With trade balances equal
to approximately 200% of GDP, Vietnam is susceptible to
changes in the global macroeconomic landscape such as
developments in notable geopolitical issues, including the
US – China trade tension, Brexit, and other movements in
various parts of the world, which should be carefully
analyzed as they pose possibly serious disruptions for the
Vietnamese economy and the real estate market as well.
However, such events could also provide opportunities for
Vietnam to integrate further into the global market,
especially as Vietnam is increasingly regarded as a rising
destination for manufacturing investment, amidst
ongoing trade conflicts.
In 2018, Vietnam attracted US$35.5 billion of registered
FDI, down 1.16% y-o-y but still at a relatively high level. The
amount of newly licensed capital decreased 15.5%. In
addition, increased capital of previous registered projects
in 2018 was US$7.6 billion, decreasing 9.7% y-o-y.
Meanwhile, implemented FDI rose by 9.1% y-o-y reaching
US$19.1 billion.
Manufacturing sector accounts for 47% of total newly
licensed FDI capital in 2018, which was equivalent to
US$16.6 billion in terms of value. Real estate sector stands
in the second place with US$6.6 billion regarding newly
licensed capital and accounts for 19% of total capital with
the emergence of large scale project such as Smart City by
joint-venture of Sumitomo Corporation & BRG Group with
registered capital of US$4.1 billion.
Such large scale projects helped propel Japan to be the top
investor to Vietnam during 2018 with US$8.6 billion,
accounting for 24% of the total investment, followed by
Korea and Singapore.
Figure 2: Proportion of FDI by Sectors in 2018, Vietnam
18%
Manufacturing
6% 47% Real estate
Retail
10%
Technology
Others
19%
Source: General Statistics Office
ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
OFFICE SECTOR
A Vibrant Year Awaits
 O F F ICE SECTOR

A VIBRANT YEAR AWAITS

SUMMARY
• A Wave of New Supply
Vietnam’s two largest metropolitan areas expect to welcome a wave of new supply,
of mostly Grade B offices, in 2019. The expected supply growth in 2019 of 13% and
11% in HCMC and Hanoi, respectively, will shake the office market for the first time
after a quiet period.
• Moderate Rental Growth Prospects
After a year of soaring rents in 2018, especially for Grade A offices in HCMC, rental
growth is expected to be more stable due to a surge of new supply coming online in
2019. Rental growth of Grade A offices in HCMC is expected to be 4%. Hanoi, on the
other hand, will see average rental growth to sustain at 1% y-o-y for both grades.
• Consistent Demand
Demand for office space is expected to remain consistently high in 2019 due to the
accelerating expansion of traditional sectors (IT/Tech and Finance/Banking) as well
as emerging sectors such as flexible space providers.
• Space Constantly Being Redefined
The increasing incorporation of advanced technology into workplace will continue
to reshape the office space usage, making it increasingly more flexible. The use of
flexible space will then be the crucial factor in all firms’ business portfolios in response
to a constantly evolving business context.

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HO CHI MINH CITY
OFFICE MARKET TO WELCOME A WAVE OF
NEW SUPPLY AFTER A QUIET PERIOD
After a quiet year of 2018 with barely no new supply,
HCMC’s market is ready to welcome a wave of new office
buildings in 2019 and beyond.
In 2019 alone, nine new buildings, with more than
150,000 sq. m., will be launched across the city, of which
two Grade A buildings will be in the CBD while all Grade
B offices will be spread out to non-CBD and decentralized
areas. This amount will mark the largest new supply
added to the office market in the past five years.
From 2020 to 2021, the market expects to introduce
additional high profile Grade A office buildings in the
CBD area. Approximately 150,000 sq. m. NLA of CBD –
Grade A offices will enter the market, lifting up the
currently scarce Grade A office stock.
New supply volume over the next three years will be
doubling the new supply that was launched in the past
three years from 2016 to 2018. This will come from 15
new buildings of both Grade A and Grade B, adding a
total of 347,000 sq. m. NLA to HCMC’s office stock.
MODERATE RENTAL GROWTH PROSPECTS
The wave of new supply expected in the coming years will
help ease the pent up demand of leasing office spaces. In
recent years, the scarcity of office stock presents limited
Figure 3. HCMC Office, New Supply and Vacancy
Forecast
120,000
100,000
80,000
NLA (sq. m.)
60,000
40,000
20,000
0 0%
2016 2017 2018 2019F 2020F 2021F
New Supply Grade A New Supply Grade B
Grade A - Vacancy Grade B - Vacancy
Source: CBRE Vietnam, March 2019.
CBRE RESEARCH | © 2019 CBRE, Inc.
O F F ICE SECTOR
options to tenants looking to relocate, expand or lease
new space. Additionally, the demand for expansion and
leasing of large area has been gradually increasing.
Hence, greater new supply over the next three years is
much anticipated to ease such leasing demand.
Increasing new supply, however, will put heavy pressure
on landlords, especially of older buildings, as the market
shifts to tenant’s market. Landlords would need to
monitor the shift of negotiation power over tenants
under such a circumstance.
Furthermore, the surge of office rents in 2018, with
average growth recorded at 15.8% y-o-y, has affected the
occupancy by the end of 2018, with Grade A vacancy
slightly increasing by year end (from 3.7% in Q3 to 5.0%
in Q4). Although it was a slight adjustment, this reflected
tenants’ reaction over quickly increasing rental rates.
Certain tenants at Grade A offices have restructured their
business portfolios by downsizing or even contracting
their spaces to relocate to Grade B offices and flexible
workspaces, a move seen as resistance against rents
surge. Landlords should be more prudent in rental
policies in order to avoid negative reaction from tenants.
Hence, rental growth of Grade A offices is expected to be
only 4%, comparing against the 15.8% growth recorded
in 2018, while its vacancy will continue to slightly
decrease to 4% in 2019. In addition, no new Grade A
building will be coming online until the end of 2019,
thus, the market will continue to absorb vacant spaces
from the existing Grade A offices.
Figure 4. HCMC Office, Asking Rent, USD/sq. m./month
Forecast
18% $50
15% $40
12%
Asking Rent
$30
Vacancy (%)
9%
$20
6%
3% $10
$-
2016 2017 2018 2019F 2020F 2021F
Grade A - Rents Grade B - Rents
Source: CBRE Vietnam, March 2019.
Asking rent excludes VAT and service charge
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 O F F ICE SECTOR

HO CHI MINH CITY

On the contrary, Grade B rental growth might experience
a minor downturn of 1.5% in response to a large number
of new Grade B buildings coming on stream in 2019,
which will also increase its vacancy rate to 6.9%.
SOLID DEMAND DRIVEN BY WORKSPACE
SOLUTIONS
Despite the market welcoming greater new supply in
2019 and beyond, the market expects that most buildings
will see healthy performance.
During the past few years, finance/banking and
manufacturing companies have occupied the largest
portion of total office demand. In 2019 and in the next
few years, the office market will experience a restructure
of demand when flexible workspace and tech firms are
expected to dominate office demand and become
anchored tenants of traditional offices. As of 2018, there
were approximately 27 flexible workspace centers in
HCMC with a total GFA of 37,780 sq. m., increasing by
109% y-o-y. Flexible workspace’s tenants are not only
freelancers, start-ups or small-medium enterprises but
also corporations. Demand for space from IT, Internet
and Tech firms is expected to further grow, driven by
expansion of both local and international companies.
TECHNOLOGY TO RESHAPE OFFICE USAGE
There is no denial for the advantages of applying
advanced technologies into the workplace to make the
management and operations of an enterprise more
efficient. In the next few years, companies are expected to
further technologize their operation systems to enhance
efficiency; in certain cases this might allow employees to
work remotely. The incorporation of technology into the
workplace will create a revolution and reshape of
office usage. Altogether, these evolvements are leading to
changes in occupiers’ requirements for unit sizes and
technical specifications. Under such a circumstance,
landlords would be required to adapt, via the
introduction and inclusion of technology, services,
facilities and amenities in the office space, providing
tenants with flexibility, convenience and wellness, on top
of safety and security. Landlords who could deliver such
requirements to meet the changing demand could
futureproof their performance, although this might
mean renovation works required.
Figure 5. HCMC Office, Tenants by Industry,
Major Transactions collected by CBRE, 2018
Flexible Workspace
22%
26% Services
Banking/Finance
12% Manufacturing
17% Technical Marketing &
16% Media
7% Others

Source: CBRE Vietnam, March 2019.

OUTLOOK
• Rental growth expected to be more stable
Landlords will be more prudent in rental policies in response to strong growth of
new supply
• Space constantly being redefined
Office space will become more flexible. The use of flexible space will then be the
crucial factor of all firms’ business portfolios in response to the constantly evolving
business context.

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 O F F ICE SECTOR

HANOI

SUPPLY GROWTH TO ACCELERATE
A significant amount of office space is expected to complete
in 2019 adding 138,000 sq.m, NLA to existing supply.
Accordingly, Hanoi office stock will increase by 11% y-o-y
reaching 1.3 million sq.m NLA. The supply growth rate of
11% exceeds previous levels of 4% per annum on average
during 2016 – 2018.
Grade B completions continues to be the major source of
new supply with eight buildings in the West and Midtown
submarkets covering 82% of total new supply in 2019.
For Grade A segment, after three years of no new supply, the
market will welcome one new building – Thaiholdings
Tower (NLA: ~24,500 sq.m). The new project will provide
opportunities for occupiers who want to expand in the CBD
– a submarket where stock has been unchanged during the
last five years.
Looking beyond 2019, Hanoi office expects to welcome even
more sizeable buildings, some of which by foreign
developers.
RENTAL GROWTH TO MODERATE WHILE
NET ABSORPTION TO REMAIN HEALTHY
In 2019, although there will be higher volume of new supply
potentially posing pressure on leasing activity, we still expect
healthy net absorption across both segments. As seen in
2018, stronger pre-commitment as well as improved leasing
speed at new projects led to the absorption reaching 100,000
Figure 6. Hanoi Office, New Supply and Vacancy
sq.m, NLA – the highest level observed over the past three
years. In 2019, the combination of healthy demand from
both traditional sectors and co-working providers as well as
quality new office supply will support the performance of
office market in Hanoi. We expect net absorption rate to stay
at a similar level to the previous year. As such, vacancy of
Grade B is expected to remain unchanged at 12% while that
of Grade A to increase by 4 ppts y-o-y reaching 7%
respectively this year. From 2020, further supply growth is
expected to create further pressure on vacancy rates.
Although there will be stronger new supply volume in 2019,
rental rates are expected to grow at a moderate pace of
around 1% level for both grades in 2019. For Grade A, rental
growth is expected to be slower than the levels experienced
in 2017 and 2018. On the back of limited new supply, rental
growth recorded a 10-year high in 2017, achieving more than
9%, then slowed to more than 2% in 2018. With the amount
of new supply anticipated in 2019 and beyond, rental growth
for Grade A is to further slow to around 1% on average for
the year. Grade B’s rents are also expected to grow at a
similar pace of 1%, which is relatively stable comparing to
the past two years. New buildings at good locations with
better specifications will be asking higher rents catering to
the expansion demand of international tenants with high
leasing budget. Meanwhile, landlords at low-vacancy
buildings seem to have increasing negotiation power at lease
renewals.
While relocation and expansion are still the main drivers for
office leasing demand, renewals will continue to be popular
among tenants in buildings in the CBD.
Figure 7. Hanoi Office, Asking Rent, , USD/sq. m./month

140,000 Forecast 20% $30 Forecast

120,000 $25
100,000 15%
$20
Vacancy (%)

Asking Rent
NLA(sq.m.)

80,000
10% $15
60,000
$10
40,000 5%
20,000 $5
0 0% $0
2016 2017 2018 2019F 2020F 2021F 2016 2017 2018 2019F 2020F 2021F

New Supply Grade A New Supply Grade B Grade A - Rents Grade B - Rents
Grade A - Vacancy Grade B - Vacancy
Source: CBRE Vietnam, March 2019. Source: CBRE Vietnam, March 2019.
Asking rent excludes VAT and service charge

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 O F F ICE SECTOR
HANOI
SIMILAR TO HCMC, FLEXIBLE SPACE
PROVIDERS ARE EXPANDING QUICKLY TO
BECOME BIG OCCUPIERS AND MAJOR
SOURCE OF LEASING DEMAND
Continued healthy office demand is expected in Hanoi in
2019. On the back of strong economic fundamentals, the
Financial and IT/Tech sectors remain in good shapes and
stable demand drivers. The tenants from these sectors
continuously accounted for around 40% of CBRE’s leasing
enquiries over the past three years. Among companies in the
financial sectors, local banks and international insurance
companies are expected to be the most active players
looking for new office space. These companies are either
seeking new locations for both back office and branches for
the purpose of expanding their networks and scales.
Meanwhile, IT/Tech sector witnessed expansion of both
local and international firms in 2018; CBRE expect the same
trend to persist in 2019.
In 2018, flexible space in Hanoi grew at 77% and accounted
for the largest proportion (31%) of major leasing
transactions (*) in Hanoi recorded by CBRE, showing greater
presence of this sector in leasing demand. The growth of
this model has been driven by the needs of improving space
efficiency of corporate clients. Flexible space providers have
actively approached these occupiers to introduce build-to-
suit service as a cost saving and workplace solutions.
Meanwhile, the cooperation of flexible space providers and
landlords to add co-working component in traditional office
buildings have also supported the expansion of this model.
OUTLOOK
• Solid expansion of Finance and IT/Tech sectors and persistently strong growth of
Flexible space will drive the Hanoi office market in 2019.
• Supply to grow at a higher rate than previous years to meet growing demand.
• Grade A’s rents in existing projects to be stabilized while newly completed projects
will ask for higher rates. For Grade B segment, rents only expect to increase
slightly as landlords look to ensure occupancy.
CBRE RESEARCH | © 2019 CBRE, Inc.
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As such, CBRE forecasts that the flexible space providers will
continue to be a major source of leasing demand in 2019.
In terms of sizing, the most common enquiries to CBRE
have been office space of under 500 sq.m, covering around
45% of CBRE’s enquires in Hanoi in 2018. In upcoming
years, we expect there will be stronger demand for larger
office space of more than 700 sm. The share of this sizing is
expected to increase from current level of 20% to 30% to
CBRE’s leasing enquiries in 2019.
From 2019 onwards, tenants will have more options to
consider given increasing volume of office supply to be
introduced from both Grade A and B. Locations such as
Midtown and West submarkets will continue to appear in
the prioritized option lists of IT firms and Insurance/Bank
branches. Meanwhile, MNCs, Embassies and Financial
sectors will have new options in the CBD for their expansion
or relocation plans.
Figure 8: Hanoi Office, Tenants by Industry,
Major Transactions collected by CBRE, 2018
8%
9% CWS Workspace
Flexible
31%
Insurance
9% Energy
IT
13% Healthcare
16% Real Estate
13%
Education
Source: CBRE Vietnam, March 2019.
(*) Major leasing transactions are defined as those with leased space of
greater than 1,000 sq.m
ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
 RETAIL SECTOR
Advancing Strategies Into New Retail Era
 RETAIL SECTOR

ADVANCING STRATEGIES INTO NEW

RETAIL ERA

SUMMARY
• Tight availability in CBD
Despite the rising interest in international brands by major cities in Vietnam like
Hanoi and HCMC, retailers face the dilemma of finding suitable retail spaces in CBD
areas. This challenge is likely to continue in the coming year with limited new supply
in CBD.
• Strong pipeline
In the next three years, Vietnam has a strong pipeline of shopping malls in major
cities, including Hanoi and HCMC. By the end of 2019, supply is expected to grow
remarkably by 25% in HCMC and 21% in Hanoi.
• Positive consumer confidence and young demographics
According to Global Consumer Confidence Survey by Nielsen, Vietnam’s
Consumer Confidence Index reached 122 points in Q4 2018, ranked fourth in the list
of the most optimistic countries in the world. Retail sales of goods continued to post
a strong double-digit growth in 2018.
With nearly 70% of population being between 15 and 64 years old, Vietnam has a
young demographic with constantly changing shopping behavior, which are
reshaping its retail industry.

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 RETAIL SECTOR

VIETNAM

STRONG CONSUMER CONFIDENCE

According to Global Consumer Confidence Survey by population from

Nielsen, Vietnam Consumer Confidence Index reached 15 to 64
122 points by Q4 2018, ranking fourth in the list of most
optimistic countries in the world, together with India,
70% years old
Philippines and Indonesia. With strong economic
performance, the overall upward momentum of consumer
confidence level is expected to continue in the coming
years.
Figure 9: Vietnam Consumer Spending
Together with the strong consumer confidence, the retail
market in Vietnam also has strong shift in consumer Insurance Premium
behaviour and preferences.
Home Improvements
SPENDING ON ENTERTAINMENT PRODUCTS New Tech Products

Despite considerable intention of saving, Vietnamese

Entertainment
consumers are willing to spend on new products and Holiday/vacations
entertainment. Compared to last year, Q4 2018 saw a
New Clothes
significant increase in expenditure on New Clothes and
Tech Products. More importantly, the most positive moves
0% 10% 20% 30% 40% 50% 60%
belong to spending on Out-of-home Entertainment and
Holiday Vacation, which increased by 5 ppts and 4 ppts y- Q4 2018 Q4 2017
o-y, respectively.
Source: Nielsen, Q3 2018.

HEALTH GOES FIRST

Improving quality of life plus rising education on food

safety issues has led to better awareness of food sources, Figure 10: Vietnam Health and Beauty sales, US$ million, 2018-2021F
quality, and hygiene amongst Vietnamese. Demand for
Forecast
all-natural and organic products is on the rise despite 900 18%
higher prices. In response to this trend, most
750 15%
supermarkets have dedicated areas for these products
and key players, including Saigon Union of Trading 600 12%
US$ million

Growth

Cooperatives and Vingroup, have even launched products 450 9%

under their own private label brands.
300 6%
Non-food organic products are also seeing equivalent 150 3%
growth patterns, as more consumers look for organic
0 0%
labels on their nutritional supplements, cleaning
2016 2017 2018 2019F 2020F 2021F
products, cosmetics and even clothing. In the future,
retailers will be more active in penetrating the market Drugstores/Parapharmacies sales
and diversifying their product portfolios to provide Vitamin and Dietary sales
consumers with more choices related to health, Health&Beauty total sales growth
nutrition, green and organic products. Watsons opened Vitamin and Dietary sales growth
its first store in Vietnam in early 2019, catching up the
Drugstores/Parapharmacies sales growth
demand for health and beauty in the country. Source: Euromonitor, Jan 2019.

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VIETNAM
RETAIL STRATEGY: EMBRACING
TECHNOLOGY TO IMPROVE CONSUMER
EXPERIENCE
Online retailers are expected to be more active in 2019 as
they continue to develop and invest in e-commerce and
logistics platforms. According to Euromonitor’s report,
internet retailing grew 32% in 2018, reaching total sales of
US$1.65 billion. Looking forward, online retail turnover is
expected to increase by more than 20% per annum over
the next three years. As a result, Internet retailing will
account for 4.4% of total retail sales in 2021, compared to
2.9% share in 2018. Some retailers, especially electronics &
appliance, in recent years have adopted omni-channel
strategy into sale process, allowing consumers to look for
product specifications and price comparison online before
purchasing.
Online delivery apps is another emerging trend that
retailers need to adopt. Besides the extensive portfolio of
restaurants and eateries, fast delivery and flexible
payment methods, food delivery apps such as Now by
Foody, GrabFood and GoFood race to capture customers
through various tempting promotions specifically free
shipping and discounts. The competition amongst these
apps will become even more intense after South Korea’s
Woowa Brothers, operator of the country’s leading food
delivery platforms Baedal Minjok, announced their
acquisition of Vietnammm which used to be the only
online food delivery platform in Vietnam. This
investment is expected to help Vietnammm raise its
current competitiveness and reshape the market.
Figure 11: Vietnam Internet Retailing sales, US$ million, 2018-2021F
Forecast
4,000
US$ million
2,000
0 0%
2018 2019F 2020F 2021F
Mobile internet retailing sales
Internet retailing sales
Total internet sales growth
Source: Euromonitor, Jan 2019.
CBRE RESEARCH | © 2019 CBRE, Inc.
RETAIL SECTOR
Vietnam’s food delivery market is valued at US$33
million and is forecasted to reach US$38 million in 2020,
according to Euromonitor.
Retailers are also creating their own mobile applications to
provide shoppers a better shopping experience using their
mobile devices. These include key internet retailers such
as Tiki, The Gioi Di Dong, Lazada and Shopee. The mobile
apps also integrate reminders and sale alerts to allow
customers to spend more during special events.
Consumers are expected to continue spending more in the
coming years using online shopping tools, while omni-
channel will be the focus for retailers' customer access
strategies.
In the near future, Vietnam market will see retailers
utilizing both online and offline channels to improve
customers’ experience and boost total retail sales.
Though online shopping is popular across all adult age
groups in Vietnam, differences in how age groups engage
with digital channels are an important focus for
omnichannel brands and their marketing and sales
platforms. Online channels may be growing their share of
retail transactions, but consumers’ shopping preference is
omnichannel: combining multiple channels for a single
purchase. While Gen Z shoppers, consumers aged 18-24,
are making a strong shift online to make their purchases,
some substratum retailing elements remain intact. Among
Gen Zs, the majority still prefer visiting stores to make
their purchases, after researching, browsing or price-
comparing online.
Figure 12: Vietnam Internet Retailing sales in Total Retailing sales, 2018-2021F
Forecast
60%
4%
4%
Growth rate
3%
30% 3%
2018 2019F 2020F 2021F
% Internet retailing sales in Total retailing sales
Source: Euromonitor, Jan 2019.
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 RETAIL SECTOR

HO CHI MINH CITY

FUTURE SUPPLY TO GROW BY 25%, MOSTLY
IN THE EAST
HCMC’s current retail supply reached almost one million
sq. m NLA. 80% of total stock are shopping centres, 14%
are retail podiums and department stores make up the
remaining share. In 2018, HCMC welcomed three new
large-scale shopping centers each of which measured
25,000 to 60,000 sq. m NLA. Compared to 2017, when
eight out of ten new projects in HCMC were retail
podiums with small scale, the new supply of 2018 has
now provided more quality spaces.
Pipeline of seven new shopping centres, with sizes
ranging from 20,000 sq. m NLA to 60,000 sq. m NLA per
project and totaling more than 247,000 sq.m NLA, are
expected to enter the market in 2019. Except Union
Square (which will be relaunched following renovation),
six other projects are all located in non-CBD areas.
More than 51% of total new stock is developed in the
East, while only 9.2% of that is in the city center. No
future supply will be posted for the West.
In terms of format, shopping centers are expected to
continue being the dominant retail format. The closure of
some Parkson department stores in HCMC has proved
that stand-alone department stores have failed to deliver
adequate shopping experiences for customers and to
adapt to rapid changes in consumer behaviors.
In terms of shop format, the trend of pop-up retail will
continue in the future, especially within the high-end and
mid-end segments. These stores have special, unique and
interesting designs that trigger curiosity in customers,
luring them to visit the store. HCMC has been chosen by
many foreign and local brands to open their first store in
Vietnam. In order to test an immature market such as
HCMC, a pop-up shop is a low-risk starting point. An
increasing number of local brands have also adopted this
pop-up model as a great way to test an area and potential
clientele. Retailers have correspondingly taken advantage
of the peak shopping season by hosting holiday pop-up
shops at short-term retail spots in busy shopping centres
such as Saigon Centre.
POSITIVE RENTAL GROWTH OUTLOOK

These upcoming projects are progressing relatively slow In 2019, retailers across Asia Pacific are expected to
compared to their initial planning. In the coming years, remain cautious after getting back on their feet, and
as further large-scale condominium projects would be around half of the major markets are to see growth slower
completed, a significant supply of retail podiums is than the average of the last five years.
expected to surge accordingly.
In that context, HCMC appears to be one of the few
markets with a bright rental growth outlook, where rental
Figure 13: Regional Retail Rental Growth, 2019F
levels in 2019 are expected to rise quicker than the levels
Outperforming Recovering Slowing observed past five years. This is driven by new quality
15% space to be introduced, which has been long sought after
by international retailers wishing to enter or expand in
10%
the city. However, rental growth prospects will not be
5% similar at all malls and all locations; locations of limited
footfall and malls with outdated designs and irrelevant
0%
positioning would continue to struggle, unless changes
-5% arrive timely enough.

-10%
In HCMC, CBD rental growth will increase from 2019
Beijing
Guangzhou
Tokyo (Ginza)

Hong Kong
Brisbane

Hanoi CBD

Shanghai
Shenzhen
HCMC CBD

Sydney

Auckland
Taipei
Singapore

Melbourne

onwards owing to completion of new projects. Stronger

economic growth, high consumer confidence and more
favorable FDI policies have enticed overseas retailers,
2019F 5-year average which is a push for new rental levels in CBD areas.

Remarks: All the above are high street rents except Vietnam, China, Singapore and
Auckland tracked shopping centres rents.
Source: CBRE Research, January 2019.

CBRE RESEARCH | © 2019 CBRE, Inc. ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
16
 RETAIL SECTOR

HO CHI MINH CITY

RENTS TO RISE BY 5% ON AVERAGE IN
2019
In 2018, the significant disparity in supply between CBD
and non-CBD areas has led to a great divergence of rents
with asking rents for an area of 80–250 sq. m. on ground
floor and first floor in CBD area ranging from
US$75/sq. m/month to US$156/sq. m/month. Moreover,
new retailers aiming at CBD area face lower hand in
negotiating with landlords and developers. In 2018,
vacancy rates in the CBD area were extremely low due to
limited supply in this area. The vacancy rates in non-CBD
areas decreased owing to good absorption of new supply.
In 2019, increasing new supply in both CBD and non-CBD
areas is expected to raise vacancy rates in these areas, to
17.5% and 15.3%, respectively. Despite scarce supply in
CBD areas, occupancy rate of the new supply in 2019 (to
open after renovation) will not be extreme given its large
scale and high rental rate, leading to higher vacancy rates
in CBD areas.
In 2019, new supply in prime locations of both CBD and
non-CBD areas, typically offering higher asking rents, are
expected to push average rents in these areas to
US$134/sq. m/month and US$39/sq. m/month,
respectively. Afterwards, there will be two to three projects
each year, and these projects are scattered in diverse
locations of the city. Therefore, average rental rates are
forecasted to remain stable for 2020 and 2021.
Moreover, retail podiums at residential projects still
attract a decent flow of tenants, especially from F&B and
activity-based segments. This is the result of flexibility in
terms of rental agreements offered by private landlords.
Tenants will keep looking at a revenue sharing model
with the property owners when they open a new outlet.
This model, which has become more popular in the city,
helps retailers to reduce rental costs, at least in the initial
months of opening an outlet, when the business is not yet
profitable and when footfall is lower.
NEW ENTRANTS TO THE MARKET
Among brands coming to Ho Chi Minh in 2018, more
than half are from the Asia-Pacific region, most of which
are from Asia including Taiwan and Japan. Most new
entrants were from F&B and mid-range fashion segments.
Beverage retailers such as milk tea brands from Taiwan
were particularly active in the market last year, through
either opening their footprint or expanding their
footprint in the city. Several shopping malls have
increased their F&B presence to more than 20% including
the three latest projects, Estella Place, Vincom Center
Landmark 81 and Van Hanh Mall. There will be a further
shift away from traditional shopping mall’s tenant mixes
towards an increased focus on entertainment and F&B. In
2019, F&B retailers from Asia Pacific nations, for example
Hai Di Lao Hot Pot and Hachiban Ramen, together with
specialist clothing brands from Europe namely FitFlop
Footwear and Olivia Burtons, will enter HCMC market.
Since CBD supply is scarce, tenants have little advantage
in opting for locations while landlords have the
opportunity to select their tenants.

Figure 14: HCMC Retail, New Supply and Vacancy Figure 15: HCMC Retail, Asking Rents, USD/sq.m/month

Forecast Forecast Forecast

250,000 30% $145 $40
200,000 24% $140 $38
Vacancy (%)

150,000 18% $135 $36

NLA (sq.m)

100,000 12% $130 $34

50,000 6% $125 $32
0 0% $120 $30
2016 2017 2018 2019F 2020F 2021F
2019F
2020F
2021F

2019F
2020F
2021F
2016
2017
2018

2016
2017
2018

New Supply (CBD) New Supply (Non-CBD)

CBD - Vacancy Non-CBD - Vacancy CBD Non-CBD
Asking rents are net of tax and service charge
Source: CBRE Vietnam, Mar 2019. Source: CBRE Vietnam, Mar 2019.

CBRE RESEARCH | © 2019 CBRE, Inc. ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
17
 RETAIL SECTOR

HANOI

SUPPLY TO GROW BY 21% IN 2019, residential or commercial towers above. Luxury

MOSTLY TO THE WEST
In 2018, 72,500 sq.m NLA from four projects were added to
Hanoi retail market, driving up total retail supply to nearly
865,000 sq.m. Retail space in CBD accounts for only 6.3%
of total space in Hanoi and will reduce to 4.8% by 2021 with
no future supply in the CBD in pipeline. CBD will continue
to post positive rental growth and low vacancy rates of
below 5% in the coming year. Nevertheless, non-CBD
shopping malls will face strong pressure from rising
competition. Two of four malls opened in 2018 include
Discovery Complex and Machinco in the largest retail
supply cluster – the West where nearly half of total retail
space is located. Looking towards 2019, retail supply will
grow by 21% per annum, bringing total space to surpass
one million sq.m. The West will continue to dominate
market supply as four out of six projects (126,700 sq.m) will
be opened in 2019 in this area. On the other hand,
residential developments and infrastructure improvements
will lead to more retail supply in the South with two
openings in 2019 - Hinode City and Sun Plaza Ancora. New
properties in strategic locations with reputable developers
are forecasted to charge premium rents while existing ones
would face pressure on performance, especially weak-
performing malls. As a result, ground floor rents are
expected to remain stable or to adjust slightly.
In terms of format, malls as a part of residential complexes
will continue to thrive. Five out of six future projects in 2019
are located in podiums, utilizing immediate demand from
international retailers keen on expanding to local market
have searched for shops and podiums along major high
streets in CBD as alternative to high-quality retail space,
which is of shortage in Hanoi. High street shops, however,
pose more challenges than usually unsuitable designs and
limited scale. Notwithstanding high rent for prime
location, street shops have limitations in terms of façade
and technical requirements. International fast fashion
tenants require sizeable scales and prefer shared-revenue
scheme which is not common for typical shophouse
owners. The challenges will remain as landlords and
tenants gradually morphed into an agreement.
EVOLUTION OF RETAIL LOCATIONS
At present, there is no established shopping district in
Hanoi’s CBD due to a lack of stock. The past few years have
seen a shift of shopping areas beyond CBD, gradually
forming new bustling retail destinations in local market.
The areas within 3-5 km from CBD have seen rapid
infrastructure improvements and developments of new
shopping malls. Area along Chua Boc, Ton Duc Thang, and
Kim Ma streets in Midtown has gained it status as busy
shopping areas for street shops and shopping centers,
attracting more international brands. On the other hand,
the intersection of Pham Hung and Tran Duy Hung streets
started seeing more scaled shopping malls with the
development of office and residential buildings. Vincom
Center Tran Duy Hung is set to open in 2019, luring mid-
end to high-end brands into this area.

Figure 16: Hanoi Retail, New Supply and Vacancy Figure 17: Hanoi Retail, Asking rents , USD/sq.m/month

Forecast Forecast Forecast

250,000 25% $102 $32
$101
Vacancy rate (%)

200,000 20% $30

$100
NLA (sq.m)

150,000 15% $28

$99
100,000 10% $26
$98
50,000 5% $97 $24

0 0% $96 $22
2019F
2020F
2021F

2019F
2020F
2021F
2016
2017
2018

2016
2017
2018

2016 2017 2018 2019F 2020F 2021F

New Supply - CBD New Supply - Non CBD CBD Non-CBD

CBD - Vacancy Non-CBD - Vacancy
Asking rents inclusive serviced charge but exclusive VAT
Source: CBRE Vietnam, Mar 2019. Source: CBRE Vietnam, Mar 2019.

CBRE RESEARCH | © 2019 CBRE, Inc. ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
18
 RETAIL SECTOR

HANOI

INTERNATIONAL RETAIL DEVELOPERS TO BE
MORE ACTIVE
By end of 2018, only four shopping malls in Hanoi are
developed and managed by foreign retailers, including
Central Group, Lotte Group and Aeon. Looking forward,
with the expansion plan of big international players such as
Lotte, Aeon, and Big C, the market is expected to see
upgrading mall designs with regional scales and
comprehensive merchandising mix. Such regional malls
tend to locate in non-CBD area with large-scale residential
developments, providing add-on services and amenities to
residents in the immediate catchment. Looking forwards,
the fact that Aeon Mall Ha Dong of regional scale (more than
60,000 sq.m NLA) is expected to come online with its usual
Japanese concept, will set new standards and bring more
exciting brands to the immediate catchment of Ha Dong
district.
LANDLORDS GOING CREATIVE AND
FLEXIBLE
2018 saw several cases of flexible offices (co-working)
moving into retail spaces on the back of limited quality
supply in well-located office buildings. This type of tenants
with a typical size of 2,000 sq.m tend to locate from 2nd floor
and above, helping to alleviate vacancy pressure for
landlords quickly. Besides, some sizeable non-traditional
retail tenants such as financial services and health &
supplement offices have started moving into shopping
malls. This trend is expected to continue in the coming
years, especially in malls seeing high vacancy on upper
floors. In addition, F&B category will continue to get a bigger
bite at most shopping malls, adding experiences to keep
mall visitors to stay longer. It is observed that certain new
shopping malls have seen share of F&B reach up to 20%
while this category typically accounts for only 9 – 15% of
retail space. Red Sun and Golden Gate are two most active
restaurant chains in shopping malls, focusing on those with
diversified merchandising mix in populated areas.
ADVANCED TECHNOLOGY BOOST BRICK -
AND-MOTAR SALES
During 2018, retailers and landlords have invested in
logistics platforms and new store concept to drive
customers in and attract millennials who are technology-
savvy. Lotte Department Store in Hanoi has upgraded in-
store experience and technology by changing shopping
environment to “village concept” and “smart experience”,
including new Phuong Nam Bookstore with more lifestyle
concept and reading area. New feature “Smart Pick-up”
leverages store as pick-up for online orders on Lotte.vn,
targeting young customers.
In 2019, investments by supermarket chains in technology
are expected to reshape the grocery industry. Vinmart
recently launched Scan & Go feature on mobile app for
customers to shop. From scanning the products’
specifications to paying at express lines using QR code, app
users can shop for products at Vinmarts quickly or have it
delivered within two hours.

OUTLOOK
• Advanced technology to boost bricks-and-mortar sales
Retail market is expected to see more technology advancement in physical stores
amid the disruption of e-commerce.
• High quality future supply
The market is awaiting high-quality supply with the increasingly high demand from
international retailers and changing young generation’s shopping habits. Besides,
the expansion of international mall developers will lead to the transformation of
shopping mall designs, putting the pressure of remerchandising and space
renovations on many of the existing shopping malls.

CBRE RESEARCH | © 2019 CBRE, Inc. ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
19
CONDOMINIUM
From Boom to Steady Growth
 CO NDOMINIU M

FROM BOOM TO STEADY GROWTH

2018 confirmed a new stage of Vietnam condominium market from boom to

steady growth, which is expected to continue in the future. Via new policies and
guidelines, the government has played a stronger role in mitigating risks while
developers are enhancing resilience to meet high demand for housing market
driven by a growing young population and a growing expat community.

LEVERAGING OPPORTUNITIES FROM STABLE conflicts and the relocation trend of factories from China
DOMESTIC DEMAND AND INCREASING to South East Asia countries. This leads to the growth of
FOREIGN INTEREST expat communities in Vietnam.

Demand for housing in Vietnam, especially in HCMC and

Vietnam condominium market is becoming more
Hanoi, is rising due to high pace of urbanisation.
attractive for both end-user and investor demand,
According to the World Bank, with the current trend of
especially in the context that regional markets are more
urban migration in Vietnam, the share of urban
tightened to foreign buyers while Vietnam is recently
population is expected to reach 50% by 2040.
opening up.
Additionally, the steady growth of population in Hanoi
and HCMC of average 2% per annum each city as seen
High demand is shown in the number of pre-sale
over the past five years will drive constant housing
reservations – especially at certain high-end and luxury
demand.
projects where the number of reservations is recorded
double or four times higher than the expected new launch
Overseas demand was fuelled by FDI inflow. Vietnam is
units. This trend is mostly seen in projects at prime
expected to benefit from the recent US-China trade
locations.

CBRE RESEARCH | © 2019 CBRE, Inc. ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
21
 CO NDOMINIU M

VIETNAM

Figure 18: Growth of Population and Workforce, Vietnam

100 2.5%
80 2.0%
Million persons

Growth (y-o-y)
60 1.5%
40 1.0%
20 0.5%
0 0.0%
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018
Total population Workforce Workforce growth
Source: GSO, Vietnam

Figure 19: HCMC Condominium, Accumulated Sold Rate by Figure 20: Hanoi Condominium - Accumulated Sold Rate by
Segment as of 2018 Segment as of 2018

94% 88%
91% 90%
87% 87%
89% 88%

Source: CBRE Vietnam, March 2019. Source: CBRE Vietnam, March 2019.
Calculation: Accumulated sold since 1999/Accumulated supply since 1999 Calculation: Accumulated sold since 1997/Accumulated supply since 1997

Figure 21: HCMC Condominium, Primary Pricing Index Figure 22: Hanoi Condominium, Primary Pricing Index

2018

2017

2016 Increasing
Trend
2015

2014

0% 20% 40% 60% 80% 100% 120% 140% 0% 20% 40% 60% 80% 100% 120% 140%
Luxury High-end Mid-end Affordable
Source: CBRE Vietnam, March 2019.
Calculation: 2014 is the based year and the indexes of each segment is 100%. Other years’ indexes are calculated as percentage of average primary pricing of each segment of the year to
2014’s primary pricing of the same segment

CBRE RESEARCH | © 2019 CBRE, Inc. ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
22
 CO NDOMINIU M
HO CHI MINH CITY
POSITIVE MARKET SENTIMENTS TO SUSTAIN
To tap high demand from end-users, many developers
have prepared the land bank in city fringe districts and
surrounding provinces including Binh Duong, Dong Nai
and Long An. The focus on those provinces are in line
with HCMC proposed master plan. Lower tier segments
are expected to be active in 2019 and onward continues
from large-scale projects. Regarding locations, the eastern
part of HCMC is expected to be the highlight, especially
District 9 and Thu Duc District.
Over the next three years, HCMC is expected to welcome
approximately 90,000 units. New launch in 2019 will be
slightly lower than 2018 due to slow licensing process. By
2020, with the removal of restriction for condominium
development in central area, new launch supply will
reach 33,000 units. In 2021 together with the completion
of Metro Line No. 1, the market is expected to have
additional 35,000 units.
Mid-end segment is expected to reach 75% of 2019 new
launch supply, the highest number since 2007, thanks to
large scale projects in the East and the South. In 2020,
launches of luxury and high-end segment are expected to
increase by 35% y-o-y thanks to new projects in District 1
and Thu Thiem area. Affordable segment expects to
Figure 23: HCMC Condominium, New launch and Sold units
45,000 New launch supply
Forecast
Sold units
40,000
Primary Price (US$ psm)
35,000
30,000
25,000
Units
20,000
15,000
10,000
5,000
- 0
2016 2017 2018 2019F 2020F 2021F
Luxury High-end Mid-end Affordable
Source: CBRE Vietnam, March 2019.
CBRE RESEARCH | © 2019 CBRE, Inc.
23
maintain a stable growth rate.
Selling prices in mid-end and affordable segments are
expected to post modest growth rates from 1%-3% due to
high competition from a large volume of supply. High-
end projects in District 2 and District 7 are expected to see
higher selling prices, representing 5% y-o-y growth. For
approved luxury projects in District 1 and District 3,
selling prices are expected to increase from 5%-7% per
year, due to scarcity of land bank in the city centre. This
growth rates are similar to 2018 in most segments.
Secondary market will be more active in 2019 thanks to
shortage of new supply, especially in District 1, 2 and Thu
Thiem area. Projects in these areas can achieve up to 30%
price growth compared with launched prices.
Buyers are becoming more discerning on both units and
projects quality. They are more concerned on safety issues
and management quality. Infrastructure issues such as
potential flooding and traffic congestion, condominium
management services are keys to influence buyers’
decisions. Product enhancements will be the key to
improve sales performance for projects targeting end-
users. While large-scale townships will offer wide range of
amenities, single projects are expected to pay more
attention to unit design and building specifications.
Figure 24: HCMC Condominium, Primary Prices
7,000
Forecast
6,000
5,000
4,000
3,000
2,000
1,000
2016 2017 2018 2019F 2020F 2021F
Luxury High-end Mid-end Affordable
Source: CBRE Vietnam, March 2019.
ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
 CO NDOMINIU M
HANOI
ENHANCING RESILIENCE
Over the past few years, Hanoi condominium market has
been expanding further and further away of more than 10
km to the CBD. The market has witnessed increasing new
supply from suburban districts such as Dong Anh and Gia
Lam. In particular, the share of suburban districts to total
new supply has increased from 11% in 2016 to 20% in
2018. This trend is expected to continue from 2019
onwards since there is limited land bank at core districts
such as CBD or Midtown. Additionally, it also highlights
that the future supply will be more focused on large-scale
townships instead of small to medium scale projects as
seen commonly in the past. While customers are more
discerning, the projects launched from townships have
certain advantages in terms of amenities and
landscaping. However, the total volume of supply from
these large-scale projects will challenge their developers
to set proper phasing to avoid pressure on selling efforts.
The level of new supply is expected to stay at above 32,000
units in 2019 – a relatively similar volume as seen from
2016 – 2018. The mid-end segment still dominates the
market with forecasted share to new supply of around 65 –
70% pointing out that Hanoi market is end-users-
oriented. Sales performance, thus, is forecasted to reach
28,000 – 30,000 units in 2019.
Figure 25: Hanoi Condominium, New launch and Sold units
Forecast
45,000 New launch supply
40,000 Sold units
35,000
30,000
Units
25,000
20,000
15,000
10,000
5,000
- $0
2016 2017 2018 2019F 2020F 2021F
Luxury High-end Mid-end Affordable
Source: CBRE Vietnam, March 2019.
CBRE RESEARCH | © 2019 CBRE, Inc.
24
While mid-end products are common in condominium
market, recent progresses seen at prime sites in core
districts and Tay Ho area signal the return of luxury after
two years absent of new supply. Luxury primary pricing is
expected to reach around US$4,500 psm much higher in
comparison with previous launch levels of US$3,5000 -
$4,000. For high-end segment, it is expected that there
will be more product upgrades and offerings from both
local and international developers to meet the demand of
investors and high-income end-users. Pricing growth of
mid-end and affordable segments is predicted to be
modest at around 1-2% in 2019 given strong pipeline
from these segments.
In terms of demand, local end-users are forecasted to
continue to drive the demand, supporting the absorption
of mid-end and affordable stocks. Investors, on the other
hand, will seek opportunities at locations with higher
rental yields than current market average of 5%. The
projects with close distance to industrial parks, expat
communities are those drawing attention of these
investors. Noticing the different needs of each buyer
group, developers are more focusing on design and
concept differentiation and marketing strategies to
promote the project’s uniqueness. While there are many
similar products available in the market, there are
opportunities for developers to introduce new standards
quality and unique product’s features
Figure 26: Hanoi Condominium, Primary Price
Forecast
$5,000
$4,500
$4,000
Primary Pricing (US$ psm)
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
2016 2017 2018 2019F 2020F 2021F
Luxury High-end Mid-end Affordable
Source: CBRE Vietnam, March 2019.
ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
 CO NDOMINIU M
VIETNAM
The condominium markets in Hanoi and HCMC have
significantly grown over the past few years. Positive
sentiments are expected to persist in the foreseeable
future, although there might be temporary issues to be
addressed.
INFRASTRUCTURE IMPROVEMENT AND
MASTER PLANNING SUPPORT
DECENTRALISED TREND
The Hanoi and HCMC markets have been expanding
further away from the core districts with significant
improvements in infrastructure including upcoming
completion of the Metro line No. 2 in Hanoi and Metro
line No. 1 in HCMC.
There are still some issues on funding for infrastructure
projects leading to long delay of key projects such as
Metro line No. 1, 2 in HCMC and 3 in Hanoi as well as
flooding presentation system. Meanwhile, progresses in
Metro line no. 2A and elevated Ring Road 2 in Hanoi
brings better outlook for projects in surrounding areas.
HCMC adjustment of land use planning: HCMC
government announced the government’s Resolution
80/NQ-CP, dated 19 June 2018, on adjusting land use
planning until 2020 in HCMC. New land bank for
residential development will be added in decentralized
area. This will support the current trend of development
that developers need to go further for land bank.
Figure 27: HCMC Condominium, New Launch Supply by Location, 2019
8%
23% Central
1% East
West
7% North
South
61%
Source: CBRE Vietnam, March 2019.
CBRE RESEARCH | © 2019 CBRE, Inc.
25
CONDOMINIUM RESTRICTION IN HCMC
LEADS TO LOWER NEW LAUNCH SUPPLY
HCMC to restrict condo developments in downtown area
until 2020: According to the HCMC’s housing
development plan between 2016 and 2020, new housing
projects cannot be developed in the centre area including
District 1 and 3. HCMC will be more selective in choosing
high-rise condominium projects.
Project investigation and reclaiming “long-pending”
projects to control the quality of projects and avoiding the
vacant land plots in prime location across all the city.
These actions from the government leads to a reduction
in new launch supply in 2019. Low period in 2019 will
allow the market to absorb the remaining stock.
Developers also review their product strategy to meet
buyer’s needs.
CONCERNS ON OWNERSHIP FOR HYBRID
PRODUCTS AND TO FOREIGN BUYERS
Hybrid products ownership: while hybrid products such
as office-tel, condo-tel, shophouse at condominium
podium have been introduced to the market for a while,
the lack of legal framework backed up for these products
has posed risks for buyers. The lack of legal framework
might negatively impact on the marketability and stability
of these product types.
Figure 28: Hanoi Condominium, New Launch Supply by Location, 2019
2%
2%
2% 8%
East
36% West
Midtown
CBD
South
50% North
Source: CBRE Vietnam, March 2019.
ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
 CO NDOMINIU M
VIETNAM
CONCERNS ON OWNERSHIP FOR HYBRID
PRODUCTS AND TO FOREIGN BUYERS
(CONT’D)
Concerns on condominium title and paperwork for
foreign buyers were addressed to a certain extent by the
various city governments in 2019. In February,
Department of Construction of Da Nang City announced
17 projects that are allowed foreigner to receive pink
book. In March, Department of Construction of Hanoi
approved for one project to sell to foreign buyer. This is a
positive news for foreign buyers that their concerns will
be solved. The market is looking forward to this list
extended in other cities, especially HCMC. This concern
has been affecting foreign buyer decisions even though
market still records high interest from this group. Prime
location projects reached 30% quota for foreign buyers
quickly. Secondary market for this group is also more
dynamic due to limited supply.
OPPORTUNITIES FOR BETTER PRODUCTS
AMID INCREASING COMPETITION
Expansion and New entrance: Local developers showed
aggressive move in expanding their land bank to other
provinces from their core markets. There have been
increasing new developments in second-tier cities such as
OUTLOOK
• Slow licensing process in HCMC will challenge the launching of new projects
while Hanoi to see level of new launch supply to sustain
• Strong demand from first home buyers across the major cities, while investment
demand is increasing from foreign buyers. Local investors to look outside of
the two major cities for new opportunities.
CBRE RESEARCH | © 2019 CBRE, Inc.
26
Bac Ninh, Hung Yen in the North and Dong Nai, Long An
in the South showing strong expansion of residential
markets. Meanwhile, developers based in Hanoi also find
new opportunities in HCMC and vice versa. At the same
time, foreign developers look for partnership with local
players with main focus on HCMC and Hanoi. Given the
more active participants of both local and foreign
developers, it is expected that better product quality and
new features will be introduced to the markets.
Competitive rental market: Handovers of completed units
lead to growing competition on the rental market
especially in Binh Thanh District and District 2 area in
HCMC and the West area of Hanoi. Short term leasing
platforms (such as Airbnb) have proved a popular channel
for residential leasing, with potentially higher short-term
rates than traditional lease terms, but typically requiring
better management and more frequent housekeeping.
Last but not least, land prices for both development sites
and land plots are increasing. While developers might
enjoy the latter, they also have to cope with challenges
from the former. The market is expected to see further
segmentation of residential product types, from
affordable condominium units, to high value villa units,
catering to the increasingly broader demand spectrum.
ASI A PACI FI C REAL ESTATE MARKET OUTLOOK 2019 | VI ETNAM
For more information about this regional major report, please contact:
RESEARCH

Desmond Sim Dung Duong, MRICS An Nguyen, MRICS

Head of Research, Senior Director Director – Professional Services
Southeast Asia Head of Professional Services Research & Consulting Services
+65 6326 1638 (Valuation, Research and +844 2220 0220
desmond.sim@cbre.com.sg Consulting) an.nguyen@cbre.com
Research & Consulting Services
+8428 3824 6125 Thanh Pham
dung.duong@cbre.com Senior Manager
Research & Consulting Services
+8428 3824 6125
thanh.pham@cbre.com

For more information regarding global research, please contact:

Richard Barkham, Ph.D., MRICS Neil Blake, Ph.D.
Global Chief Economist Global Head of Forecasting and Analytics |
richard.barkham@cbre.com EMEA Chief Economist
neil.blake@cbre.com

Henry Chin, Ph.D Jos Tromp Spencer Levy

Head of Research, Asia Pacific Head of Research, EMEA Head of Research, Americas
henry.chin@cbre.com.hk jos.tromp@cbre.com spencer.levy@cbre.com

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