Vietnam: 2 Decades of Urban Development​

Vietnam: Two Decades of Urban Development REPORT

2023

Foreword Over the past twenty years, the Vietnamese economy has experienced remarkable growth, particularly in the real estate market. The urban landscape of Vietnam has undergone significant transformations, encompassing various aspects such as the development of iconic skylines in Hanoi and Ho Chi Minh City, the increasing competence of developers, changes in home buyers' profiles and affordability, evolving locational preferences, and the gradual establishment of a comprehensive legal framework.

As CBRE celebrates its 20th anniversary in Vietnam, our team has taken the opportunity to reflect on the trends and developments within the Vietnam Residential Market over the past two decades.

Additionally, we have made predictions regarding the market's future trajectory over the next twenty years.

Chapter I

2003 - 2008

Vietnam: Two Decades of Urban Development | © 2023 CBRE, Inc.

3

Vietnam: Two Decades of Urban Development

2003 - 2008

Emerging and Growing The period from 2003 to 2008 marked an era of transformation in Vietnam's residential development landscape. This period welcomed new urban townships in key cities, Hanoi and Ho Chi Minh City (HCMC), and the arrival of the first generation of foreign developers, igniting an era of modern living. Notably, in 2008, Hanoi expanded its geographical boundaries, initiating residential development in the West of the city to Me Linh, Ha Tay province and part of Hoa Binh province. In HCMC, the rise of Phu My Hung township from a Taiwanese developer acted as the "Gate of South Sai Gon”, not only catalyzing residential expansion towards the Southern parts of HCMC but also playing a pivotal role in fueling the prosperous growth of the entire Southern area.

1.

The 1986 reforms and new regulatory framework Vietnam's shift from a centrally planned to a market-oriented economy has been instrumental in fostering growth, alleviating poverty, and enabling the advancement of property transactions. New frameworks were formed to regulate the growing residential market.

2.

The bull market from 2007 to 2008 Vietnam’s residential market underwent a hot surge in selling prices.

3.

Hanoi’s expansion in 2008 The expansion of Hanoi boundaries has significantly driven the residential development from inner districts to sub-urban areas of Hanoi.

4. The emergence of foreign developers and new urban townships The introduction of new urban townships developed by foreign companies in the two key cities of Vietnam.

4

CBRE RESEARCH

Picture illustrating Ha Mo, Dan Phuong, Hanoi (before merging with Ha Tay province).

© 2023 CBRE, INC.

Modern Residential Supply Started to Grow

S.O.E.

State-owned enterprises were major developers of residential supply

Vietnam: Two Decades of Urban Development | © 2023 CBRE, INC.

To curb the speculative bubble in the real estate market, the government issued Decree No. 87-CP/1994, setting land price framework. This decree helped to bring the land value and the compensation cost closer to a more realistic and stable value.

In 1998, Vietnam witnessed the launch of its first foreign-invested townships, Phu My Hung in HCMC, followed by Ciputra in Hanoi.

2005 Housing Law The appearance of privateowned real estate developers

Accumulated Supply (Units)

Share of state-owned enterprises in total launched residential supply of Hanoi and HCMC until 2008

The 1993 Land Law revolutionized Vietnam's real estate market by introducing the "red book" as an official document to recognize land use rights (LURs). This significantly facilitated transactions, as before 1993, transfers relied on written notes, causing friction in the process.

2003 Land Law

108,000 ~60%

1995 - 1999

Real estate emerged as a dominant asset class since it was the primary investment option alongside gold.

2003 - 2008

Accumulated residential units in Hanoi and HCMC by 2008

1993 - 1994

2006 Law on Real Estate Business

The government's first international bond issuance

120,000

2000 - 2003 Despite the 1997 Asian financial crisis, Vietnam's stabilized economy attracted significant foreign investments.

HCMC Stock Exchange traded the first time in July 2000, with the VN-Index peaking at 572 points within six months.

Speculation and a lack of information on property prices fueled a booming market from 2000 to 2003.

The government implemented specific measures to control the market, including 2003 Land Law and Decree 181/2004 prohibiting the transfer of “the LURs in the form of selling house foundations while houses have not yet been constructed”.

2007 Vietnam joined WTO Ciputra township Ciputra, the first FDI real estate project in Hanoi, welcomed the first residents moving in.

2008 Vietnam’s GDP per capita exceeded US$ 1,000/person.

108,000

100,000 80,000 60,000 40,000

33,000

20,000 0 2003

2004

2005

Developer-built landed property

Source: CBRE Research, November 2023.

2006

2007

2008

Condominium 5

Vietnam: Two Decades of Urban Development

The Bull Market in 2007 - 2008 25

Vietnam joined WTO

4

20

3

15 9.6

2 2.4

1

10

6.7

5

-

GDP per capita

Condominium, Average Selling Prices in the Secondary Market, Hanoi and HCMC (mn VND psm) y-o-y growth

40%

30 25

23%

20

HCMC, CAGR (2004-2008)

15

27%

10

HANOI, CAGR (2004-2008)

5 0 2004

2005

2006

Between 2007 and 2008, Vietnam's entry into the global economy as a member of the WTO brought substantial benefits. Reduced trade barriers and an improved sovereign credit rating attracted significant foreign investment, resulting in a surge of 179% in foreign direct investment (FDI) from $2.4 billion in 2006 to $6.7 billion in 2007. The flourishing Vietnamese stock market during this period also created newfound wealth, much of which poured into the property market. Such an influx of capital, as a result, drove asset prices to significant levels in this period.

2022

2021

2020

2018

2019

2017

2015

2016

2014

2013

2011

FDI net inflow

2012

2010

2008

2009

2007

2005

2006

2004

2003

2001

2002

2000

1998

1999

1997

1996

1995

1994

0

FDI net inflow (US$ bn)

5

1993

GDP per capita (‘000 US$)

Vietnam’s GDP per Capita and FDI Net Inflow

2007

2008

2009

2010

At the bull market in 2007, Vietnam’s credit growth reached 53.9%, with significant increases in real estate, stock, and consumer credit. Prices were doubling or even tripling in a matter of months, leading to a highly speculative period. In Hanoi and HCMC, secondary prices of condominiums surged by approximately 40% between 2007 and 2008. Properties in the My Dinh area of the West saw prices surge up to 1.5 to 2 times in one-year period. Likewise, in HCMC, prices in Phu My Hung township rose by over 20% within a short period, and projects like Saigon Pearl and Cantavil saw remarkable growth, with prices per square meter increasing by 30% to 70% in early 2008 compared to the end of 2007.

Vietnam experienced the same scenario as previous cycles: rapid price increases, eased credit policies, and a massive influx of capital, setting the stage for an unprecedented bubble. Inevitably, as soon as Q2 2008, the market started to go into a correction.

Source: World Bank, CBRE Research 6

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The Introduction of New Urban Townships

BEFORE

Swampy area of Nha Be District, HCMC

AFTER

Phu My Hung township & Nguyen Van Linh boulevard in HCMC

Before 2008, the concept of townships featuring developer-built houses and high-rise condominiums was new to Vietnam's market, with limited supply available. In 2008, townships started to emerge in the two key cities of Vietnam. Ciputra and Phu My Hung were pioneering examples of foreign-invested townships.

Phu My Hung New Urban Area in HCMC, developed through a partnership between Tan Thuan Industrial Development – IPC (Vietnam) and Central Trading & Development (Taiwan), was Vietnam's first FDI real estate project. The launch of "South Sai Gon's Gateway" - Phu My Hung township, coupled with the completion of Nguyen Van Linh Boulevard, has transformed District 7 and the broader southern area from the wasteland and swamp into HCMC's new development hub.

Ciputra, a collaboration between UDIC (Vietnam) and Ciputra Group (Indonesia), has maintained its position as Hanoi's most prominent township in scale from its first launch to the present day.

These projects introduced the new concept of a "gated community", where some residential areas are enclosed by physical barriers, such as walls, fences, or security gates, to restrict access to the community, thus enhancing the residents' quality of life through a secure and well-maintained living environment.

7

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The Expansion of Hanoi in 2008 Total land area (sq km) Total population (mn)

Hanoi’s boundary after the expansion in 2008

HANOI BEFORE EXPANSION

Before 2008

2008

2022

922 3.4

3,345

3,360

6.2

8.4

ME LINH

LUONG SON OLD HA TAY

The year 2008 stood out as a significant milestone for Hanoi as it marked the expansion of Hanoi's geographical boundaries to the entire Ha Tay province, Me Linh (a district of Vinh Phuc province) and four communes of Hoa Binh province (Dong Xuan, Tien Xuan, Yen Binh and Yen Trung).

Before 2005, the development of townships in Hanoi primarily focused on the inner districts of the West and South, with a particular emphasis on Tu Liem (now Nam Tu Liem district), Cau Giay, and Hoang Mai district along Ring Road 3. However, the landscape began to shift in 2005, just before Hanoi's official expansion, with the emergence of township projects in more distant areas, including Ha Dong and Hoai Duc (formerly part of Ha Tay). Following the city's expansion, this trend gained even more momentum after 2008, with the launch of larger-scale, higher-positioned townships across the city.

8

CBRE RESEARCH

Townships launched before 2005 Townships launched within 2005 - 2008

© 2023 CBRE, INC.

Chapter II

2009 - 2013

Vietnam: Two Decades of Urban Development | © 2023 CBRE, Inc.

9

Vietnam: Two Decades of Urban Development

2009 - 2013

Property Market Correction

4. The evolvement of brokerage companies The market welcomes the participation of foreign developers and many brokerage companies.

10

CBRE RESEARCH

Inflation rate

VNINDEX

0 2013

0 2012

200

2011

5

2010

400

2009

The market welcomed the first landmark tower and luxury projects in both key cities of Vietnam.

10

2008

3. The completion of iconic high-rise buildings

600

2007

Public investment across many economic sectors has been one of the positive efforts from the government.

15

2006

2. Boosted public investment in both key cities

800

2005

Vietnam’s residential market has experienced the repercussions of the global economic crisis, leading to a decrease in both the availability of new supply and selling prices.

1,000

20

2004

Correction after a period of significant growth

Market Correction

25

2003

1.

Vietnam’s Stock Market Volatility Under Macroeconomics Impacts, 2008 - 2013

Inflation rate (%)

The market was realized the impact of the global economic crisis right after a period of bubble booming and started to correct, which was a result of market overheating, driven by an overheated stock market, high inflation, and a lack of a well-grounded legal framework for both developers and buyers. This period also served as the foundation for the market's exponential development phases starting in 2014.

VNINDEX

Source: Vietam Statistical Ofice.

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Supply Growth Decelerated

The correction after significant growth By 2009, Vietnam's economy started to feel the heat for the very first time from the Global Financial Crisis in 2008. After reaching a record high in 2008, at US$1,310 in Hanoi and US$2,000 psm in HCMC, prices began to drop gradually until 2013 at a rate of 5% p.a. for Hanoi and 8% p.a. for HCMC (to reach US$1,169 in 2013 for Hanoi & US$1,150 for HCMC). Growth of condominium new supply slowed down within 2009-2011, before coming off in 2012. From the peak of nearly 18,000 units in HCMC (in 2010) and over 22,000 units in Hanoi (in 2011), new launch of condominiums in the two cities dropped to only 4,000 units and 9,400 units in 2012, respectively. This was the lowest level of new launch recorded in the period 2009-2023. Buyers were hesitant to buy due to uncertainties in the market, while many developers resorted to postponing new launches, others even had to make major adjustments in selling prices to speed up sales of the remaining stock. For landed properties, supply in HCMC within the 2008-2013 period was also relatively low with an annual new supply of no more than 300 units, mainly concentrated in District 7 and District 9 with Novaland and Phu My Hung acting as the market leaders of the South.

In contrast, new supply of landed properties in Hanoi grew strongly from 2009 until 2012, maintaining an annual new launch of over 1,000 units, before dropping to only 320 units in 2013. In terms of developers, more developers from the private sector either entered or strengthened its presence in Hanoi market, among which the most notable ones are Vinhomes, Muong Thanh and Nam Cuong Group.

2009 - 2013

Condominium Accumulated Supply and Primary Prices, Hanoi and HCMC, 2003-2013

MARKET CORRECTION

2003 - 2008

27% p.a. ▲ 24% p.a.

Supply Growth 300,000 250,000

▲

▲

8% p.a.

13% p.a.

30.0

Residential supply surpassed 200,000 units

25.0 20.0

150,000

15.0

100,000

10.0

50,000

5.0

VND mn psm

Residential supply surpassed 100,000 units

200,000

2011 - 2013

23% p.a. ▲ 10% p.a.

▲

Price Growth

Units

2009 - 2011

0.0

0 2003

2004

2005

2006

Developer-built landed property

2007

2008 Condominium

2009

2010

2011

2012

2013

Condominium's primary prices

Source: CBRE Research 11

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The Bright Spot: Boosted Public Investment in Both Key Cities During a period of slowed market activity, the government made concerted efforts to encourage disbursement of public investment, resulting in a 25% increase in public investment in 2009. One of the notable successes during the 2009-2013 timeframe was the completion of significant infrastructure projects, easing connectivity across the cities’ key hubs, as well as opening up new development potential for the real estate market.

Vietnam’s Public Investment, 2007-2015 250,000

30%

200,000

20%

150,000

10%

100,000

0%

50,000

-10%

-

Y-o-y change

VND bn

Completion of Thu Thiem Tunnel (HCMC)

Completion of Vo Van Kiet Boulevard (HCMC)

-20% 2007

2008

2009

2010

2011

2012

2013

Completion of Vinh Tuy 1 Bridge (Hanoi)

Kick-off Metro Line (HCMC)

Kick-off Metro Line (Hanoi)

Basically completion of Ring Road 3 (Hanoi)

2014

2015

Source: Public news, CBRE Research 12

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The Booming of Integrated Townships Thanks to several infrastructure improvements towards the two key cities’ suburban areas, both cities welcomed major township developments during this period, including Ecopark, Gamuda Yen So Park, Vinhomes Riverside, Vinhomes Times City in Hanoi, and Celadon City in HCMC. Compared to the township developments introduced earlier, these projects paid more attention to well designed landscape, better and more diverse, “full package” amenities such as schools, supermarkets, convenience stores, F&B outlets etc., all within walking distance, despite the projects’ location farther away from the CBD. At the same time, the emergence of “one-stop”, mega scale shopping centers such as Crescent Mall, Aeon Mall, Vincom Megamall Royal City, and Vincom Megamall Times City also contributed to increasing housing demand in these township areas.

Township developments in the two key cities of Vietnam, particularly in Hanoi

Townships

Standalone projects

HCMC

HANOI Park City Launch: 2010 Completed: not yet completed Scale: 77 ha 1 Residential supply: ~ 1,000 units

Vinhomes Times City Launch: 2011 Completed: 2017 Scale: 36 ha Residential supply: ~16,000 units

Celadon City Launch: 2010 Completed: 2021 Scale: 82.6 ha Residential supply: ~6,100 units

Gamuda Gardens Launch: 2010 Completed: 2020 Scale: 78 ha Residential supply: ~3,200 units

Ecopark Launch: 2009 Completed: not yet completed Scale: 500 ha 1 Residential supply: ~17,500 units

Source: CBRE Research. Note: (1) Number of units launched to date 13

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Landmark towers redefining the skylines The Lancaster Le Thanh Ton

Avalon

Sailing Tower

Keangnam Hanoi Landmark 72

Diamond Island - The Brilliant Saigon Pavillon

2004

2005

2006

2008

2009

The Lancaster Le Thanh Ton

14

Keangnam Hanoi Landmark 72

Bitexco Financial Tower

2021

2020

2019

2018

Zenity

The Grand Hanoi

The River

The Marq

Metropole Empire City

2011

2010

Lotte Center Hanoi

2022

CBRE RESEARCH

Léman Vinhomes Dong Khoi CT Plaza Bitexco Financial Hoang Thanh Tower Tower

Landmark 81

2016

2015

2014

Serenity Vinhomes Golden River D1 Mension

Vinhomes Central Park Landmark 81

Lotte Center Hanoi © 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The Rise of Privately-owned Developers 2003 - 2008

2009 - 2013

2014 - 2018

2019 - 2023

Market share by developers * Hanoi

60%

TOP 03

TOP 03

TOP 03

TOP 03

HUD

Muong Thanh

Vinhomes

Vinhomes

Vinaconex

66%

HANDICO

Vinhomes

Muong Thanh

49%

171,000 units

Ecopark Group Masterise Homes

Geleximco

Nam Cuong

81,000 units

59,000 units

72%

121,000 units

HCMC

76%

45,000 units

TOP 03

TOP 03

TOP 03

TOP 03

Phu My Hung

Novaland

Vinhomes

Vinhomes

HAGL

Phu My Hung

SSG

86%

Nam Long

52,000 units

85%

257,000 units

Novaland Hung Thinh

Nam Long

77%

Masterise Homes

206,000 units

Note: * Number of units launched by developers over total new residential launch in Hanoi and HCMC within each period Source: CBRE Research 15

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The Evolution of Brokerage Companies The growth of the residential market has ultimately led to the rapid development of brokerage services. The real estate brokerage market includes brokerage services for the primary and secondary markets.

One noticeable practice emerging in the period of 2009-2013 was the stronger appearance of many independent real estate brokerage firms, such as Dat Xanh, Cenland, DKRA, etc., joining the market, where developers’ in-house sales consultants had previously dominated.

According to the Ministry of Construction, under the governmental regulations that require performing real estate activities via real estate brokerage firms, there were more than 1,000 real estate brokerage companies established in 2013. By 2023, the number of real estate brokerage companies was almost four times higher.

Professional real estate brokers play a crucial role in assisting small and new developers to maximize their project profits by offering comprehensive services. These brokers act as consultants and project appraisers for buyers, helping them identify suitable properties while safeguarding their rights and interests. The presence of real estate brokers is essential for maintaining market transparency due to their pivotal intermediary role. All brokerage firms provide real estate services, encompassing marketing and distribution. Leading brokerage firms establish long-term partnerships with major developers, becoming their exclusive agencies.

16

CBRE RESEARCH

Midnight queue up for hot properties in District 2, HCMC (2007)

Sales events in Hanoi & HCMC (2023)

Banners of newly launched project in Hanoi (2016)

Luxury sales gallery (2023)

© 2023 CBRE, INC.

Chapter III

2014 - 2023

Vietnam: Two Decades of Urban Development

2014 - 2023

A Roller Coaster Ride From supply booming during 2015-2019 to a decade-low supply shortage in 2023, the latest 10-year period marked one of the most volatile periods for the real estate market in Vietnam’s key cities.

1.

Supply peak At the beginning of the period (2015-2018), there were booming supplies for HCMC’s condominium market, with around 60,000 new units launched yearly.

2. Foreign buyer booming 2015 marked the first year in which foreigners were legally allowed to buy residential products in Vietnam, helping to diversify the buyer landscape in Vietnam.

3. Licensing issues Towards the end of the period, several bottlenecks in project licensing led to limited supply in both Vietnam’s key cities.

4. Residential prices heated, especially during the COVID-19 period, then cooled At the end of the period, limited new supply and an increase in new supply in the high-end and luxury segments have led to primary prices reaching their peak.

18

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Supply and Prices Both Accelerated

From 2014 to 2019, there was a significant increase in residential supply in both Hanoi and HCMC. During this period, both the East and the West emerged as major sources of new supply in Hanoi, while HCMC experienced strong expansion, specifically in the East. Despite recent declines in new supply due to the impact of COVID-19 and licensing issues, the market reached a remarkable milestone of over 700,000 units in 2021, more than doubling the level of more than 300,000 units in 2014.

Over the past decade, numerous large-scale projects have been launched across the Greater Hanoi and HCMC regions. These include Vinhomes Ocean Park 1,2,3 with total scale of 50,000 units in Hanoi, Vinhomes Central Park with over 10,000 units, and Vinhomes Grand Park with more than 40,000 units, all located in HCMC.

Accumulated Residential Supply and Primary Prices, Hanoi and HCMC, 2012 – 9M 2023

Residential supply surpassed 700,000 units

Over 500,000 units Over 600,000 units

Residential supply surpassed 300,000 units

2015 Foreign ownership relaxed Residential supply surpassed 400,000 units

2022 High-end and luxury+ segments dominated new supply

2019 Tightened credit into real estate

PRICE PEAK

1,000,000

250

800,000

200

600,000

150

400,000

100

200,000

50

0

0 2012

Source: CBRE Research 19

CBRE RESEARCH

VND mn psm

Units

SUPPLY BOOMING

2013

2014

2015

Developer-built landed property supply

2016

2017

Condominium supply

2018

2019

2020

Condominium’s primary prices

2021

2022

9M 2023

Developer-built landed properties’ primary prices © 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Mega Townships Expanding Towards The Suburban

The rapid urbanization growth rate, the shrinking land bank in prime urban areas and the shift in hybrid work due to COVID-19 contribute to the demand for expanded and enhanced public transit systems towards the less congested districts. The residential landscape has developed accordingly, with improved infrastructure expanding to the suburbs and even towards satellite provinces such as Hung Yen (adjacent to Hanoi) and Binh Duong (adjacent to HCMC). With buyer tendencies to settle in outlying areas increasing, developing townships that cater to all-in-one expectations is required to facilitate residents' needs and continue attracting buyers fully.

Over the course of 20 years, the residential supply in Hanoi has undergone a rapid evolution. Initially concentrated in the inner districts along Ring Road 3, the focus has gradually shifted towards more distant locations. Several major mega townships have been introduced in suburban areas of Hanoi, resulting in the emergence of new residential clusters in these regions.

Phu My Hung (District 7), Celadon City (Tan Phu District) and Vinhomes Grand Park (Thu Duc City) were three typical township projects developed around 15-25km away from HCMC’s CBD, yet still attracting high occupancy rates thanks to improved infrastructure connection and their full-service offerings inside the projects.

BINH DUONG ME LINH

DONG ANH

DONG NAI

SON TAY

HCMC

Starlake

LONG BIEN Vinhomes Grand Park Mailand Hanoi City

HOAI DUC

GIA LAM

Celadon City

Vinhomes Smart City

QUOC OAI

Ecopark Vinhomes Ocean Park 123

Residential projects launched before 2009

Residential projects launched before 2009

Phu My Hung

Residential projects launched during 2009-2013 Residential projects launched during 2014-current

HUNG YEN

Residential projects launched during 2009-2013 Residential projects launched during 2014-current

Source: CBRE Research 20 CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

…with Key Infrastructure Connecting the East to the CBD

Following the development of public transit infrastructure in the previous period, throughout 2014-2023, Vietnam’s first Metro Line was completed in Hanoi, i.e. Line No. 2A (Cat Linh – Ha Dong), while in HCMC, Metro Line No.1 is expected to be operational by July of 2024. The completion of Ba Son Bridge (formerly known as Thu Thiem 2 Bridge) in HCMC at the end of 2022 was to the market’s anticipation. Other significant infrastructure projects in Hanoi during this period included Dong Tru Bridge, Nhat Tan Bridge, Ring Roads 2, 3 and most recently, the kick-off of construction of Ring Road 4. These significant infrastructure improvements have had major impacts on the residential landscape, further boosting development expansion towards the East of both HCMC and Hanoi.

Development Timeline of key infrastructure in HCMC & nearby residential projects

Development Timeline of key infrastructure in Hanoi & nearby residential projects Launch of Intracom Riverside (Dong Anh Dist.)

Key supply along the Metro No.1: Vinhomes Central Park, Masteri Thao Dien, Estella Heights, The Nassim, Gateway Thao Dien, Sala Thu Thiem (2015) Vinhomes Golden River (2016) D’Edge, Feliz En Vista, Sunwah Pearl (2017)

Launch of Khai Son City (Long Bien Dist.)

Launch of Vinhomes Ocean Park (Gia Lam Dist.)

Introduction of North Hanoi Smart City (Dong Anh Dist.)

Launch of Eurowindow Twin Parks (Gia Lam Dist.)

Luxury cluster nearby and within Thu Thiem NUA: Sala Thu Thiem (2015) Empire City (2016-2019) The River (2020-2021) Metropole Thu Thiem (2018-2022) Grand Marina Saigon (2021-2022)

Launch of Vinhomes Ocean Park 2&3 (Hung Yen Province) 2012

2013

2014

2015

2016

2017

2018

2019 2020

2021

2022 2023

2024

Dong Tru Bridge Nhat Tan Bridge

Mega township far from CBD: Vinhomes Grand Park

Cat Linh-Ha Dong (Metro Line 2A) Vinh Tuy 2 Bridge 2012

Ring Road 2 Ring Road 3 (Phase 1 & 2)

Metro Line No.1

Ring Road 4

Ba Son Bridge

2013

2014

2015

2016

2017

2018

2019 2020

2021

2022

2023

2024

Source: Public news, CBRE Research

21

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The West Emerged as the New CBD of Hanoi Following Hanoi’s expansion in 2008, the West area, particularly the center of the West covering the districts of Cau Giay, Nam Tu Liem and Bac Tu Liem, has rapidly emerged as a thriving hub for residential and commercial real estate development, backed by ample land bank and strong development of infrastructure system, including ring roads and metro lines. Today, the West is often referred to as Hanoi’s new CBD. In addition, Hanoi’s plans to relocate the government agencies to the West by 2025 and to establish two satellite cities, one of which is situated in the West (the city of Hoa Lac), are expected to further foster the already robust growth of real estate development in the West.

By 2004

Residential supply 500

As at Q3 2023:

HANOI

224K

units ▲ 14% p.a. (2004-2023)

432K

units ▲ 14% p.a. (2004-2023)

Thousand units

WEST

400

By 2008

By 2013

By 2018

By Q3 2023

Metro Line 3 (e. 2028) CAU GIAY Leadvisors Tower DIST. BA DINH DIST. Lotte Center

Capital Place Vinhomes Metropolis

Vinhomes Gardenia My Dinh 1

NAM TU LIEM DIST.

NOTABLE RESIDENTIAL & COMMERCIAL PROJECTS ALONG RING ROAD 3 & METRO LINES Residential projects

200

Commercial buildings

2.8M

sqm NLA ▲ 14% p.a. (2004-2023)

3 Million sqm NLA

HANOI

THANH XUAN DIST.

Bac Ha

Under construction Van Quan

3

As at Q3 2023:

1.3M

DONG DA DIST.

Vinhomes Royal City

Mo Lao

Office & Retail supply

sqm NLA ▲ 25% p.a. (2004-2023)

Nam Trung Yen Trung Hoa Nhan Chinh D’Capitale Taisei

0

WEST

HOAN KIEM DIST.

Keangnam Landmark 72

The Manor

300

100

TAY HO DIST.

BAC TU LIEM DIST.

HA DONG DIST.

2

Van Phu

2 1 1

Linh Dam

Park City

HOANG MAI DIST.

Phu Luong

Metro Line 2A (c. 2021)

0 Source: CBRE Research 22 CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Case Studies: HANOI: ADDITIONAL BRIDGES ACROSS THE RED RIVER ENABLED THE SHIFTING OF URBAN DEVELOPMENTS TOWARDS EAST AND NORTH

HCMC: EXPECTED METRO-LINE FACILITATES THE GROWTH OF RESIDENTIAL DEVELOPMENTS IN THE EAST OF HCMC

For a long time, the East of Hanoi was not the preferred choice amongst local home buyers because of its limited transportation options and poor access to the city center due to the lack of bridges across the Red River. Before 2010, there were only six bridges, most of which older ones, connecting the North and East of Hanoi to the city center. It was upon the completion of Vinh Tuy bridge in 2010 that connectivity between the East and the city center was significantly improved. According to the Hanoi Department of Planning and Architecture, Hanoi is planning to add 10 more bridges across the Red River which is expected to further unlock development potential on the other side of the river.

The construction of Metro Line No. 1 in HCMC has particularly caused great excitement among local residents, as residential developments in HCMC have primarily focused alongside Metro Line No. 1, with both new supply and selling prices recorded surges over the 10-year period since the kick-off of the line in 2012.

Construction of bridges across the Red River has fostered the growth of residential supply in the East1 and North of Hanoi

HCMC Condominium, Supply in the East before and after the construction kick-off of Metro Line No. 1

Residential supply

Residential supply

Existing bridges Nhat Tan Bridge (c.2015)

Metro Line No.1 (2012 – 2024 est.)

NORTH

NORTH

Vinh Tuy 1 Bridge (c.2010)

EAST

EAST

EAST

CBD

HUNG YEN

Before 2010:

North & East: ~4,900 units

HUNG YEN

EAST

CBD

SOUTH

After 2010:

North & East: ~80,000 units (▲16 times)

SOUTH

Before 2012:

East: ~23,300 units

After 2012:

East: ~143,000 units (▲6 times)

Source: CBRE Research. Note: (1) Supply in the East of Hanoi include three major townships in Hung Yen (province bordering Hanoi): Ecopark, Vinhomes Ocean Park 2 & 3 23 CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Fundraising will remain crucial as developers plan large-scale developments Increasing number of Listed Companies

Recent corporate bond reforms put a brake on new bond issuances

Thanks to positive macro-economic conditions and a stable political environment, Vietnam’s real estate market has become one of highly potential destinations for foreign investors. Under such favorable conditions, from 2016 to 2022, the real estate market has witnessed waves of real estate companies listing on the exchange to capture investment opportunities, reflected through an increasing number of listings from real estate companies on all three key shares exchanges (HNX, HOSE and Upcom).

Beside loans from banks, corporate bonds emerged as an important long-term financing channel for enterprises, with real estate firms being the major corporate bond issuers since 2019. However, corporate bonds then observed a downward trend, mainly due to higher issuance standards after bond issuance fraud incidents in 2022, as well as rising risks of debt maturity as a result of long-delayed implementation schedules from many projects across the country.

Notably, in 2018, Vietnam stock market marked the impressive introduction of Vinhomes JSC, following its share issues worth of ~US$ 1.35 billion, Vietnam’s biggest equity sales to date. The success of Vinhomes JSC’s shares issuance indicated high potential for real estate companies to raise funds through shares issuance, especially internationally.

In the context of rising difficulties in approaching traditional capital channels due to tightening credit policies and corporate bonds, IPOs and capital fund raising on the stock exchange are expected as inevitable alternative financing sources for Vietnam’s real estate developers in the coming years.

Despite international equity offerings being an effective financing channel, meeting all strict requirements to be qualified for an issuance or listing, locally or internationally, proves a lot of challenges for any Vietnamese companies. In 2022, Vietnam’s stock market recorded only eight successful IPOs across all sectors, which was the lowest level among Southeast Asia countries.

Vietnam’s corporate bond issuance value by year, 2019 – 9M 2023

(VND trillion) 800

Number of listed real estate companies, 2006 – 9M 2023

(No. of listed companies)

Surpassed 80 companies Surpassed 70 companies

100

400

80 60

600

Surpassed 40 companies

200

40

0

20

2019

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 9M 2023

Source: HOSE, HNX, Upcom, CBRE Research 24 CBRE RESEARCH

2020 Real estate

2021

2022 Others

9M 2023

Source: Vietnam Bond Market Association (VBMA), CBRE Research © 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Financing Sources For Home Buyers

Vietnam’s Mortgage as % of GDP, 2018 - 2022

Since the later half of 2022, with global macroeconomic headwinds, the residential market has faced multiple challenges, from credit crunch to interest rate hikes. As a result, the mortgage market in Vietnam has experienced a deceleration in growth, presenting challenges for homebuyers as they face greater difficulty in utilizing financial leverage to fulfill their housing needs. However, there is a positive indication as interest rates have stabilized, suggesting a potential recovery in mortgage demand in the near future. Additionally, the current mortgage levels in Vietnam, which account for 13% of the country's GDP, are significantly lower compared to developed countries like Japan or Singapore. This suggests that there is ample room for future growth in the mortgage market.

25 CBRE RESEARCH

13%

2020

2021

2022

11%

2018

2019

Source: Euromonitor.

Home Mortgage Floating Interest Rate, 2018 – Sep 2023

% p.a.

Over the past decade, real estate developers and commercial banks have formed strategic partnerships to introduce interest rate support programs to stimulate market demand. Despite the impacts of COVID-19, 2020 and 2021 witnessed a notable surge in the number of buyers opting for mortgages, motivated by the opportunity to take advantage of lower loan interest rates.

13%

12%

Home buyers enjoyed easier access to mortgages until credit policies were tightened and interest rates increased in the latter half of 2022. However, there has been a loosening of such conditions since the second half of 2023.

During the reviewed period, the stability of lending rates in Vietnam has led to an increased popularity of mortgages among homebuyers. As property selling prices continue to rise, mortgages have become essential for homebuyers, enabling them to access properties and making homeownership more affordable for a broader population segment.

13%

16% 14% 12% 10% 8% 6% 4% 2% 0%

13.8% 11.8%

2018

2019

2020

2021

2022

Jan-23

11.2%

May-23

Sep-23

Source: Commercial banks September 2023, CBRE Research.

© 2023 CBRE, INC.

Chapter IV DEVELOPMENT OF LEGAL FRAMEWORK

Vietnam: Two Decades of Urban Development | © 2023 CBRE, Inc.

26

Vietnam: Two Decades of Urban Development

Legal Framework: Ongoing adjustments to major laws governing the real estate market in Vietnam Alongside the market's development, the legal framework governing real estate business activities has undergone continuous review and adjustments to address challenges and foster sustainable market growth. Furthermore, the Vietnamese government has made substantial efforts in recent years to mitigate risks, bridge the supply-demand gap, and stimulate the real estate sector by implementing credit policies, adjusting interest rates, and introducing mechanisms to develop diverse types of properties that cater to the end users’ needs.

1987

2000

2003

2005

Law on Foreign Investment in Vietnam

Revised “Law on Foreign Investment in Vietnam”

Land Law 2003

Replacement of the “Law on Foreign Investment in Vietnam” with “Investment Law”

2023

2019

2015

2014

2013

• Decree on Certificate of Ownership for condotel that meets the conditions prescribed by law

Tightening of credit into real estate

Foreign housing ownership relaxed

Law on Housing 2014

Land Law 2013

2006 Law on Real Estate Business 2006

• Revised “Land Law 2013” in discussion (expected to be passed in 2024) 27 CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Policy effects on the residential market Vietnam’s residential price index and the introduction of certain policies (index indicates %y-o-y change) Tightening of credit into real estate

Foreign housing ownership relaxed

20

Revised “Land Law 2013” Monetary policy/ credit support

Land Law 2013

15 10 5 0 (5)

Covid - 19

(10) 2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Source: CBRE Research

28 CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Vietnam's legal framework has been modified to facilitate greater accessibility for foreign buyers purchasing residential properties In 2015, Vietnam’s real estate market saw a positive signal as the Government removed the barriers to purchasing real estate properties for foreign buyers. According to the Housing Law 2014, effective since 2015, any foreigners allowed to enter Vietnam could buy residential properties in Vietnam. Until now, limits on ownership have not been measured by the number of units but rather by the percentage of the project sold to foreigners, with a maximum of 30% per residential building or no more than 250 landed properties in the project. The tenure is 50 years and extendable subject to applicable law but not exceeding 49 more years or freehold tenure in case the foreigner has a Vietnamese spouse.

Home buyers from Asian countries, such as China, Hong Kong, Korea, Taiwan, etc., have consistently accounted for the largest proportion of investing in Vietnam’s real estate market. The main reason is the presence of prominent real estate developers from these countries in Vietnam’s market. In addition, as the real estate market in these countries experienced boom times in previous years, they are looking for new investment opportunities in emerging markets such as Vietnam, where there is still more room for price growth.

Buy-to-gain remains the most popular purpose to invest in real estate properties for foreign buyers.

Meanwhile, buy-to-let is a temporary option whilst buyers await the capital gain to increase. Only a small quantity of non-Vietnamese citizens buy real estate for actual own-use accommodation, mainly from those who are employed full-time in Vietnam and long-term residents.

The preferred product type of these investors has been condominiums, especially those in the highend segment located in the key cities such as HCMC and Hanoi. Affordable condominiums in good locations and a high potential for capital growth have understandably received the most attention from these foreign investors.

29 CBRE RESEARCH

Over 3,000

foreign buyers recorded from 2015 to Q3 20231

9 in 10

foreign buyers are condominium buyers2

60%

are buy-to-gain investors2

75%

coming from Asian developed countries2

(1) From Vietnam’s Ministry of Construction; (2) From CBRE’s records on successful transactions (including both sales and longterm lease transactions) from 2017 – Oct 2023

© 2023 CBRE, INC.

Chapter V THE COMING DECADES

Vietnam: Two Decades of Urban Development | © 2023 CBRE, Inc.

30

Vietnam: Two Decades of Urban Development

The Coming Decades

Heading to the Next Market Evolution On the back of solid economic fundamentals and concrete housing demand, the Vietnam residential market possesses room to grow and advance to a more modern stage of development. Key factors supporting market growth and shaping the market’s developments in the coming years include the following: 1.

Demand for developer-built homes looking robust amidst strong economic growth and high urbanization rates The continued fast pace of urbanization process, rising income would support sustainable demand for developer-built homes.

2.

Locational preferences will continue to shift Limited land bank in the existing city centers and improving infrastructure network to encourage expansion of residential market to new locations.

3.

The future of commute Rising demand for public transportation leading to more Transit-oriented Developments (TODs) attached to the key infrastructure projects and rising prices of residential projects near the metro stations. On the other hands, increasing numbers of car ownerships requires better and greater numbers of parking facilities.

4.

The future residential living The market is poised to undergo an evolution in terms of asset types and features of future homes, driven by a diverse demand and the preferences of buyers.

31

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Further growth is anticipated thanks to

Cities population vs Home prices

Beijing 20.1 mn (21.8mn) $16.4k

demographic characteristics Population growth plays a crucial role in driving the development of the residential market, and Hanoi and Ho Chi Minh City (HCMC), the two largest metropolises, are expected to experience a steady population increase of 1.2% annually from 2021 to 2040. This upward trend positions the population scale of these cities above that of major cities in the Asia-Pacific region like Bangkok or Seoul, and on par with Jakarta. Moreover, when compared to other cities in the region, Hanoi and HCMC boast competitively priced residential properties, indicating a promising potential for market growth.

Simultaneously, Vietnam is undergoing a rapid urbanization process, with Oxford Economics projecting that the urban population will constitute 51% of the country's total population by 2040, a significant increase from the current 38%. This indicates a swift transformation towards urban living and highlights the growing importance of urban areas in Vietnam's demographic landscape.

Overall, the combination of population growth, urbanization, and competitive residential prices in Hanoi and HCMC lays a strong foundation for the long-term growth and expansion of the residential market in these cities and the whole country.

(9.5mn) $21.7k

Shanghai 23.2 mn

Tokyo 14.4 mn

(24.8 mn) $18.8k

Delhi 24.8 mn

(14.1 mn) $5.0k

(20.4mn) $2.5k

Hanoi 10.5 mn

Mumbai 11.9 mn

(8.3 mn) $2.6k

(12.7mn) $6.7k

Bengaluru 18.2 mn (13.0 mn)

Bangkok 9.7 mn (9.3 mn) $5.6k

HCMC 11.6 mn

NCR Manila 17.5 mn (14.3 mn) $4.4k

(9.3 mn) $2.9k

Singapore 6.3 mn Population scale (## mn) Population as of 2022 US$/sqm of apartment in the City Center $##k Source: Oxford Economics, Numbeo, CBRE Research

32 CBRE RESEARCH

Seoul 8.4 mn

(5.7mn) $20.6k

DKI Jakarta 11.3 mn (10.7 mn) $2.7k

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Demand for developerbuilt homes continues to

Forecasted GDP Growth (%) of Vietnam and Major Countries in APAC South Korea

be driven by growing affluence Vietnam is forecasted to be among fastest growing economies in APAC. According to Euromonitor, Vietnam’s GDP is projected to grow 6-6.7% per annum from 2024 – 2030 while sustaining the growth of 5-5.5% per annum from 2031 – 2040. The government's master plan aligns with these projections, as Vietnam aims to achieve uppermiddle-income status by 2030 and developed country status by 2050. This sustainable economic growth translates into increased spending power for consumers and homebuyers, thereby driving the growth of the residential market, particularly in the segment of developer-built homes, over the next 1520 years. The positive economic outlook sets a favorable environment for investment and expansion in the real estate sector, supporting the long-term development of the residential market in Vietnam.

1.6

5.0

1.0 3.9

2.2

0.6

Japan

1.8

3.7

China 6.4 6.2

6.0

5.0

3.4

4.7

3.2

5.3

Thailand 4.1

5.5

Philippines

3.5

Malaysia 2023F 2024F – 2030F

6.1

Vietnam

India 4.0

5.1

2.4

5.0

5.0

4.5

Indonesia

2031F – 2040F Source: Euromonitor, November 2023. For 2024F – 2030F and 2031F – 2040F, the figures presented are average for the whole period

33 CBRE RESEARCH

0.4

© 2023 CBRE, INC.

Ring Roads:

Vietnam: Two Decades of Urban Development

The City has kicked start the construction of Ring Road No. 3.5 and No. 4. Once completed, these projects will open up new development area to suburban districts such as Dan Phuong, Dong Anh, Hoai Duc and nearby area of Bac Ninh and Hung Yen provinces.

Locational Preferences will continue to shift to the outer metropolitan

for Hanoi . . .

Dong Anh

Metro lines: In the next 20 years, Hanoi expects to have at least 4 metro lines in operation. The new lines are expected to boost the connectivity from Hoa Lac area, Bac Tu Liem district to the existing city center.

Bac Ninh

Dan Phuong Hoa Lac Hoai Duc

International Airports: Existing

Hung Yen

Future (indicative location)

Hanoi is currently planning for another international airport, in addition to the existing Noi Bai International Airport. The new airport is expected to be located in a suburban district in the South of the City. This expects to boost the industrial market as well as housing market in these locations.

Future residential hubs # 34 CBRE RESEARCHFuture emerging residential clusters #

Bridges: Existing

Thanh Oai Thuong Tin Ung Hoa

Future

A total of nine additional bridges connecting the two sides of the Red River are expected to be completed by 2050.

The completion of the new bridges could potentially enhance the position of the North and East of Hanoi as a new commercial and residential cluster. © 2023 CBRE, INC.

Hanoi 2023

2040, projected

Vietnam: Two Decades of Urban Development

Residential Supply Density High Low Expected locations of future townships and residential hubs City center Note:35The maps include Van Giang, a district located on the border of Hanoi in Hung Yen province, which provides residential CBRE RESEARCH townships to cater to the housing needs of Hanoi.

© 2023 CBRE, INC.

Bridges:

Vietnam: Two Decades of Urban Development

Thu Thiem will be connected to Binh Thanh District, District 1, District 4, and District 7 via five bridges (including one pedestrian bridge) according to the city’s master plan. Two out of the five bridges were completed.

. . . as well as for HCMC

In addition, HCMC is also working on constructing three other bridges that are part of the Ring Road 3 project.

Altogether, these bridges will enhance the potential development of the Eastern HCMC area, especially the Thu Thiem New Urban Area.

Metro lines: In the next 20 years, HCMC expects to have at least 3 metro lines in operation. The new lines are expected to boost the connectivity from Thu Duc City, Hoc Mon and Binh Chanh districts to the CBD.

Thu Duc City International Airports: Existing

Binh Tan

Future (indicative location) Long Thanh International Airport is currently under construction in Dong Nai. The airport is expected to attract a significant number of businesses and workers, leading to further development of residential areas to the East of HCMC and Dong Nai province.

Future residential hubs # 36 CBRE RESEARCHFuture emerging residential clusters #

Thu Thiem Ring Roads:

Binh Chanh

Ring Road 3 is currently under construction and will pass through several provinces, including HCMC, Binh Duong, Dong Nai, and Long An. Once completed, connectivity between cities and provinces will be improved, expanding residential areas into suburban areas such as Thu Duc City, Binh Chanh, Hoc Mon districts of HCMC, together with Long An and Dong Nai provinces. © 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

37 CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Provincial Markets to garner growth in the coming decades

Expressway System Completed: 1,729km To be completed by 2030: 5,000 km To be completed after 2030: 9,000 km

The real estate landscape in Vietnam is undergoing transformation, driven by strong commitments to upgrading the infrastructure network. According to the global infrastructure outlook, Vietnam has allocated 6% to 7% of its GDP towards infrastructure development in the past five years. Furthermore, the government plans to continue investing 4-6% of GDP annually in infrastructure in the foreseeable future. By 2030, the government aims to complete 5,000 km of expressways, and by 2050, the goal is to expand the infrastructure system to encompass 9,000 km of expressways. This focus on enhancing connectivity and accessibility across various regions creates opportunities for growth and investment, not only in established areas like Hanoi and Ho Chi Minh City but also in emerging locations, fostering the potential for new real estate markets to flourish.

NORTH

CENTRAL

SOUTH

The coastal cities of Hai Phong, Quang Ninh and potentially Thai Binh are candidates in the North to become major residential markets outside greater Hanoi area. Recent completion of Hanoi – Hai Phong – Ha Long – Mong Cai (China’s border) and future expansion of Hai Phong – Thai Binh coastal way will further support the industrial market development creating jobs and attracting population shifting to these cities/provinces. Thus, there will be opportunities to forming mega urban cities.

For the Central area, Nghe An, Thua Thien Hue (TTH), Khanh Hoa and Binh Dinh can potentially become major economies in the Central region besides Da Nang. Hospitality and industrial developments are supposed to be economic drivers for these cities/provinces, thus generating population and residential demand.

Can Tho, Binh Phuoc, Long An, and Tay Ninh have the potential to become emerging residential markets in the South. These provinces would be benefited from industrial market developments and improving connectivities to HCMC.

Population (2022)

Acc. Residential Supply*

Quang Ninh

20,000 (Q2 23)

1.36 mn

Hai Phong

22,000 (Q2 23)

2.09 mn

Thai Binh

6,000 (Q4 22)

1.88 mn

TTH

6,300 (Q3 22)

1.16 mn

Binh Dinh

5,300 (Q2 23)

1.50 mn

Khanh Hoa

9,300 (Q2 23)

1.25 mn

Binh Phuoc

550 (Q4 22)

1.03 mn

Tay Ninh

520 (Q4 22)

1.19 mn

Long An

14,000 (Q3 23)

1.73 mn

Source: Department For Roads Of Vietnam, Ministry of Transportation, CBRE Research. * Only includes developer-built projects 38 CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The availability of public transportation will be key to home purchase decisions The construction of public transit projects and bus routes is expected to have a significant impact on the residential market, especially in suburban area, as connectivity becomes a crucial factor in attracting residents to these locations. In addition, location preference is further determined by accessibility to nearby retail and service outlets, emphasizing the need for Transit-Oriented Developments (TODs) around major metro and bus stations. Both Hanoi and HCMC are currently working on developing and implementing special mechanisms for TODs, which will act as catalysts for the development of new residential and commercial clusters in these cities.

As the metro and public transportation networks within major metropolitans of Hanoi and HCMC are more developed, there will be opportunities for properties nearby metro stations to increase their values.

Case study: The Sydney Metro - Metro line suburbs outperform surrounding suburb

Source: CBRE Research, REA Group PropTrack, Australian Bureau of Statistics, NSW Government, Google, October 2023 39 CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Case Study: Riding the Metro in Hanoi Despite being in the initial stages of developing comprehensive metro systems, both Hanoi and HCMC are showing promising signs. The increasing number of passengers utilizing the recently completed Cat Linh – Ha Dong Metro Line in Hanoi*, which is Vietnam's first operating metro line, indicates prospects for this mode of transportation to become a key way of commuting in the country's future.

Metro 2A: Cat Linh Ha Dong (Hanoi), operated since 2021

Bangkok Skytrain – Sukhumvit and Silom, operated since 1999

Length (km):

13.1km

>68km

No. of passengers/ day

22K – 28K/day * (2022 – 8M2023)

Stable period: 750K/day (2019) Early years: 105K/day

No. of passengers per km per day:

1.7K – 2.1K (2022 – 8M2023)

Stable period: 11K (2019) Early years: 1.5K

Upcoming lines In Vietnam

Metro 3: Nhon – Hanoi Station (Hanoi) Length: 12.5km To be completed in 2024 (upper ground) and 2027 (underground)

Metro 1: Ben Thanh – Suoi Tien (HCMC) Length: 19.7km To be completed in 2024

Source: Hanoi metro, Ministry of Transportation, Vnexpress.net (*) According to Ministry of Transportation, the number of passengers using Metro Cat Linh Ha Dong in 2022 and 8M 2023 reached 8.2 million and 6.7 million, respectively. Total passengers for the year 2023 is expected to reach 10.6 million 40 CBRE RESEARCH

Photo: Passengers riding the Metro in Hanoi during rush hours in Nov 2023. © 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

Owning a private vehicle in the cities won’t be so convenient as parking remains a pressing issue in a foreseeable future Projected % of household processes car in Vietnam

2023: 8.9%

2040: 16.8%

2030: 12.0%

The existing quantity of vehicles in Hanoi and HCMC is already placing significant strain on the parking facilities of public and residential projects:

HCMC (2023)

Hanoi (2023)

1.1 million • •

•

1 parking project completed after 2017 Only 10% of current demand for public parking is addressed Around 90% condominium projects have less than 1 car parking/unit per CBRE’s observation (*)

0.9 million

6.6 million • •

•

>8.0 million

0 public parking basement is completed in 15 years Public parking system only achieved 20% of the city’s masterplan Around 80% condominium projects have less than 1 car parking/unit per CBRE’s observation (*)

Source: Euromonitor, November 2023. Bao Dau tu (2023), Laodong.vn (2023).Tuoitre.vn (2023). (*) anecdotal evidence and CBRE’s general observation on selected projects on the market.

41

CBRE RESEARCH

© 2023 CBRE, INC.

Vietnam: Two Decades of Urban Development

The Future Residential Living: Anticipating Increasingly Diverse Demand as Demographics Shifts to Older Brackets Age Groups and Expected Accommodation Types Second Home Property/ Landed Property/ Luxury Condo/ Senior Housing

50++ 60++

50 - 59 40 - 49 30 – 39 30 - 39 20 – 29

42 CBRE RESEARCH

Projected to post a significant jump by 2040 to account for 22% of the Vietnamese population, this expanding group of aged 60 and above expects to create additional demand for second home properties, landed properties in eco townships and senior housing facilities.

Landed Property/ High-end and Luxury Condo/ Second Home Property In the age range of 50s, homebuyers are expected to continue to favor space and privacy, over convenience and proximity to city centers. Landed properties and high-end condos will be favored, both for residing and for investment purposes. Second home property can be a consideration.

Landed Property/ High-end and Luxury Condo In the age range of 40s, homebuyers are anticipated to prioritize spacious properties, convenience and features that enhance health and safety. Consequently, landed properties and high-end condominiums are likely to emerge as popular choices among this age group seeking upscale living options.

Condominium, especially in Mid-end segment Currently, only 12.9% and 8.2% of Hanoi and HCMC residents, respectively, reside in condos. However, these proportions are projected to increase substantially due to rapid urbanization and limited land availability making condominium to be the most popular housing types. Mid-end condos are expected to be the preferred housing option for individuals in their 30s.

Rental Housing, Co-living, First/Entry-home Given the rapid urbanization and escalating property prices, there is a foreseen robust demand for rental housing, particularly in major cities. As a result, rental housing and co-living are forecasted to be popular choices for individuals in their early 20s, while the age range for purchasing first homes in major cities would be typically late 20s to early 30s.

Source:: CBRE’s calculation based on projected population scale by Oxford Economics, GSO

© 2023 CBRE, INC.

Contacts Regional Research

CBRE Vietnam Research

Henry Chin, Ph.D.

Cynthia Chan

Dung Duong

Van-Anh Do

Global Head of Investor Thought Leadership Head of Research, Asia Pacific henry.chin@cbre.com

Director, Asia Pacific cynthia.chan@cbre.com

Executive Director dung.duong@cbre.com

Associate Director anh.v.do@cbre.com

Henry Chan

An Nguyen

Yen Nguyen

Senior Director an.nguyen@cbre.com

Manager yen.nguyenhai@cbre.com

Thanh Pham

Dung Le

Associate Director thanh.pham@cbre.com

Associate Manager dung.lephuong@cbre.com

Ada Choi, CFA Head of Occupier Research, Asia Pacific Head of Data Intelligence and Management, Asia Pacific ada.choi@cbre.com

Manager henry.chan5@cbre.com

Tony Lai Manager tony.lai@cbre.com

Liz Hung Director, Asia Pacific liz.hung@cbre.com

© Copyright 2023. All rights reserved. This report has been prepared in good faith, based on CBRE’s current anecdotal and evidence based views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this presentation, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE’s control. In addition, many of CBRE’s views are opinion and/or projections based on CBRE’s subjective analyses of current market circumstances. Other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE’s current views to later be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change. Nothing in this report should be construed as an indicator of the future performance of CBRE’s securities or of the performance of any other company’s securities. You should not purchase or sell securities—of CBRE or any other company—based on the views herein. CBRE disclaims all liability for securities purchased or sold based on information herein, and by viewing this report, you waive all claims against CBRE as well as against CBRE’s affiliates, officers, directors, employees, agents, advisers and representatives arising out of the accuracy, completeness, adequacy or your use of the information herein.