newsletter 14 - en
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8/6/2019 Newsletter 14 - En
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THE BULLETINThe Real Estate News & Information Source
www.coldwellbankervn.com
WHAT HOME BUYERS NEED
REAL ESTATE AS AN ASSET CLASS IN A MIXED-ASSET PORTFOLIO:
A U.S. PERSPECTIVE
IN THIS NEWSLETTER:
What Home Buyers Need Real Estate As An Asset Class In A Mixed-asset Portfolio:
A U.S Perspective
Gold Markets
Stock Markets
Currency Markets
Real Estate Market
May 9th, 2011 Issue 14
Amid the saturated state of the real estate market with supply sources
exceeding the demand, many developers are struggling to find buyers
for their completed projects. Some headlines in the media are saying
that real estate prices hit bottom and massive launches and series
of promotions, yet the market still has not flourished. So what is the
determinant for a buyer to decide which project they will invest in?
C nn gi tin vo ngn hng?
2. FRIENDLINESS
Friendliness in this case contains many meanings: friendly
with the building residents, friendly with their visitors and
friendly with the environment.
An apartment could not be seen as a friendly house without
ensuring adequate facilies for the residents daily lives. The
inner facilies such as supermarkets, groceries, swimming
pools, and park areas with green interiors, for example, are
considered the minimum comforts for mid- to high-end build-
ings. But this is not enough. More importantly, the
apartments quality must not degrade over me. There aremany current apartments are labeled as high-end but the operaon and building management are extremely weak in fact. Even
some places have leaks and cracks only a short me aer being put into use. On the other hand, apartment projects from reputa-
ble developers have the advantage of ensured quality from the very first stages. Specific paints are chosen to bring the best qual-
ity for the houses and connuously maintained to improve the projects images as well as the developers reputaons as they
embark on new projects.
Besides providing security for residents, a friendly building also needs to provide comfort to the guests who come to visit or work
there. A successful project means everyone stepping in must feel as if they are the owners of the building. They have the right to
get the most aenve services, no maer whether they are buying large blocks for investment or purchasing their future primary
residence. Everyone must be treated as residents living in a community that the project owners have built up.
The final factor is environmental friendliness. As global warming is an ever-increasing concern with negave implicaons withoutproper acon, people are more and more focused on how to connue developing properes without damaging the environment.
Modern buildings have been designed to save space and energy while minimizing risk factors through the advanced waste and
water treatment systems.
Those factors have challenged developers to find ways to meet the customers needs while creang opportunies for buyers to
choose the best qualified projects for their own.
INTRODUCTION
Real estate is both a physical and financial asset, making it an ideal investment product with disnct characteriscs in the financial
world. From the porolio allocaon perspecve, property investment has emerged as an asset class which offers relavely com-
peve risk-adjusted returns to other asset classes, inflaon hedging and risk diversificaon benefits to a mixed-asset porolio.
WAYS TO GAIN EXPOSURE TO THE REAL ESTATE MARKET
Property investments can be done in one of the following forms: unlisted/private real estate and listed/public real estate. For the
first investment type, investments are made in real assets and the laer is accessed by invesng in shares of real estate firms that
are listed on a stock exchange. Listed/public real estate investments also offer a high level of liquidity compared to unlisted invest-
ments.
Real estate investments can also be categorized as direct investments (direct ownership in property assets via 100% equity or
joint venture) in specific real estate assets or indirect investments (Private funds, Real Estate Investment Trusts (REITs), Debt
Financing) in a property or a porolio of properes.
Table 1: Methods to accessing real estate
THE ROLE OF REAL ESTATE IN A MIXED-ASSET PORTFOLIO
RETURN ENHANCEMENT
Real estate is an asset class which is capable of generang a relavely aracve return. As illustrated in Table 1, global real estate
has derived a beer return than global equies and bonds on a long term basis, generang an annual return of 7.3% over a 10
year period while global bonds and equies offered less compeve annual returns of 0.5% and 4.8% respecvely.
From a mixed-asset porolio perspecve, adding real estate investment into the mixed-asset investment porolio can enhance
the overall porolio return while maintaining the same porolio risk level. As noted in Table 2, a study implemented by UBS Real
Estate Research over a 25 year period has showed that incorporang real estate and REITs in a mixed porolio with proporons
of 12.4% and 7.5% respecvely can enhance the overall porolio return by 0.6% while keeping the porolio risk constant at
10.3%.
Table 3: Real estate in Allocaon Models
INFLATION HEDGING
The cash flows that come from real estate investments remain unique in the financial world. Cash flows generated from lease pay-ments do not fluctuate as much as corporate earnings but vary at a higher degree than most investment-grade bonds. Over the
long term period, real estate may provide protecon against inflaon since its revenue is derived from periodically contractual
rental payments which can be adjusted to changing external market condions, such as rising inflaon. This can be done by pass-
ing along the inflaon cost to tenants. Therefore, rental payments oen increase over the term of the lease, a feature not found
in the bond market where coupon payments are fixed during the duraon of bonds.
The U.S. REITs are an example of income generang property investment which have their dividends growing faster than the rate
of inflaon from 1987 to 2008, as presented in Table 3. With the excepon for the years 1990, 1991 and 2001, the Consumer Price
Index growth rates were beaten by those of the U.S REIT dividends.
Table 4: REITs Dividend Growth vs. Consumer Price Index
1. TRUST
The current market does not lack capital, but actual trust in the devel-
opers presge and their projects quality. According to journalists
observaons recently, homebuyers are not limited to the common
speculators of yesteryear and now include those people with real
housing needs. Meanwhile, new investors have arrived in the real
estate market, shiing their investments from the tradional channels
of gold, foreign currencies and securies to the property market. Nev-
ertheless, a large number of under construcon and on sale projects
is causing the market to suffer from oversupply.
In these arduous mes, those developers who connue standing tall
in the market and maintain their names and reputaons in the minds
of customers with a long-term approach have the possibility to reap
success in the future. These developers do not quickly sell off for easy liquidity nor intenonally cause rumors to manipulate the
market and destabilize property prices. Instead, they try to serve the community with desirable projects to create miniature socie-
es instead of merely lifeless buildings.
For homebuyers with real needs, the value of their home does is not only contained in the four brick walls, but also encompasses
the surrounding habitat. Who will be their neighbors? Is this the best environment for their families for the coming 20 to 30 years?
Can their children grow up and parents enjoy rerement here? These are all necessary quesons which need to be posed when
homebuyers are choosing their own houses. Unfortunately, these quesons didnt have the right answers in some projects.
Buyers should therefore be aware of these factors, whether buying a home for themselves or for investment, as they will certainly
have an effect on the value of the property in the future.
Consultant of COLDWELL BANKER Vietnam explaining the features
and comforts of Tricon Towers to a prospective customer
The second building in Vietnam to be recognized for its environmentally friendly
design by the Singapore National Environment Agency
Listed (Public)
Equity Public property companies
Listed Funds
Mortage-Backed Securies
Direct Investment
Private Funds
Direct LendingDebt
Unlisted (Private)
Yield
to
Date
(%)
1
year
(%)
10
year
(%
p.a)
Global real estate5 22.9 7.3
Asia Pacific real estate-2.8 -0.3 4.8
European real estate 0.5 23.6 6.8North American real estate
15 52.4 9.7Global Equites
-0.8 11.3 0.5Global Bonds
4.8 6 4.8Source: European Public Real Estate
Associaton
Table 2: Real estate performance vs. Equity and Bond
performances as of 31 July 2010
Source: Naonal Associaon of REIT (REIT Dividend Growth) and U.S. Department of Labor (Consumer Price Index)
RISK DIVERSIFICATION BENEFITS
The return drivers underpinning real estate returns differ from those of many other classes of financial assets. Real estate has a
tendency to lag in the business cycle and fluctuate based on real estate market condions, lease expiraons, and construcon
costs. Those disnct characteriscs have contributed to a low correlaon with the rest of the tradional financial products,
providing an advantage during periods of general market volality.
As indicated in the chart below which shows the correlaon between the U.S. Naonal Council of Real Estate Investment Fiduciar-
ies Property Index (NPI) and U.S. Market Indexes, over the 1990 -2009 period, the U.S. real estate has only a 0.14 correlaon with
common stocks (S&P500) and a negave 0.16 correlaon with bonds (Barclays U.S. Aggregate). Since real estate asset class has a
low correlaon with the other asset classes, adding it to a mixed-asset porolio will lead to risk diversificaon in the porolio.
Table 5
CONCLUSION
Real estate is a disnct asset class and an important addion to a mul-asset porolio. The asset class offers a wide range of
significant benefits to asset allocaon and porolio construcon such as return enhancement, risk diversificaon benefits, and
inflaon-hedging. Individual and instuonal investors can exploit those implicaons to adjust their asset allocaon in a desired
mixed-asset porolio in accordance to their risk-return preference to acquire more favorable risk-adjusted returns.
Portfolio Allocations and Returns
U.S. 1978-2003
Asset ClassesRepresentative
Allocation Ranges
Stocks,
Bonds & Int'l
Stocks
IncludingReal
Estate
Including
REITs
Bonds 20.0 -60.0% 40.00% 39.70% 22.10% 20.00%
Int'l Stocks 5.0 - 15.0% 10.00% 7.50% 5.70% 5.00%
Large Stocks 22.5-67.5% 45.00% 45.30% 49.80% 47.60%
Small Stocks 2.5-7.5% 5.00% 7.50% 7.50% 7.50%
Real Estate 5.0-15.0% _ 15.00% 12.40%
REITs 2.5-7.5% _ _ 7.50%
Portfolio Mean 12.70% 12.80% 13.00% 13.30%
Portfolio Std Dev 10.30% 10.30% 10.30% 10.30%
Source: USB Real Estate Research
Mid-point
Allocations
Stocks, Bonds &
Int'l Stocks
Efficient Allocations
With Constant Risk
NPI vs. Market Indexes
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Newsletter Issue 14
REAL ESTATE MARKET SUMMARY
Hanoi
PROJECTS
La Casa Apartments to open, consisting of ten 35-story blocks with 1,948 apartments. The average
sales price is VND21.5 million/sqm.
Inauguration of the first 300 lease-purchase apartments for low-income people - The project includes
seven 6-story section blocks, with areas from 36-63sqm/unit. In addition to affordable prices (about VND6
million/sqm), buyers can choose installment periods (minimum in 5 years) with the first installment being
20% of the total apartment value.
Luxury apartments to be built on the land of Trang Tien Ice-cream with expected selling price at
USD10,000/sqm. Ocean Group plans to build it as a complex of services and about 20 high-class apartments
as well as the head office of Ocean Bank on the first floor.
Vietnam - China Cultural Center to be built next to The Manor urban (Me Tri Commune, Tu Liem Dis-
trict) with a total construction area of about 14,000sqm, including a 1500-seat conference hall, meeting
rooms, multi-function room, offices, and Chinese medical center.
Lancaster Hanoi apartments for sale - The apartment areas range from 45-300sqm, located at 20 Nui
Truc Street, Giang Vo, Ba Dinh District. Delivery is expected by the end of 2012.
Complex to be constructed at 1, Lane 319, Vinh Hung Ward, Hoang Mai District - The complex of
housing, commercial services and offices with 23 stories will be built on an area of 5,445sqm.
Hesco Van Quan priced at VND95 million/sqm, with land plots to be offered from 82sqm. The project
has two 50-story buildings, one 45-story building, terraced houses adjacent to many facilities such as pre-
schools, squares, halls, and amusement parks.
20 Gia Phu Khang apartments to open - The apartment areas are from 53-79sqm, located at 68-72
Le Van Chi, Thu Duc District. Their final delivery to customers is expected in September 2012.
Withdrawal of over 42,500sqm of residential area for officers at Nuclear Center because of less capital
contributors being officers than initially listed and many external contributors.
Upcoming 45,000sqm Crescent Mall at Phu My Hung New Urban - Nine floors of the shopping mall
include six retail floors and three basements. Currently 50% of Crescent Mall is leased with the highest price
at USD50/sqm.
Opening of Phase I at Vinh Loc B resettlement area, Binh Chanh District with a total investment of
over VND847 billion and land use area of 30.92 hectares. The construction is divided into four areas: 45apartment blocks with 1,939 apartments; primary school; internal roads, sewage treatment station, park
system and lighting system as well as other items.
Quang Thai Apartments in Ho Chi Minh City offered at VND13.3 million/sqm, including 264 apart-
ments with areas from 63-90sqm, located in Ly Thanh Tong, Tan Phu District, near Dam Sen Cultural Park.
Commencement of 784 social houses at 35 Ho Hoc Lam, An Lac Ward, Binh Tan District. The project
includes six 15-story apartment blocks, the average areas of apartments from 34-55sqm and a total invest-
ment of VND408 billion.
Inauguration of Ruby Garden apartment project on 24 April, 2011 - The average price of apartments
is VND20.5 million/sqm.
Sales launch of phase 1 of Happy City Apartments near Phu My Hung, including 50 apartments from
76-100sqm, priced at VND13.7 million/sqm.
Geleximco to build 20-story building in front of the two land lots 2-4-6 Dong Khoi and 21 Ngo Duc Ke
Street, District 1. The first seven floors of the building will be for offices and commercial services with the
upper 13 floors for a 5-star hotel with 220 rooms.
Construction of Sovrano Plaza complex (District 8) begins - Sovrano Plaza was designed with classical
architecture and includes 3-4 commercial stories, 10 blocks of apartments with 24-25 stories, including
about 1,000 closed apartments with full utility services, helicopter landing field, tennis court, and swimming
pools.
1/500 plan of residential area at Phong Phu Commune (Binh Chanh District) has been approved for
the construction of housing and green parks.
Vietnam borrows EUR20 million from France to build social housing and city infrastructure development in
Ho Chi Minh City - The Ministry of Finance said the loan provides a big sum of credit capital for the invest-
ment fund of the City (HFIC) to construct social houses, educational institutions, and hospitals as well as
modernizing waste collection and management.
Regulations on minimum land area required for land lot separation proposed to be removed - accord-
ing to voters, Decision 19 is no longer consistent with some provisions of the Land Law, Construction Law
and the Law on Residence which have been amended and supplemented. On the other hand, it is very diffi-
cult to implement the current regulations on agricultural land lot separation.
Leaning houses in Ho Chi Minh City to be coerced - Ho Chi Minh City Department of Construction has
just released an official letter to instruct district peoples committees regarding orders and procedures for
leaning houses resolution across the city. Accordingly, from now until 05/15/2011, the districts must quickly
collect and list leaning delved works exceeding permitted conditions under the construction standards and
report to the Department.
2012 land price schedule is promptly fixed, according to the announcement of the Peoples Commit-
tee of Hanoi (PC) upon the decision on establishing the directing board that is in charge the 2012 land price
schedule establishment.
Inconsistent criteria for movement of universities made by Hanoi PC and Ministry of Education and
Training resulted in unfinished list of 12 universities proposed for relocation.
Ho Chi Minh City
Four newly planned urban residential areas include Minh Thanh (Tan Ha Ward), Tan Binh (Nong Tien), Tan
Phat (Y La) and Dong Son (Y La and Hung Thanh). This is part of the gradual development strategy of
Tuyen Quang City, aiming to become a Grade-II city before 2020.
Tuyen Quang
Over 200ha projects required to obtain approval of the Prime Minister - This is the latest information from
the workshop to get opinions for the draft decree on the urban project management and draft plan on man-
agement mechanism of construction investment in Vinh Yen City, Vinh Phuc Province.
Vinh Phuc
Duc Viet Villas priced at VND6 million/sqm (Thuan Thanh District) - The total number of villas and conjoined
houses are approximately 216 units with areas from 100-300sqm. Sales prices range from VND6-9
million/sqm contracting directly with the owner.
Bac Ninh
Low-income housing to be developed on 9.5 hectares of land - The project includes residential apart-
ments, public services works, trees, and internal traffic infrastructure. The population size is estimated from
1800-2200 people, including about 1000-1200 people in conjoined houses and 800-1000 people in apart-
ments.
Apartment Building on 9.5 hectares in Ha Long City - Quang Ninh Province has recently approved a
decision on the detailed tasks of planning to build residential condominiums and services to low income
earners in Ha Khanh Ward, Ha Long City. The project will include residential apartments, group housing,
public works services, landscaping, and internal traffic infrastructure.
Quang Ninh
Approved plan 1/500 of Hoa Son urban with total planned area of 33.4 hectares, located in Hoa Son Com-
mune, Luong Son District. The total investment is VND451.844 billion. Lideco-Hoa Son Ltd. is the investor.
Hoa Binh
Villa village to be developed in Bim Son Town with an area of 34,148sqm and investment capital of VND85
billion. HUD4 is the project investor. The project will have 65 bare finished villas from 3-5 stories and sched-uled for completion in Q1/2013.
Thanh Hoa
Villa village to be developed in Bim Son Town with an area of 34,148sqm and investment capital of VND85
billion. HUD4 is the project investor. The project will have 65 bare finished villas from 3-5 stories and sched-
uled for completion in Q1/2013.
Thanh Hoa
Construction of Quy Hop Hotel and adjacent houses includes a 9-story hotel on an area of 1,540sqm
and 4,500sqm of adjacent houses with 43 units. The average areas of apartments are 110sqm/unit. PetroVi-
etnam Nghe An Construction Joint Stock Company (PVNC) is the project owner.
Two VND2 trillion projects to be commenced - Quang Trung apartment building and Hoang Mai petro
urban are planned to be improved. Execution is expected to start in July and September 2011. PetroVietnam
Nghe An Construction JSC is the owner.
Wonder Park, the largest beach theme park in Cua Lo to be constructed, including yacht club to serve
tourists in addition to golf and swimming.
Over VND16.5 trillion project of Dong Hoi Seaport to be built - the Ministry of Transport has approved
detailed planning by 2020 of Dong Hoi Seaport, Quynh Luu District, Nghe An Province. The Seaport is
mainly used for commodity export and import for thermal power plants, steel mills and building materials
in Dong Hoi Industrial Park and neighboring areas.
Nghe An
Tan Hai Doanh urban project to open with total area of 974,366sqm and total investment of more
than VND1.6 trillion. The project is comprised of 500 villa lots and units have areas from 500sqm.There are
1,279 conjoined plots and three 7-story apartment blocks for middle-income people in Hoa Khanh and Lien
Chieu Industrial Zones.
USD750 million commercial service complex of Thien Thanh to be built on the area of 1 million square
meters, including commercial services, international hospital, school, luxury hotel, office for lease, and con-
ference center.
Phuong Trang new urban project at Da Nang Bay to be introduced with a total area of 150ha, includ-
ing the major functional areas such as villas, conjoined houses, hotels, commercial service complex, super-
market, school and park. Phuong Trang Real Estate Corporation is the owner.
Construction of FPT Da Nang urban area in Hoa Hai Ward, Ngu Hanh Son District. This is considered
the first high-tech city model in Da Nang and the central area.The project covers an area of over 181ha
with an investment capital of USD1 billion. FPT Da Nang Urban Corporation is the investor.
Da Nang
Recovery of VND1 trillion My Khe Resort project due to late execution.
Quang Ngai
Vinh Hoi Resort planned to be constructed in Binh Dinh in early 2012 - This is a luxury resort including an
international conference center, 5-star hotel and resort, 18-hole golf course, luxury villas, and sports facili-
ties. The project has a total area of 325ha and Phase 1 investment is USD250 million. The investor is Viet
My Travel and Hospitality Ltd.
Binh Dinh
Construction of high-level Ba Be Lake resort with a total area of 20ha, at the Phuoc Dinh Commune, Thuan
Nam District. The project aims to build tourist resorts with ecological nature, including mountains, sea, and
forest at 3- to 5-star standards.
Ninh Thuan
Indochina tourism Project proposed to be recovered because investors have already been delivered forest
land without timely construction and late implementation which results in deforestation and serious
encroachment on forest land and forest product damages. The registered capital of the project is over
VND368 billion and Tropic Tourism Ltd. is the project owner.
Lam Dong
Construction of Prince Town commercial urban to start in Q2/2011 - The project is located opposite the
Eastern International University, comprised of 129 townhouses combined with trade center of 100-112sqm,
3 floors with 2 fronts. Completion is expected in 3 years.
Binh Duong
Approval on Toan Gia Thinh resettlement expansion plan with nearly 22ha in Duc Hoa Ha Commune,
Duc Hoa District, Long An Province. The VND160-billion project is invested by Toan Gia Thinh Corporation.
Pico and Sanderson invest in Happy Land complex project - Pico will build one of six amusement
parks, with an area of nearly 100 hectares and total investment of USD600 million. Sanderson won the
USD140 million bid package. Happyland is considered to be the largest entertainment complex in Southeast
Asia.
Long An
Sales launch of Bau Sen Vung Tau apartment building at VND16 million/sqm. Bau Sen building includes two25-story apartment blocks with 518 flats, of which the ground floor is used for services and the second and
third floors are commercial centers.
Ba Ria - Vung Tau
HUD invests a 21-ha urban area in Can Tho - including 14,200sqm of conjoined houses, 40,200sqm of villas,
27,000sqm for high-rise buildings, and the remaining area used for public works, court, school, and trans-
port.
Can Tho
Mekong Telecoms to be constructed on an area of 3,500sqm -Vietnam Telecoms National under Vietnam
Posts and Telecommunications Group (VNPT) is the developer.
Hau Giang
Withdrawal of five tourism projects which failed to implement projects as scheduled - These projects are
invested by Kien Giang Travel JSC, Phu Quoc Tourism JSC and Nhat Tam Lasta Film JSC.
Kien Giang
VND1.185 trillion invested in the mini-project of Ca Mau City - The People's Committee of Ca Mau said
the project has a total area of 82.56ha spreading over eight wards and one commune. The project is divided
into two implementation phases: Phase 1 from 2012-2013 and Phase 2 from 2014-2017.
Ca Mau
PROJECTS
LEGAL POLICIES - PROVISIONS
INFRASTRUCTURE
LEGAL POLICIES - PROVISIONS
(NATIONAL) POLICIES
Home & Real Estate Market management office (Ministry of Construction) released an official letter to direct
real estate transactions to comply relevant regulations of law when they register their line of business as a
real estate transaction trading floor. Specifically, the official letter specified the provisions on business condi-
tions, models of organization and operation as well as management of real estate transactions.
The informaon and comments provided in this newsleer are based on an assessment of the writer at the date of the newsleer. This newsleer is not for investment purposes but only for reference to assist investors with
more complete informaon in making decisions and can change at any me without prior noce. The informaon in this newsleer is based on the available informaon gathered from various sources which are believed to
be reliable and accurate, therefore perfecon cannot be guaranteed. COLDWELL BANKER Vietnam is not responsible for the investment decisions made when using the informaon contained in this newsleer.