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The rapid economic growth of the early 2000s was followed by the development and emergence of the office-for-lease markets in Ho Chi Minh City (HCMC) and Ha Noi from 2006 to 2008. However, the global recession in 2008 and Viet Nam’s struggling macro economy from 2009 to 2012 negatively affected this trend. Given the signs of macro economic recovery in 2013, the office leasing market in HCMC is expected to recover. However, the Ha Noi office market may take longer to turn around, mainly due to large amounts of available stock in some locations, especially in the western area of the city.
Retail sales posted an average 4.9% annual growth for the three years from 2011 to 2013. However, the gloomy economy outlook resulted in more conservative consumption numbers and retail sales growth slowed to 2.9% in 2013, the lowest in five years. Aside from the economy, another main reason for the slowdown is the emergence of nonstore shopping, which has changed consumption patterns and recorded an over 7% growth rate in the past two years. Retail sales can be classified into five segments, with department store sales representing the largest market share of 27%, followed by convenience stores (26%) and supermarkets (15%). Convenience stores and supermarkets showed strong growth in sales at 3.21% and 4.52% respectively in 2013. Aggressive expansion increased the number of supermarkets by 12% from 2010 to 2012, while convenience store numbers grew by 6% to over 10,000 stores during the same period. The newly opened convenience stores are larger in size than has been typical and provide indoor seating areas to encourage customers to stay longer.
Tianjin, as one of China’s four municipalities, is advantageously located in the Bohai Bay economic rim, which makes it a national hub for the north–south exchange of commodities, with an increasing role as a business centre. Moreover, Tianjin has become one of the most favoured destinations for overseas and domestic investment. Tianjin’s GDP totalled RMB1,437 billion in 2013, up 12.5% yearon- year (YoY), 4 to 5 percentage points (ppts) above the national average, with a GDP compound annual growth rate (CAGR) of 14.5% between 2000 and 2013. Tianjin ranked fifth among mainland cities in terms of GDP growth rate, which has attracted large investment into real estate.
Shenzhen, as one of China’s Special Economic Zones, serves as an important economic and international trade centre in southern China. Due to its proximity to Hong Kong, Shenzhen is often thought of as China’s window to the world. As its economy developed, Shenzhen’s hospitality industry experienced substantial growth. According to the Shenzhen Statistics Bureau, the number of tourists entering the city has grown by a CAGR of 10% between 2005 and 2012, receiving 12.1 million international overnight visitors and 29.4 million domestic visitors in 2012, up 9.2% and 11.9% respectively year-on-year (YoY).
In the first nine months of 2013, Shenyang‘s GDP increased by 8.3 year-on-year (YoY), to RMB522.31 billion. Retail sales reached RMB229.79 billion in the same period, up 13.3% YoY. Meanwhile, urban residents’ disposable incomes grew by 10.1% YoY to RMB22,090. As a major economic, cultural, transportation and trade hub of northeast China, Shenyang’s retail market attracted customers from both the locality and other small to medium cities in northeast China, such as Tieling, Anshan, Fushun and Benxi. Consequently, the city has the second largest retail market nationwide, following Beijing, in terms of mid- to high-end retail stock.
Following the historical economic reform led by Deng Xiaoping in the 1970s, Shanghai has become one of the strongest performers of all mainland cities, registering a remarkable nominal GDP compound annual growth rate (CAGR) of 13.5% between 2000 and 2010. In an effort to accelerate the city’s development, the State Council hastened plans to turn the city into an international financial hub and shipping centre in 2009. In the late 2000s, due to weak external demand, a strong renminbi, and rising labour and raw material costs, China’s economic growth slowed to single digits. The manufacturing sector has remained sluggish for the last two years as the Purchasing Managers Index has been close to 50. Foreign direct investment saw negative growth in 2012, suggesting global concerns over China’s sustainability. Given such challenges, the present central government are demonstrating strong ambition in revitalising the economy through a range of measures, the highlight of which is the launch of the Shanghai Pilot Free Trade Zone (SPFTZ). Although still at its initial stage, details of the reform have started to roll out, especially in the finance sector.
The recent softness of the residential sales market, both new and resale across the island, has prompted some to ask if it is time to buy landed properties. In fact, from our recent encounters with the public, there are more people asking if they should commit to landed properties than there are those looking to sell. This angle of questioning points to the possibility that this segment of the residential market could be harbouring significant pent-up demand. Landed properties have several attributes which make them stand out from other housing types. For one, supply is limited. That is actually a very important consideration to take into account when analysing this segment of the market. Chart 1 shows that over the two periods from 2003 to 2008 and 2008 to 2013, while the cumulative increase in the median and top decile of household income was comfortably in the double-digit range, the supply of landed homes has been less than 4%. For non-landed properties (not shown in the chart), the cumulative increase in supply over the 2008 to 2013 and 2008 to 2013 periods was 19.9% and 26.6% respectively, much closer to matching the growth in household incomes.
As one of China’s most important harbour cities and coastal resorts, Qingdao is the economic centre of Shandong province. The city is a major economic, cultural and tourism hub in the Bohai Economic Region and home to the second largest port in northern China in terms of throughput. Qingdao maintains strong economic ties with both Japan and Korea, given its geographical proximity, with many companies having established offices here. Qingdao ranked third in terms of GDP among north China cities in 2013 and has managed to maintain strong GDP growth averaging 13.3% (nominal compound annual growth rate [CAGR]) between 2008 and 2012, although slowing to 10.0% (real growth) by the end of 2013, echoing China’s economic slowdown. While it is an important industrial base in Shandong province, tertiary industry plays a less important role in the local economy, accounting for 50.1% of total GDP in 2013.
The Philippines is currently one of the fastest growing economies in Asia, despite the calamities the country faced last year. While global growth remains in low gear, the Philippines’ economy posted growth of 7.2% in 2013, continuing the trend seen over the past few years. The current state of the Philippine economy has also prompted economists to maintain their high growth forecasts for 2014, with the International Monetary Fund expecting 6.0% growth and the World Bank 6.5%, while the government is more bullish at 6.5% to 7.5%. However, Southeast Asia, including the Philippines, will come under pressure when the Federal Reserve rolls back its quantitative easing programme, although robust fundamentals make the Philippines less vulnerable to capital outflows than its neighbours. Robust domestic demand, public spending, strong exports and surging overseas remittances contribute to the local economy, and will maintain the upward trend as long as growth improves in advanced economies.
The Malaysian economy increased at a steady rate of 4.4% in the second quarter of 2013 compared with 4.1% in Q1/2013. In line with forecasts, GDP reached 5.0% in Q3/2013 and 5.1% in the fourth quarter. However, with the global economy affected by the weak US dollar and the euro crisis, which caused fluctuations in international trades, including the performance of supplies and services, the country’s overall GDP for 2013 contracted by 0.9% to stand at 4.7% by year’s end, compared with 5.6% in 2012.