K. P. Singh, general director of DTZ Vietnam, and Chi Edward, chief executive officer of Coldwell Banker Vietnam, shared the concern with the Daily one day after The Ascott Limited took a 90% stake in Somerset Central TD Hai Phong City for US$9.45 million.
Ascott said the acquisition in line with its conditional joint venture agreement with Thuy Duong Investment Joint Stock Co. on Tuesday would allow it to take control of the development of the serviced residence. In 2009, Thuy Duong awarded Ascott the management contract for the 132-unit Somerset Central TD Hai Phong City.
Ascott will inaugurate the international serviced residence in the second half of 2012 and plans opening of Somerset Danang Bay and Somerset Saigon properties by 2014 to consolidate its position as the largest international serviced residence owner-operator in Vietnam. The company, which is CapitaLand’s wholly-owned serviced residence business unit, now operates more than 860 apartment units at four properties in Hanoi and two in HCMC.
Ascott’s Chief Executive Officer Lim Ming Yan said the company’s strategy for Southeast Asia was to invest in key cities with strong potential for serviced residences. “Vietnam is one of our key markets in Southeast Asia and we hold a long-term view of our investments in the country.”
“Vietnam’s pro-business regulatory environment and growing educated workforce will continue to attract multinational companies to set up operations. This will in turn generate demand for serviced residences,” Lim said.
Previously, CapitaValue Homes Limited of CapitaLand Group spent over VND121 billion to buy 65% of shares of Quoc Cuong Saigon, which has a license to develop a VND906-billion project of some 800 apartments on 9,000 square meters in HCMC’s Binh Chanh District.
The Singaporean real estate developer has struck a deal with Khang Dien Saigon to buy into 70% of a US$70-million project of around 974 apartments under construction in HCMC’s District 2. With the acquisitions, CapitaLand has invested in seven projects with combined number of 6,400 apartments in Hanoi and HCMC.
Reality is not rosy
Experts said the acquisitions announced recently did not reflect the reality. Singh of DTZ Vietnam said hotels and serviced apartments were still experiencing reasonable market conditions but stagnation in the office and condominium segments.
On the same side, Edward of Coldwell Banker Vietnam said he knew some major property investors were gradually withdrawing their investment capital from Vietnam’s property market or undertaking their projects longer than previously planned.
“Foreign companies are more cautious about their investment in Vietnam’s real estate market,” Edward told the Daily on the phone on Wednesday, pointing out market uncertainty as one of the reasons behind their caution. He added that investors were more prudent to select markets in troubled times.
However, Edward said foreign property investors were pinning high hopes that the new-term Government would apply appropriate policies and measures to develop a sustainable realty market in Vietnam and create confidence among investors and in the market.
Edward expected a new policy would be in place to relax credit strain, to a certain extent, for property projects to revive the frozen market, which has not showed any sign of recovery. Therefore, he said the tempo of realty projects now depended much on offshore investment capital.
Singh said the market was seeing more projects delayed and that most real estate investors were worried about abnormally high inflation, devaluation of the Vietnam dong, high cost of financing and high mortgage lending interest rate.
He added many investors saw the challenging time as a short term phenomenon, and took the view that Vietnam offered good mid- to long-term potential.
Singh said many of the real estate companies which are in early stages of development planning were using the current market conditions as an opportunity to carefully plan their projects, gain their required documents and to work up their master plans.
“This will place them in a prime position to move forward with the commencement of construction and launching when the market turns,” Singh said.
Singh noted that a good number of developments continue to progress as investors wanted to prepare products when the market picked up, because foreign investors had an advantage over local developers in terms of being able to raise finance abroad at much lower interest rates than local investors in Vietnam.
By Dinh Dung and Mong Binh - The Saigon Times Daily
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.
No comments:
Post a Comment