Newcomers explore market
Project buying or transferring is a popular economic activity among real estate enterprises. Such activities have occurred more often since 2008 as many local investors are facing capital problems and struggling to find an outlet for their products.
While local firms are troubled with market slowdown, financially-capable foreign investors find it a good opportunity. Many investors, through foreign brokerage firms located in Vietnam, are exploring and seeking chances to enter the local market.
Marc Townsend, managing director of CB Richard Ellis Vietnam (CBRE), said many foreign investors are eyeing Asia, of which Vietnam is a new investment destination.
He said Korean investors are making their way back to Vietnam while several Chinese and Russian firms are looking for chances to invest in local office building or serviced apartment projects.
Sai Gon Thuong Tin Real Estate Joint Stock Company, or Sacomreal, said it received many foreign investment funds seeking ways to invest in its projects this June. For example, Mapletree Investments under the Singapore-based Temasek Holdings showed keen interest in office building and apartment projects, while Sung Chang of South Korea was interested in retail projects. EngelInvest of Israel was also named.
Townsend of CBRE described high population density and profitability of property projects as main factors to attract foreign investment despite the current economic challenges.
Tightened real estate loans and cash flow issue are pressuring local investors, forcing several companies to transfer some of their projects, withdraw capital from others and accepting break-even or losses to maintain their businesses.
To overcome the credit squeeze, many firms are looking for cooperation with local and foreign investors to access capital sources.
Su Ngoc Khuong, associate director of investment at Savills Vietnam Co., said many Vietnamese investors are seeking advice to approach foreign partners. The company witnessed 20% increase in their consultation enquiries this year compared to 2010.
Most investors in the local property market are Asian, such as Japanese, Korean or Singapore, thanks to similar cultures. Besides apartment and office, villa projects are appealing to many foreign investors.
Khuong said few companies publicize their project transfer, except for the listed ones. Moreover, a transfer deal takes between six months and two years to be accomplished.
Jones Lang LaSalle Vietnam Co, for instance, took one year to settle the transfer of Centre Point office building project on Nguyen Van Troi Street, Phu Nhuan District of HCMC. The transfer value remains unknown.
Savills Vietnam has served as a medium to help transfer a complex project of US$120 million, including shopping center, office building and residences in HCMC, Khuong said. The transfer is to be completed in the year’s end but identities of both local and foreign investors have yet to be revealed.
Khuong’s company has previously succeeded in brokering the transfer of an office building project of US$100 million in Hanoi. Khuong said that many project transfers are underway and more mergers and acquisitions would be announced in the coming time.
Old-timers speed up
While new investors are cautiously entering local market, those who have comprehended the market are expanding their investments through project acquisition.
In May, CapitalLand Group announced 70% stake acquisition of an apartment project in Binh Tri Dong Ward, District 2 from Khang Dien Sai Gon Real Estate Co. The project comprises of 974 units covering 2.9 hectares with total capital of US$70 million.
Two weeks later, the Singapore-based property group announced another acquisition of 65% stake, worth some VND121 billion, in Quoc Cuong Sai Gon Co. With these two projects in hands, CapitalLand holds a total seven property projects with 6,400 units, excluding the Somerset Central TD Hai Phong City project acquired by its subsidiary, Ascott Group Limited.
Yip Hoong Mun, chief representative of CapitalLand Vietnam, said the current difficulties are opportunities to investors and underlined that his firm would keep seeking investment cooperation in viable real estate projects.
Regarding this issue, Chairman Le Hoang Chau of the HCMC Real Estate Association (Horea), stated project merger and acquisition tendency would continue and investors are obliged to join hands to enhance financial power so as to implement their projects.
Market observers are optimistic about the mutual support in brand name, experience, project management and even customers offered by foreign partners. They also see that not all project transfers result in loss-making.
Sacomreal is an example. The property firm gained hundreds of billions of dongs from the transfer of Celadon City residence project in HCMC’s Tan Phu District, while it still retains a 40% stake in the project.
Experts predicted if project transfer deals are made successfully, some dozens of property projects might change hands in upcoming time.
By Dinh Dung in HCMC - The Saigon Times Daily
Business & Investment Opportunities
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