Vietnam - Difficulties force property investors to change

The troubled property market is forcing investors to be more efficient - by restructuring investment, transferring projects, or simply leaving.

In the heyday of the property market several years ago, numerous enterprises active in other sectors sought to make their way into the market and develop apartment projects.

Hoa Sen Group for instance aimed to move beyond its five major business fields - steel, building materials, financial investment, seaports and logistics - by investing in the realty sector.

The Pho Dong-Hoa Sen Building project in HCM City's District 9 kicked off in late 2009 was the group's first step to step into the property market.

It was one of the three projects Hoa Sen planned to develop in District 9, with 200 apartments expected to be launched into the market.

However, after two years of deployment, the group decided to transfer its 50 percent stake to its partner Pho Dong Development Investment Joint Stock Co.

The unfavourable property market has also forced the group to halt other projects.

Particularly, Hoa Sen Group is seeking partners to transfer the apartment projects Hoa Sen Phuoc Long B and Hoa Sen Riverview, both in District 9, together with a land plot along Tran Nao Street in District 2.

Macro-economic upheavals, coupled with the slump in the realty market, spark a need for Hoa Sen to sell property projects to focus on its core businesses.

According to Chair Le Phuoc Vu of Hoa Sen Group said the group would not make dispersed investment anymore.

Similarly, the Vietnam National Oil and Gas Group (PetroVietnam) will pull out of the complex project consisting of a five-star hotel, a commercial centre, a theme park, and a petroleum tower in Tu Liem District, Hanoi, upon the prime minister's request last week.

The project is taken over by PetroVietnam Construction Joint Stock Corporation (PVC).

While outside investors are divesting their capital in the property sector, insiders are striving to transfer their projects and land.

Van Phat Hung Corporation said it would liquidate the land plots in District 2 and 9 in HCM City, and offer the land for the company's office in District 7.

Besides the target to sell 70 apartments of the Lacasa project within this year, the real estate company will issue 300 billion dong worth of convertible bonds in order to have more working capital for the its plans in short and medium terms.

Likewise, Pacific Property and Infrastructure Development Joint Stock Co. (PPI) is looking for investors to cooperate or transfer two projects in Thu Duc District, HCM City.

The company is offering the 2,400-square-metre land plot of the PPI Tower office and apartment building in Hiep Binh Chanh Ward at 29 million dong per square metre, as well as seeking partners for the Water Garden complex project also in Hiep Binh Chanh.

The two-hectare land site for the project development is being offered at 15 million dong a square metre.

2012 is considered the year of mergers and acquisitions (M&A) activity with many opportunities for the financially-capable investors.

Phan Xuan Can, chair of the property service provider SohoVietnam, said the demand for realty project transfer was now higher than ever.

The service provider has been asked by other developers to offer 80 projects of several segments from apartments, office land, and urban areas to resorts.

The rising number of projects offered for changing hands is ascribed to tightening monetary policy, high banking interest rates, and the weak liquidity of the market.

Can said that the property market was undergoing thorough selection and only financially- capable and experienced investors would be able to survive.

"The market is restructuring itself and in the next 2-3 years, the Vietnam property market will have a new face," he said.

Tuoi Tre

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