Vietnam - Enterprises saying good bye to real estate business

Due to the prolonged difficulties on the property market, a lot of enterprises have to restructure their investment portfolio, seek way to transfer projects to other partners, and say goodbye to the real estate business.

Back to core capacity

Some years ago when the realty market was booming, many firms in many different industries sought ways to enter property investments and develop condominium projects. HoaSen Group also had the ambition to go beyond five major business sectors including steel, construction material, financial investment, seaport and logistics to invest in the property market.

The company kicked off the Pho Dong-HoaSen project in Phuoc Long B Ward, Dist 9, HCM City in late 2009 as a start of investment expansion strategy. It planned to supply around 200 condos to the market. This was the one of three projects HoaSen wanted to develop in Dist 9.

But after only two years of construction, HoaSen Group decided to transfer 50% to the joint venture partner Pho Dong Investment Development JSC due to unfavourable market conditions.

Also, HoaSenGorup is searching for a partner to sell HoaSen-Phuoc Long B condo project with 400 units in Dist 9. The project is capitalized at 520 billion dong. Till now the company has disbursed around 46 billion dong into the project.

Similarly, the group plans to transfer HoaSen Riverview condo project in Bung OngThoan, PhuHuu Ward, Dist 9. Of total estimate of 650 billion dong, the firm poured around 45.5 billion dong into the project.

Because of the difficult macro-economy, HoaSen Group had to re-estimate all investment projects to collect capital for developing core business of steel and plastic.

Its Chairman Le Phuoc Vu on March 22 admitted that economic upheavals and market changes were big lessons for the company so his firm will not expand to non-core business.

With the same move, Vietnam Oil and Gas Group (PetroVietnam) will stop investment in the complex of PetroVietnam Tower, 5-star hotel and entertainment park on 25 hectares in Me Tri Commune, TuLiemDist, Hanoi with a view to focus on core operations.

Earlier, on March 12, the Prime Minister requested PetroVietnam not to continue implementing property projects and to use all resources for main operations.

Focus to survive

While other firms are rushing to divest capital from the realty market, property developers are struggling with the market hardships. In order to manage capital, a lot of the developers are transferring projects and land.

At the shareholders meeting on March 20, Van Phat Hung Joint Stock Co has announced it would sell their land fund in Dist 2 and Dist 9, and a land lot for building its office in Dist 7 (HCM City) in its capital restructure strategy.

Along with the target of selling 70 condos in Lacasa project within this year, Van Phat Hung will offer 300 billion dong worth of convertible bonds to supplement its working capital for short term and long term plans.

Meanwhile, Pacific Property and Infrastructure Investment Joint Stock Company (PPI) are looking for investors for cooperation or transfer of two property projects in Thu DucDist, HCM City.

The company also is offering the price of 29 million dong per square meter for 2,400 sqm used to develop PPI Tower in HiepBinhChanh Ward and seeking a partner for Water Garden complex at 15 million dong per sqm.

2012 is seen as the year of Merger and Acquisitions (M&As) and the chance for rich financial investors.

Mr Pham Xuan Can, Chairman of Sohovietnam, an expert in real estate marketing and transfer, said that the demand for realty project transfers is booming at this time. Many investors through the company are selling 80 projects.

“The property market is being restructured and in next 2-3 years, the market will have a new face”, he added.

VietBiz24

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