Foreigners stake out prime real estate

The historic Majestic Hotel in HCM City. Foreign investors are dominating new luxury real estate developments

The government’s policy of opening up the market and the lack of high-end offices and hotels in the country’s two largest cities, Ha Noi and HCM City, will lead to more property development projects by international investors, said domestic experts.

The Vietnamese property market is one of the last destinations for major urban development projects in the world, according to international experts.

Strong economic growth, foreign direct investment and WTO membership are all contributing to higher demand for office and residential spaces. Another factor is the expansion of local and multinational companies, said Marc Townsend, general director of CB Richard Ellis Viet Nam.

The Ha Noi Department of Tourism estimates two million foreigners will visit the capital by 2010. That requires 26,000 new hotel rooms of three-star standard or higher, including 7,000 four-and five-star rooms.

In response to increased international visitor arrivals in HCM City, the city’s Department of Tourism is preparing prime spaces for development of new hotels.

Companies from Japan, Singapore, Malaysia and South Korea are staking out their piece of the pie, particularly in Ha Noi, HCM City and provinces with many industrial parks.

According to the HCM City Real Estate Association, more than 40 foreign investment funds with a combined capital of US$20 billion are seeking prime spaces, some of which require hundreds of hectares of land.

These investors especially have their eye on Districts 1, 3, 9 and the rural districts of Nha Be and Binh Chanh.

The UK-based JSM Indochina is one of those investors. Following advise from a global financial investment firm, Lehman Brothers, the company plans to invest between $400 million and $600 million in Viet Nam and Cambodia, two newly emerging markets.

The ASEAN Fund of the Singapore-based Ascendas will invest up to $1 billion in Viet Nam, Malaysia and the Philippines.

The company will focus on constructing trade centres and office buildings in the suburbs and supply materials for hi-tech intensive industries such as IT and biology, said Ong Beng Kheong, general director of Ascendas in Viet Nam.

The HCM City Tourism Department reports that many major foreign companies have sent their representatives to seek opportunities to invest in construction of hotels in Viet Nam.

The department proposed to the city government 21 spaces for hotel construction, a majority of them downtown.

Several foreign property investors have received permission from the department to develop projects in Binh Duong, according to Nguyen Viet Dung, deputy director of the southern province’s Planning and Investment Department.

The province’s Investment and Industrial Development Corporation (Becamex IDC) will join with Malaysia’s SP Stia Herhad to develop a 226-hectare ecological urban area in My Phuoc, Dung said. The project will cost $600 million.

Dung said the agency has considered many applications from foreign investors interested in building high-quality office and apartment buildings in the province.

Approximately 20 businesses from Dubai, Qatar, and Bahrain are scouting for opportunities in the property market, said Townsend.

They are interested in developing new urban areas in Ha Noi, HCM City and in the central region.

The Dubai-based Kingdom Hotel Investments will invest $65 million in building the Raffles Resort in Da Nang.

Specific projects

More than $8 billion in foreign investment has been pledged in property projects underway between 2004 and 2010, according to a survey by the HCM City-based property management firm VietRees.

Investment from South Korea is the highest, followed by Singapore, Malaysia, Hong Kong and Taiwan.

Korean firms have the most projects. These include Posco E & C, which has a $212 million project to build the Bac An Khanh urban area in HCM City; Kumho with its $230 million Asiana Plaza Sai Gon; Tay Ho Tay with a $314 million new urban area project in Ha Noi; and Booyoung with a $171 million apartment project in Ha Tay Province near the capital city.

Japanese investors have a joint venture with Lam Dong Province to build the Ban Kia –Suoi Vang resort in Da Lat in the Central Highlands

Singapore’s Keppel Land, through a wholly-owned subsidiary, Portsville, has teamed up with the Dong Nai General Agriculture Service United Cooperative and Vietcombank Fund Management to build a residential township on a 509ha in the Dong Nai Province, just 28 km north-east of HCM City.

The central province of Thua Thien-Hue granted a licence to Singapore’s Banyan Tree group to develop a $276 million project for the construction of a deluxe resort at its Lang Co Beach.

IndochinaCapital and VinaCapital are developing two luxury resorts, Nam Hai and Son Tra, in Hoi An and Da Nang towns, respectively.

Nine investors from Singapore, Hong Kong, Australia, the US, Malaysia, Saudi Arabia and China want to invest in the Binh Quoi-Thanh Da urban area project in HCM City.

(Source: VNS)