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Foreign investors eyeing domestic real estate projects   2011-08-18 - TBKTSG

A lot of real estate project assignment deals where buyers are foreigners have been reported so far this year, while the number is expected to increase towards the end of the year since the assignments, which are now under negotiations would be finalized by that time.

Difficulties of some could be opportunities for others


Many real estate developers are reportedly facing big difficulties because they cannot access bank loans and find it hard to find the buyers for their products. However, the difficulties of the developers are really the big opportunities for financially capable investors. Foreign investors, through the foreign brokerage companies which have representative offices in Vietnam are exploring the opportunities of doing business in Vietnam.

Marc Townsend, Managing Director of CB Richard Ellis Vietnam, a real estate service provider, said that a lot of foreign investors are seeking investment opportunities in Asia, including Vietnam.

According to him, South Korean investors are coming back to Vietnam after they withdrew from the market in 2008. Some Russian and Chinese investors have also asked consultancy firms to give advices on the opportunities on making investment in office buildings and apartments in Vietnam.

A senior executive of Sacomreal, a real estate developer, said that in the first six months of the year, some foreign investment funds came to learn about the cooperation opportunities with Sacomreal in Sacomreal’s projects.

Mapletree Investments, a subsidiary of Singaporean Temasek Holdings, came to learn about the projects on office buildings and apartments, while South Korean Sung Chang has expressed its interests in retail projects, and Israeli EngelInvest also came to seek information about Vietnamese market.

The managing director said that the high population density and the high profitability of the real estate projects in Vietnam are the main factors that attract foreign investors, despite the current gloomy real estate market.

In fact, domestic real estate developers are also seeking foreign investors to cooperate because they cannot rely on their financial resources to develop projects. The currently applied tightened monetary policies have kept many real estate developers away from the official credit channel. As a result, domestic investors have to look for the financial sources from foreign investors.

Su Ngoc Khuong, Analysis Director of Savills Vietnam, also a real estate service provider, said he has received a lot of domestic investors, who ask for the help to connect foreign investors. Khuong said that the number of cases, where domestic investors use the company’s consultancy services has increased by 20 percent.

He went on to say that Asian investors, including Japanese, South Korean and Singaporean, who believe that they have enough knowledge about Vietnamese market and Vietnamese business habits, have determined to make investments in the market. They have been not only interested in apartment and office projects, but also in villa projects.

According to Khuong, it takes an affair about one or two years to be completed. It took Jones Lang LaSalle Vietnam, for example, one year to arrange the assignment of Center Point office project on Nguyen Van Troi road in HCM City between Refico, the initial investor, and Japan Asia Vietnam – a Japanese real estate investment fund.

Savills is reportedly acting as the broker for the assignment deal of the trade-office-apartment complex worth 120 million dollars in HCM City, having revealed that the affair may be wrapped up by the end of the year.

Existing investors speeding up

While new foreign investors still keep cautious when approaching the Vietnamese market, the experienced investors have been trying to expand their investment portfolios.

Singaporean CapitaLand, for example, has purchased 70 percent of the stakes of the residential quarter project in Binh Trung Dong ward in district 2 of HCM City from Khang Dien Saigon. The project is expected to cover an area of 2.9 hectares, which will contain 974 apartments. Of the total investment capital of 70 million dollars, CapitaLand is holding 70 percent of the capital contribution, while Khang Dien is holding the other 30 percent.

Just two weeks later, the group made another deal when it purchased 65 percent of stakes of Quoc Cuong Saigon at 121 billion dong. Quoc Cuong Saigon possesses a 9000 square meter land plot in Binh Chanh district in HCM City, which has got the license to develop a project on 800 apartments.

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