Upscale property projects back in full force
  • | | November 19, 2009 07:54 PM

In early November, the groundbreaking for construction of the Raffles Residences apartment site took place at Non Nuoc (Danang).  The total investment capital was approximately $100 million from the Vingroup Corporation.  This project faced many difficulties as it dealt with transfers and dual management from two foreign giants, Vegas Hotel & Villas and Magnum.  It is only after six years construction at this site can finally be resumed.

The transfer of luxury housing, office building and the 5 star Hanoi City Complex project acquired from Daewoo Corporation by the 5th Korean Lotte Corporation has attracted a lot of interest from well-informed authorities.  This project was officially restarted last October after being delayed for over four months.  Located in a "favourable position" on Lieu Giai, Ba Dinh district, Hanoi has a total investment capital around $400million.  This building is considered to be the second highest building in Vietnam with 65 floors, only the Keangnam buidling is higher with 70 floors. This project originally began construction in early 2007; however, the investors had to stop due to financial difficulties in early June of this year. 

    Keangnam Hanoi Landmark Tower

The race for investing in the 5 star Lotus Hotel project in Hanoi has attracted huge attention lately.  Among potential investors are Kinh Bac Corporation, Vinaconex and Thein Than Company after the withdrawal of Japan's Riviera Corporation. Among these possible investors, Kinh Bac Corporation seemed to have won the race as Vinaconex and Thien Thanh have then officially took out.

Dang Thanh Tam, CEO of Kinh Bac Corporation said the Corporation would start construction since receiving official transferring permission. “We prepare capital, human resources, construction organization, managers, designers as well as cooperate with Humhoo Aseana (Korea) and hope to complete this project within 24 months,” Tam said.

The property market in Hanoi seems to be booming as prices in many areas around Hanoi have been rising rapidly, especially in the western part of the city.  Real estate prices have increased by 20-30% and luxury realty projects have been restarting respectively.  Most of these restarted projects have been mutually acquired by enterprises.  Many experts thought the 2009 would be a difficult time for most small to large sized enterprises globally due to the economic downturn but this is also a great opportunity for those companies to stake a claim in the expected recovery.

Tam explained: “The economic recession caused many foreign companies to experience numerous difficulties forcing them to narrow their business strategies. They had to take out of the Vietnam market and sometimes sell projects to focus on doing business in their respective countries”. In line with his opinion, however, the real estate market in Vietnam should grow in the second quarter of 2010 and the cold property last period would be a premise to develop in the coming future.

Agreeing with Tam’s opinion, Chairman of Vingroup Corporation (Investor of Raffles), Le Khac Hiep guessed that 2009 would be a good opportunity for businesses to acquire property projects from enterprises damaged by the economic downturn. He said: “We will prepare at once to make projects come into operation in 2011. Experts forecasted that residential real estate would recover at this time. Therefore, we can seize this opportunity since the market should improve again and develop.” 

Along with real estate business circles, demand in the luxury housing market around Vietnam in general, and in Hanoi in particular, will see an extreme boost. The recent introduction of the Starclass project organized in early 2009 at Melia hotel actually attracted thousands of attendants. Other giant projects like Mulberry Lane (Hadong) and Tricon Towers (Bac An Khanh) have also received many orders from customers. 

Tam analysed that while demands in the housing market segment for low-income people are quite high, the high-class real estate market is still necessary to big cities such as Hanoi, HCMC, Danang and Hai Phong. “Luxury housing projects will continue to have high potential in the future as this market segment showed the strong development of society as well as created conditions to attract foreign investment,” he said. 

When projects are transferred, businesses can save time to carry out legal formalities. Additionally, prices of these project transferring will be much cheaper compared to expenditure enterprises spent on before. Despite these potentially strong investments, Tam warned that, “companies can face risks if they lack capital or management capability." 

 (Source: Vnexpress)