VIETNAM REAL ESTATE THE INVESTMENT WAVE FROM JAPAN

Transcription

1 VIETNAM REAL ESTATE THE INVESTMENT WAVE FROM JAPAN FY 2017 Competitive landscape of Vietnamese real estate market with the participation of Japanese investors

2 TABLE OF CONTENTS OVERVIEW OF THE MARKET 1 Desire for a symbolic project 1 Still favoring high-end projects 1 But starting to eye mid-end and affordable segments 2 PROJECT LIST 5 PROJECT MAP 12 CONTACT INFORMATION 13

3 OVERVIEW OF THE MARKET Investors from the land of cherry blossoms, who are classified as the most conservative and cautious investors worldwide, are taking strong steps into Vietnamese real estate market. DESIRE FOR A SYMBOLIC PROJECT Back to 1990s, despite of huge investment into processing, manufacturing or mechanics, Japanese investors seemed to be cautious in real estate field. At that time the brand Nikko with two 4-star hotels in Hanoi and Ho Chi Minh City was the only Japanese-invested project in Vietnam. Desire for a breath-taking property project deserving to be a destination for Japanese investors still remained. Japan is the second biggest investors in 112 countries having projects in Vietnam Until now Japan has had 3,200 projects in Vietnam with total registered capital of $42b. (Source: Foreign Investment Division) In 2007, Riviera Group was being offered land in Me Tri to develop Lotus Hotel Project (worth $500m) which, if completed, would be the biggest hotel in Hanoi at that time with luxury design & 500 premium rooms. However, Japanese investors missed this project. In 2009, Riviera Group submitted to withdraw due to lack of capital and other financial issues. This project was later passed to another local investor. When the Vietnamese real estate market recovers. Japanese investors start coming back for investment. According to a recent study by CBRE Vietnam, among investors seeking opportunities in Vietnamese real estate market, Japan ranked no.1 with 22%, followed by Singapore 17%, South of Korea 14% and USA 8%. This shows the attraction of the Vietnamese real estate market. In , there are a number of big property groups from Japan paying interest in local market with activities like partnering, M&As. STILL FAVORING HIGH-END PROJECTS Coming back to the Vietnamese real estate market, high-end property projects remains the first priority of investors from Japan. In the third quarter, Ho Chi Minh City real estate market witnessed the partnership between Maeda and Thien Duc Corporation to develop Waterina project in district 2. Maeda is in charge of construction of underground section of the Metro line Ben Thanh Suoi Tien in District 1, HCMC. In term of housing development, Waterina is the first premium apartment projects of Maeda in the Vietnam market. According to a consulting agency, Maeda conducted market research of the market years before officially entering the high-class apartment segment. Recently, Kajima Company has set up a joint venture with Indochina Capital Vietnam with total capital of $1b to develop a series of luxury housing, hotels and resorts in Hanoi, Da Nang and HCMC. Page 1

4 Keisuke Koshijima, Director of overseas business development of Kajima, said that Vietnam is one of the focal market for luxury projects of Kajima. The Vietnamese real estate market has big potential for high-class segment and we consistently pursuit this segment in Vietnam in the years to come. One of the notable investors of Japan, Tokyu Company established a joint venture with Becamex IDC to build and develop the Binh Duong Tokyo Garden Urban Zone Project in the new city Binh Duong, 30 km from HCMC. With the total investment of $1.2b and 110 ha area, this zone, when completed will have approximately 7,500 apartment, commercial, services & office zones. Similarly, Mitsubishi Group signed a MoU with Bitexco to set up a joint venture to develop a housing project with the investment of $ years construction group Kajima from Japan also set up a joint venture with Indochina Capital with total investment of $1b in upcoming 10 years. The contribution rate of the venture is revealed to be In months, the venture will start 04 premium real estate projects in HCMC, Hanoi and Da Nang. According to Indochina Capital, these 04 projects have been shortlisted from 50 potential in the Vietnamese market. At the beginning, this new venture will focus in luxury projects such as resorts, service apartments, hotels and housing. Previously, in Hanoi, Daibiru Group has also completed purchase of CornerStone office building which is a A- graded project based in the center Hoan Kiem District with the price of $61m. Recently, Nha Mo JSC has signed a partnership contract with The Global Group an investor, developer and operator in Japan. With the total capital of $50m, Dream Home Palace will be the first project of these two investors in Vietnam. The Global Group will bring technology and expansion experience into construction process and transfer Japanese-standard operation and management procedures. Hidekazu Nagashima, Chariman of The Global Group said that this group took great interest in the Vietnamese real estate market since The Vietnamese market has great potential and definite similarity to Japan years ago. In 03 recent years, we have conducted deep market research in HCMC real estate market and terms and conditions of partnership with land companies in Vietnam, especially in medium and luxury segmentation. BUT STARTING TO EYE MID-END AND AFFORDABLE SEGMENTS Not only emphasizing high-end projects, Japanese investors also commits to deep investment in developing mid-end and affordable housing projects, meeting the biggest housing demands in Vietnam for now. In 2014, Creed Group woke up the whole market with the deal investing into a series of projects in HCMC such as City Gate Towers, Angia Skyline and River City. Apartments in these projects have been on sales with affordable prices (from 1 billion VND per unit) for Vietnam buyers. Page 2

5 Toshihiko Muneyoshi, Chairman of Creed Group believed that Vietnamese economy with deeper and deeper integration will attract more global investors. HCMC is a dynamic city with population of 12 million but housing stocks are still limited. That s a big but unexploited market. Besides, allowing foreigners to buy house in Vietnam is a breakthrough to boost growth of the housing market. Two other investors from Japan, including Hankyu Realty and Nishi Nippon Railroad invested in Nam Long Company to develop 03 mid-end housing projects in HCMC. Especially in the third project named Kykio Residence, Nam Long and Japanese partners will develop additional social housing with the Ehome-S project, pricing at only 600 million VND per unit. This is the third consecutive project Nam Long associates with Japanese partners after Flora Sakura and Fuji Residence. Based on the signed contract, the capital contribution rate between two Japanese investors and Nam Long is 50% - 50% to conduct the project Kikyo Residence in 02 years. Kikyo Residence, with total capital of 630 billion VND, is one of the most important projects of Nam Long in The project includes 110 villas and 234 apartments in the area of 17.5 ha, belonging to Nam Long Investment JSC (under Nam Long). In the field of real estate services, Hoa Binh Housing Company set up a joint venture with Okamura Home Group and Sanyo Homes, specializing in management and operation of real estate projects. Sanyo Homes is also the official partner of Tien Phat Company in the high-end development project Ascent Lakeside in HCMC recently. In the channel of private investment, Frasers Centrepoint Ltd (FCL Singapore) purchased 70% stakes in G Homes projects from An Duong Thao Dien Group. Mirae Asset (South of Korea), partnering with AON BNG Group, paid $350m to acquire Keangnam Hanoi Landmark Tower. In addition, in 09 months, big players such as Lotte, Mapletree announced to deep investment into outstanding real estate projects in the West of HCMC. Recently, the market witnessed one more huge transaction of a personal investor. A foreign billionaire paid $15m to buy a beach villa in Da Nang. In a seminar on real estate market in HCMC, Marc Townsend, Managing Director of CBRE Vietnam received a series of questions about the FDI wave in Vietnam, Marc Townsend confirmed that foreign investors interest in HCMC, Hanoi and surroundings was big. The taste of these investors is to hunt opportunities to develop housing projects with good locations linking to downtown or in-operation assets which can bring stable cash flow. However, the expert also said that most of foreign investors didn t jump into quick decisions but spent resources to make through market research before action. Page 3

6 According CBRE, approximately 6% of newly-registered and additional FDI capital are into real estate. Foreign investors have had positive responses to the market. The strong wave of foreign investment into Vietnamese real estate market was attributed to 02 reasons. Jones Lang LaSalle evaluated that the attraction to the foreign investors was due to the basic KPIs of the market, which are high urbanization level, young population, gradual increase in expected income, stable economy growth, the rising of middle class, etc. Besides, the Government s attempt to improve transparency index in the property industry played an essential role in attracting foreign investors. According to the GRETI report in 2016 by Jones Lang LaSalle, Vietnam s rank is rather low in term of the property market s transparency level, standing 68/109 nations. However, compared with years ago, Vietnam image has been improved gradually. Currently, foreign investors can easily approach information of the market and legal frameworks. Domestic project developers has strong advance in applying technologies. These 03 factors contribute greatly to the transparency of the real estate market in Vietnam. Page 4

7 PROJECT LIST Type Time Japan Vietnam Project information Hotel 2007 [HANOI] THE LOTUS HOTEL Residential 9/2014 [HCMC] CITY GATE TOWERS The Lotus Hotel project southwest of Me Tri Commune at a prime location on Pham Hung Road near the National Convention Center. Riviera, which beat South Korea s Keangnam Group and five other bidders to win the high-profile five-star Lotus Hotel project over two years ago, finally decided to quit the costly plan. Under Riviera s initial plan, construction on the project was scheduled for completion later this year or early next year, but in fact the project is still on paper now. As soon as Riviera announced its withdrawal from the project a few months ago, a host of domestic investors have expressed their readiness to develop the project. Last October, a shareholders meeting at locally-owned Nam Bay Bay approved regulations to fulfill the commitments it made with its Japanese partner, Creed Group. Earlier, Nam Bay Bay announced a programme with the Creed Group under which both would pour investment capital into Nam Bay Bay s projects and share profits. Creed Group has committed to injecting VND600 billion ($27.27m) into the projects by purchasing convertible bonds issued by Nam Bay Bay. Besides the City Gate Towers, Creed Group has undertaken two other projects NBB Garden II in Ho Chi Minh City s Binh Chanh district, and NBB Garden III in district 8. Page 5

8 Residential 4/2015 [HCMC] FLORA ANH DAO Residential 7/2015 [HCMC] ANGIA SKYLINE The Japanese investor is contributing 50 per cent of the total investment capital into every project. The NBB Garden III is projected to have an investment capital of VND3.8 trillion ($ million). In April 2015, Nam Long Investment JSC (HOSE: NLG) has officially announced the development of Flora Anh Dao project in partnership with Japanese investors, including Nishi Nippon Railroad Hankyu Realty - the Project under the new product line Flora for people of middle and stable income in District 9, HCMC. Flora Anh Dao project is located in Nam Long Phuoc Long B residential area very convenient for transport and trade development with key economic regions in the South. The project is adjacent to the large infrastructure ones in key economic regions in the Southeast, and has been implemented and controlled by the government in recent years, such as Ho Chi Minh City - Long Thanh - Dau Giay highway, Ring Road 2, Thu Thiem Bridge and Tunnel, Metro Line No. 1 Ben Thanh - Suoi Tien. Flora Anh Dao is a 16-story building with 500 apartments located in an area of 1.1 hectares in a residential area in Nam Long-Phuoc Long B with a total area of 16 hectares. Building density is only 28% of the whole area. Expected price is 18.9 million VND per m2. Creed Group and Angia Investment partnered to invest $200m into the project Angia Skyline. The launching event in 10/2015 attracted 1,500 customers with 300 apartments being sold out. In addition to the project s favorable location (next to Saigon River and Phu My Hung urban zone), Angia Skyline is very competitive with professional design, construction and service quality manager. The Page 6

9 Residential 3/2016 [HCMC] RIVER CITY Residential 5/2016 [HCMC] ASCENT LAKESIDE building density only accounted for 24% in the total area of 63,348 m2 (480 apartments). Constructors are reliable and popular locally, such as Coteccon Group, Apave and Savills. In the beginning of March 2016, the venture of Phat Dat Real Estate (PDR), An Gia Investment and Creed Group invested $500m into the project River City (formerly EverRich 2) in District 7, HCMC with scale of 8,000 units and area of 11,25 ha. Among those, PDR contributed 50% of the total capital. Accordingly, this venture will develop the project, targeting to complete sales in 2-3 years. River City is planned to be completed by Tien Phat Investment Corporation and Sanyo Homes Corporation from Japan officially signed a strategic cooperation agreement to jointly develop real estate projects in Vietnam. The first joint development between the two companies is Ascent Lakeside (a part of Lakeside Towers project), located in front of Nguyen Van Linh Boulevard, Tan Thuan Tay Ward, District 7. The project has scale of a 22-storey building, GFA of approximately 28,000 m2, offers 108 apartments and 72 officetel units. Total project cost is about $25m. Venture investors are expected to open to sell the apartments and officetel of the project in November this year. The quality of Ascent Lakeside is guaranteed by the prestige brands of Vietnam and Japan. Page 7

10 Residential 6/2016 [HANOI] THE MANOR CENTRAL PARK Tokyo-based Mitsubishi Corporation joined hands with Vietnamese property developer Bitexco in a joint venture to develop a residential development project in Hanoi. The project is part of The Manor Central Park, a mixed-use development project being undertaken by Bitexco, the realty group widely known for its tallest building in Ho Chi Minh City Bitexco Financial Tower. Mitsubishi holds a 45% stake in the joint venture while Bitexco holds the remaining 55%, with the total investment cost estimated to be 30 billion yen (almost $285m) for the first phase. During the first phase of cooperation, the joint venture will develop 240 low-rise housing units and two high-rise condominiums, while the overall target is to construct 1,000 low-rise housing units and a total of 17 highrise buildings. Residential 8/2016 [HCMC] THE ASCENT THAO DIEN CONDOMINIUMS The Hoa Binh House Joint Stock Company has partnered with two Japanese partners, Okamura Home and Sanyo Homes, to set up the Okamura Sanyo Properties Joint Stock Company specialising in real estate management in Vietnam. Okamura Sanyo Properties is expected to become one of the factors leading the real estate management market in the Southeast Asian nation. At the launch ceremony, the company announced the management of the Singapore-standard hi-end apartment project, The Ascent Thao Dien Condominiums, in Ho Chi Minh City s District 2. Page 8

11 Residential 09/2016 [HANOI HCMC DANANG] Residential 10/2016 [HCMC] WATERINA SUITES Residential 10/2016 [HCMC] ASCENT RIVERSIDE Vietnam-based real estate investment fund Indochina Capital and Japanese contractor and real estate developer Kajima Corporation have sealed a $1 billion joint venture partnership on Friday to invest in the Vietnamese real estate arena. Indochina Capital and Kajima Corporation are equal partners in the new venture. The $1 billion investment capital will be contributed over a period of 10 years. Named Indochina Kajima Development (ICC-Kajima), the joint venture will initially focus on urban in-fill accommodation projects, in the residential and hospitality segments, in Hanoi, Ho Chi Minh City The venture of Maeda and Thien Duc has been established for developing a $30m project with 25 luxurious storeys in District 2 in HCMC. With scale of 3,150 m2 and 86 sky villas, Waterina Suites plan to complete at the end of This project is estimated to be strongly competitive on the market thanks to its high quality and price, putting high pressure on domestic developers in HCMC. Tien Phat joined hands with 2 Japanese investors, including Sanei Kenchiku Sekkei (Meldia Group) and Pressance Corporation to develop the first project named Ascent Riverside, located in District 7, HCMC. The project is planned to develop 500 apartments with total investment of 1,200 billion VND ($50m). Page 9

12 Residential 11/2016 [HCMC] DREAM HOME PALACE The HCM City-based Nha Mo (Dream Home) Corporation has announced it recently signed a comprehensive cooperation contract with The Global Group, a Japanese real estate developer. Under the contract, with an initial investment of US$50 million, the Japanese group will apply Japanese experience and technologies in the project implementation as well as transfer Japanese-standardised management and operation processes to the Vietnamese side. The Dream Home Palace project in District 8, Ho Chi Minh City will be the first joint project between the two sides. It will offer more than 900 apartments with a price of only VND888 million (US$39,900) each. Office 12/2016 Vietnamese leading private group in finance, banking and golf resorts BRG Group has established a strategic relationship with Japan s Sumitomo Corporation to increase to collaborate in potential business sectors, especially the real estate and retail. In particular, Sumitomo Corporation plans to build an office tower with an investment of about USD 100 million. Office 2016 [HANOI] CORNER STONE The co-operation, which was marked by signing a memorandum of understanding (MoU) on December 1, 2016, is considered a foundation to exploit and develop the two parties potential during the co-operation progress in numerous sectors, including real estate, Nhat Tan-Noi Bai urban development project, high-tech agriculture and retail sectors. Daibiru, a Japanese real estate group, wrapped up a deal to buy a CornerStone Building in Hanoi for $61 million. Page 10

13 This was not the first investment deal of Daibiru s in Vietnam. In 2012, Daibiru bought a large amount of shares in a company that owns Saigon Tower at No29 of Le Duan Street in Ho Chi Minh City s district 1. The seller was an investment fund under the Chinese Chiaphua Group. The value of the deal remains a secret. Page 11

14 PROJECT MAP Flora Anh Dao The Ascent Thao Dien Waterina Suites Ascent Lakeside City Gate River City Angia Skyline Dream Home Palace Page 12

15 CONTACT INFORMATION SEIKO IDEAS - 11 th Anniversary Research & Consulting Division Our services Our clients Market Research Business Matching Investment Consulting Translation - Interpretation Training (Language & Soft skills) Thinktanks, Universities Japanese & Vietnamese Government Organizations Manufacturers, Retail companies Advertisement agencies, Mass media, etc Address Floor 5 th A Chau Building No.24 Linh Lang Str., Ba Dinh Dist., Hanoi, Vietnam Telephone ; Fax URL news l ett er@seiko-ideas.com PIC Nguyen Thi Quynh Tram (Ms.) HP Page 13