Developers chase dollars

March 13, 2006 | 18:32
(0) user say
It is understandable that Ho Bee Investment Group executive director Ong Chong Hua ran out of name cards during a meeting with Vietnamese business people in Ho Chi Minh City last week.

Cash-strapped local developers are looking to construct financial deals to keep projects afloat

Local developers are cash-strapped and they are going to all lengths to seek financing opportunities from the Singaporean property group.
Tens of projects were presented to developers from the island nation in the hope of finding partners for joint-ventures or stake transfers at a time when local developers, most of them are small and inexperienced, are facing cash shortages to carry out multi-million-dollar developments.
NHP real estate company introduced two projects in District 9 to Ho Bee and San Teh. One of them is a plan to build a residential compound on 9.1 hectares at an estimated cost of $18.7 million.
Director Nguyen Huu Phuoc said the company could set up joint-venture with Singaporean partners, in which it would contribute $8.7m. He also proposed a second option allowing partners to take over the project for $8.75m.
The other plan is to build a resort on 4.4 hectares at a cost of $5m. Singaporean companies can spend $2.4m to take over the project or set up a joint-venture with NHP. Phuoc said these projects were attractive as they are located next to the Vietnam-Singapore Industrial Park and Ho Chi Minh City High Tech Park, where demand for housing and resort accommodation is high.
These days, calls for foreign investment in real estate is ubiquitous. At the same time as the Singaporean developer’s meeting in Vietnam last week, a group of local developers came to Malaysia and Singapore to seek partners.
By clicking on the website of Ho Chi Minh City Real Estate Association (www.horea.org.vn), investors are able to find a four-page list of projects calling for investment, including housing, office, hotel, resort and new town projects in the second city and neighbouring provinces.
Nguyen Xuan Dao, managing director of Vietnam Property real estate consultant company, said it was not unusual to see local developers rushing to seek foreign cash.
“Investors are not financially strong, banks are cautious about real estate lending and housing transactions have slowed down over the last year, making it hard for real estate projects to mobilise cash,” he said.
Dao said experienced foreign developers armed with cash would dominate the real estate market in the coming years.
He added that demand for housing, office, hotel, shopping space in Vietnam was continuing to grow, providing opportunities for foreign investors to cash in on at a time when local developers are in dire need of foreign cash.
Sung Koo Yi, chairman of Korean Consortium, which recently received a licence to develop a 207-hectare new town in Hanoi, confirmed there was demand for quality housing accommodation.
The consortium will invest $314m to complete 4,800 apartments and villas near West Lake by 2014.
Another Korean company, Daewon, was recently granted a licence to build 1,200 housing units in the central city of Danang. The company is currently building two residential projects in Ho Chi Minh City.




No. 752/March 13-19, 2006

vir.com.vn

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional