Indochina Land chief executive officer Peter Ryder last week said the firm would continue investing in high-end residential products but it would move slowly into mid-end housing accommodation.
The company is currently developing 390 condominium units at the Indochina Plaza Hanoi, which is sold for more than $2,600 per square metre. However, its new project in Ho Chi Minh City - the Saigon South Residences, which will feature 1,000-1,200 apartments - is expected to sell for below $2,000 per square metre, according to Ryder.
He said there were vast opportunities for mid-end housing development as a result of the country’s positive economic growth, compelling demographics and rapid urbanization.
The Saigon South Residences is one of the first project bankrolled by Indochina Land Holdings 3, the third real estate fund raised by Indochina Capital to date.
Ryder said instead of spreading investments in the north, central region and the south as it did with the first two funds, the company would invest $180 million of the third fund in urban and suburban residential properties and mixed-use developments with significant residential components in two primary urban markets Hanoi and Ho Chi Minh City.
“Almost all reports from research organisations like PricewaterhouseCoopers show that Hanoi and Ho Chi Minh City will be the fastest growing cities in the world in the coming 20 years,” Ryder said.
He added that despite successful sales of the residential component at the Hyatt Regency Danang Resort and Spa, the company would not pour cash from the third fund into tourism property development.
“We will invest in more profitable sectors,” said Ryder.
The company said it had sold 90 per cent of available condominium inventory and 22 out of 27 villas at Hyatt Regency, earning $72.5 million in sales revenue. It had also sold seven out of 66 villas at the Montgomerie Links golf course in Quang Nam province and eight out of 15 villas at Six Senses resort on Con Dao island.
However, Ryder said the tourism property market had seen many more projects launching sales recently, which discouraged the firm from investing more in this particular sector.
The company said in a statement that as a result of macro-economic factors and buyers becoming increasingly prudent in their purchases, 2010 has been a slow year for Vietnam’s property market. Despite the sluggish market, Indochina Land has successfully sold approximately $40 million worth of residential real estate products this year. In the third and fourth quarters alone, it had sold approximately $21.5 million nationwide.
Ryder said with brighter economic outlooks onshore and off, Vietnam’s commercial and residential property sectors had experienced positive momentum, a trend that is forecasted to continue through the new year.
However, Ryder emphasised that the firm would still continue investing in luxury and high-end products such the segment still is potential from a sales perspective. Since the launching in November 2009, Indochina Plaza Hanoi has registered 208 sales, representing $65 million in contract value. In the fourth quarter alone, the project has recorded 35 sales, generating $10 million in revenue.
As the real estate division of Indochina Capital, Indochina Land is currently managing three real estate funds with $500 million in committed capital, facilitating over $2 billion in property development.
Thanh Thuy (vir.com.vn)