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|Daewoo E&C and its partner Korean financial institutions will invest almost $400 million in Star Lake City in Hanoi|
On January 20, Daewoo E&C signed an investment development agreement with Korean financial institutions to promote a property development project in Star Lake City, Hanoi, according to newswire businesskorea.co.kr.
The project involves building two 35-story edifices, which would accommodate a hotel, serviced residences, business offices, and retail facilities, in a block (B3CC1 Block) of Star Lake City, a new city being developed by Daewoo E&C. The development project has a total investment capital of $388 million. Construction will start this year for completion in 2024.
Daewoo E&C will create a fund together with Korea Development Bank and KB Securities. A special purpose company (SPC) will be established in Vietnam to carry out the project. This will be the first time that Korean financial institutions invest in a large-scale real estate development project in Vietnam.
The Hanoi Star Lake City project started in 1996 when Daewoo E&C proposed building a new city to the Vietnamese government. The city is being developed by THT, a company owned 100 per cent by Daewoo E&C, on a site of 2.1 million square metres, which is equivalent to two-thirds of the size of Yeouido in Korea. The city will be built in the West Lake, northwest of Hanoi. The project will cost $2.2 billion in total.
The announcement of Daewoo E&C was issued in the context of a 31 per cent plunge in 2019's fourth-quarter net profit plunged 31 per cent from a year earlier due to a delay in some of its planned construction projects.
According to its statement, Daewoo E&C's net profit for the three months ending on December 31, 2019 fell to KRW21.7 billion ($18.3 million) from KRw31.5 billion ($26.2 million) on-year.
Operating profit fell 52 per cent to KRW44.8 billion ($37.5 million) in the fourth quarter, from KRW93.5 billion ($78.1 million) a year earlier. Sales rose by 2.2 per cent to KRW2.31 trillion ($19.3 million) from KRW2.26 trillion ($18.8 million) during the same period.
For the whole of 2019, net profit dropped by 32 per cent on-year to KRW201.2 billion ($168.2 million) from KRW297.3 billion ($248.5 million). Operating profit declined by 42 per cent to KRW364.1 billion ($304.4 million) from KRW628.7 billion ($525.6 million) during the period.