Japanese investors seek opportunities to join Vietnam’s cash-strapped real estate market

By Anh Son - Feb 07, 2020 | 03:35 PM GMT+7

TheLEADERVietnamese developers are seeking new capital sources as banks tighten credit for real estate.

Japanese investors seek opportunities to join Vietnam’s cash-strapped real estate market
Mitsubishi Corporation has teamed up with Phuc Khang Corporation to develope Diamond Lotus Riverside in Ho Chi Minh CIty

An increasing number of Japanese real estate enterprises are seeking investment opportunities in Vietnam to take advantage of the growing demand for the urban dwellings while domestic investors are facing difficulties to approach bank loans.

Mitsubishi Corporation and Nomura Real Estate have announced a partnership Vietnamese developer, Vinhomes, to develop the second phase of the Vinhomes Grand Park in District 9, Ho Chi Minh City.

The two Japanese corporations plan to invest $908 million to build 21 residential towers, providing up to 10,000 apartments. Each corporation will contribute 40 per cent of investment while Vinhomes will chip in the remaining.

Vinhomes is currently developing the first phase of the 271-hectare Vinhomes Grand Park and sold out all 10,000 apartments in the first launch last July.

Vinhomes Grand Park is the Mitsubishi Corporation’s biggest overseas investment as it is strengthening services business as part of its business strategy to 2021. Through Vinhomes Grand Park, Mitsubishi Corporation will not only to develop condominiums, but also to combine various services and functions that will enhance the town’s value and its own urban-development operations.

Meanwhile, Nomura Real Estate Group has positioned overseas business as one of its growth fields. Under its new medium- to long-term management plan, which runs until March 2028, the company plans to invest approximately $2.8 billion in overseas businesses.

Nomura Real Estate is looking to aggressively expand its own overseas businesses, both by breaking into new countries and stepping up developments in countries where it already has a strong presence, such as Thailand, Vietnam, the Philippines and China.

Mitsubishi Corporation and Nomura Real Estate are quite familiar with Vietnam’s real estate market.

In 2015, Nomura Real Estate teamed up Daiwa House Industry, Sumitomo Forestry and Phu My Hung Development Corporation to develop the Phu My Hung Midtown in Ho Chi Minh City with estimated total cost of about $220 million.

In June last year, Nomura established Nomura Real Estate Vietnam Company in Ho Chi Minh City before acquiring Zen Plaza office building.

Mitsubishi Corporation set up a joint venture with Phuc Khang Corporation at the end of 2017 to develop Diamond Lotus apartment chains. The Japanese firm immediately invested $30 million into Diamond Lotus Riverside project.

One year earlier, Mitsubishi Corporation also revealed a joint venture with Bitexco Group to develop a part of The Manor Central Park township in Hanoi at a cost of $290 million. However, there are no signs of progress so far.

Akihiko Iwatani, CEO of Haseko Corporation Vietnam claims Vietnam is still the most attractive real estate market in Southeast Asia because the Singaporean market is small, Malaysia market is stable while the merger and acquisition procedures in Indonesia is complicated.

He said international investors were particularly interested in developing residential projects in Vietnam as there is huge and increasing demand for housing in big cities such as Ho Chi Minh City and Hanoi.

Those corporations who are interested in long-term and stable investment prefer to invest in office and hotel sectors, he said.

Some domestic real estate enterprises are taking advantage of growing interest from foreign investors. Nam Long Investment Corporation is an example. In 2015, Nam Long announced the collaboration with Hankyu Hanshin Properties Corp. and Nishitetsu Group to develop Flora project and since then it has continued the collaboration with Japanese investors in five other housing projects in Ho Chi Minh City and Long An province.

Luu Thi Thanh Mau, general director of Phuc Khang Corporation has discussed investment opportunities with a handful of big Japanese corporations, including Sumitomo, Haseko, Taisei, Mitsubishi Corporation, and finally Mitsubishi Corporation was chosen for a joint venture three years ago.

She said Japanese investors were showing rising interest in Vietnamese real estate market and through working with overseas investors, local developers could reach a new height.

“Merger and acquisition with foreign investors will lend Vietnamese enterprises two advantages, namely innovation and creation. The application of foreign knowhow will promote innovation in corporate management and levels of real estate products,” said Mau.

She said Phuc Khang Corporation had learnt from international investors to develop green projects.

Mau said international investors had changed their point of view when they invested in Vietnam. In the past, most of foreign investors want to take control of a joint venture with Vietnamese partner. However, Phuc Khang Corporation is currently holding 51 per cent of stake in the joint venture with Mitsubishi Corporation.