Van Phu – Invest accumulates huge land funds before share listing

By Dang Hoa - Nov 29, 2017 | 11:00 AM GMT+7

TheLEADERVan Phu - Invest Investment Joint Stock Company (VPI) has accumulated 236 hectares of land for development, including prime locations in the center of Hanoi and Ho Chi Minh City to target robust strategies next year.

Van Phu – Invest accumulates huge land funds before share listing
The handover of the Van Phu-Victoria project will bring great profit to VPI this year

Before the listing of its 160 million shares on the Hanoi Stock Exchange (HNX) on this 28 November, VPI announced its 19 real estate projects developed in the coming years with the total land area of up to 236 hectares.

Accumulating land and waiting for opportunities

In particular, the total land fund of VPI in Hanoi is about 230 hectares, including projects located in the inner districts such as Ba Dinh, Dong Da and Tay Ho and the new central areas such as Nam Tu Liem district.

Major projects to be developed in Hanoi are mostly located in the suburban areas such as the Huu Hoa urban area in Thanh Tri district with a total area of 156 hectares, the Victoria - An Hung complex located on an area of nearly 3.6 hectares in Ha Dong district with 1,350 apartments and 166 low-rise buildings.

VPI also owns six real estate projects located in the center of Ho Chi Minh City such as the construction of 437 apartments at 129 Dinh Tien Hoang, Binh Thanh district and the construction of 647 apartments on an area of 10,618 square meters at 132 Dao Duy Tu, district 10.

This is the first time VPI has publicly disclosed the huge land fund accumulated for a long time in order to prepare for a strong growth strategy in the next few years.

Despite handing over more than 4,000 apartments in Van Phu new urban area; the Van Phu-Victoria apartment complex and The Victoria commercial townhouses in Ha Dong district and Home City project in Cau Giay district, VPI is still considered as an unknown player in the real estate market as it has not disclosed the business results as well as the land fund before announcing the listing of its shares.

VPI’s prospectus shows that the company has used a variety of methods to accumulate land funds including self-projecting, project acquisition, venture, and investment cooperation.

One collaboration with another investor is the 970 apartment Grandeur Palace – My Dinh project in Hanoi’s Nam Tu Liem district, with the total capital of VND3,760 billion (roughly US$165.71 million).

The prospectus also shows that the company has quietly expanded its land fund by acquiring projects since 2010. Specifically, VPI spent VND162 billion (roughly US$7.14 million) purchasing a land plot of 4,967square meters in Thao Dien, district 2, Ho Chi Minh City from The Minh Co., Ltd and received the certificate of land use right at the end of 2010.

However, the leader of VPI revealed that the company has signed a contract to sell this project to real estate developer SIC at the price of VND191 billion (roughly US$8.42 million). VPI has paid a deposit of VND35 billion (roughly US$1.54 million).

VPI has also purchased the An Hung commercial and service apartment complex with an area of 35,574 square meters from JSC An Hung Urban Investment with a total value of VND747 billion (roughly US$32.92 million).

Build-transfer (BT) projects: the fastest route to accumulate land funds

The best way for VPI to approach and quickly accumulate its land fund is implementing BT projects.

In particular, VPI has built the new campus of Hanoi School of Public Health for the Ministry of Health under the BT contract with a total investment of VND640 billion (roughly US$28.21 million). In return, VPI is entitled to use the land area of 9,031 square meters which is the former campus of this university on Giang Vo street, Ba Dinh district, Hanoi.

VPI plans to invest VND1,500 billion to develop a project called Grandeur 143 high-rise apartments and 32 low-rise buildings. The project will be started in 2018 and completed in 2020.

The perspective of the Saphire Tower which is under construction in Hao Nam, Hanoi.

VPI is implementing three BT transportation projects including two projects in Hanoi and the other project in Ho Chi Minh City.

To Nhu Toan, chairman of VPI’s Board of Directors told TheLEADER that the company signed the BT contract with Ho Chi Minh City government last year and the project is under the land clearance. Ho Chi Minh City authorities have granted six parcels of land as payment to VPI. However, Toan said that this amount of land fund is not enough and the city is finding more lands to pay for VPI.

Toan also said that the authorities of Hanoi have approved VPI’s feasibility study for the project to build roads connecting urban areas and residential areas in Ha Dong district, preparing to sign the BT contracts.

Hanoi has also identified land funds to allocate to investors as payment. Six land plots in Kien Hung, Bac Lam, Phu Lam, Ha Cau and Duong Noi wards in Ha Dong district will be paid to VPI as payment for the BT transportation project connecting urban and residential areas in Ha Dong district. 

The largest projects are the 7.6ha land plot in Kien Hung in which 382 low-rise houses are expected to be built; and the 13ha land plot in Phu Lam in which 570 five-storey houses are planned to be built.

VPI said that most of the land will be used to develop real estate projects in the 2018-2021 period.

In the next two years, the company expects to start the construction of the Victoria - An Hung, Grandeur in Giang Vo, projects in Ha Cau, Duong Noi, Kien Hung, the project of expanding and upgrading the highway No. 70 connecting Van Dien and Ha Dong. At the same time, the company will hand over the apartments in Hao Nam and Giang Vo projects; and put the Ho Tay hotel project into operation.

With this ambitious plan, VPI expects to gain VND1,933 billion (roughly US$85.19 million) in revenue in 2018, nearly 136 per cent higher than the expected sales of this year. The company also expects to raise its profit to VND652 billion (roughly US$28.74 million) next year, compared to expected VND432 billion (roughly US$19.04 million) of this year.

In the first nine months of this year, VPI’s net revenue was VND667 billion (roughly US$29.4 million) and its after-tax profit reached nearly VND251 billion (roughly US$11.06 million).

In the fourth quarter of this year, the company will continue to record an additional revenue and benefit of VND105 billion (roughly US$4.63 million) and VND62.7 billion (roughly US$2.76 million) respectively from the Victoria project. It will also gain VND100 billion (roughly US$4.41 million) in profit from CT9 high-rise condominium project.