Vinhomes’ strategies to “impound” the middle- and upper-class customers in Vietnam

By Tran Anh - Apr 07, 2018 | 12:53 AM GMT+7

TheLEADERThe giant land fund with prime locations and a comprehensive ecosystem are advantages that no real estate company in Vietnam has except Vinhomes.

Ho Chi Minh City Stock Exchange (HOSE) announced the receipt of initial listing registration document from Vinhomes Joint Stock Company.

Vinhomes, a member of Vingroup, is a developer of villas and luxury serviced apartments in major cities in Vietnam. The company has a charter capital of VND26,796 billion ($1.17 billion), similar to that of Vingroup.

Vinhomes will become the second subsidiary of Vingroup, after Vincom Retail, to be listed on HOSE. Vinhomes’ ambition is to “cover” their apartments to the middle and upper classes of Vietnam.

Vinhomes’ land fund is 20 times larger than that of the second largest firm.

For a large coverage, a real estate firm like Vinhomes at first needs a large area of land. Vinhomes now has an estimated land fund of 164 million square metres, 20.5 times larger than that of the second largest firm in the market. The large land fund helps Vinhomes deploy numerous projects with two main brands, namely Vincity (the popular segment) and Vinhomes (high-end segment). VinCity currently has eight projects under implementation while Vinhomes has 28 implemented and under implementation.

The firm estimated to account for 15 per cent of the market share of apartments in Vietnam and around 48 per cent of the market share of luxury apartments. To expand the customer segment, Vinhomes has launched the brand VinCity to the market. VinCity is aimed at the $16.5-billion potential market of middle-class customers.

The two brands Vinhomes and Vincity are estimated to serve nearly 19 million Vietnamese households in the future.

In addition to the large land area, Vinhomes’ projects also have prime locations concentrated in two largest cities in Vietnam. For example in Hanoi, Vinhomes' projects are "crowded" around a 10-kilometre radius of the city center, with 10 Vinhomes and 3 Vincity projects. Typical projects include Times City, Royal City, Vinhomes Nguyen Chi Thanh and Vinhomes River Side in Long Bien.

Vinhomes' projects are crowded in Hanoi.

In Ho Chi Minh City, three Vinhomes projects are located in District 1 and District 3. Specifically, Landmark 81 under Vinhomes Central Park project which is the tallest building in Vietnam with 81 floors and total floor area of about 141,000 square metres, was topped off in March.

In addition to the two major cities, Vinhomes is also actively looking for opportunities in satellite cities. Currently, the company is expanding its land fund in cities and provinces of Quang Ninh, Hai Phong, Hung Yen, Thanh Hoa, Da Nang, Ha Tinh.

It is easy to see that Vinhomes' projects follow closely the development plans of potential provinces and cities. For instance, Quang Ninh province, where Vinhomes Green Ha Long project is planned to be implemented after 2020, is expected to thrive in the coming time when Van Don airport goes into operation and strategic development of Van Don special economic zone is likely to be approved. The project has a total floor area of about 45.3 million square meters, located near Hai Phong - Quang Ninh expressway.

A giant ecosystem

Although the large land fund plays an important role, it is the ecosystem that is the factor to make Vinhomes' apartments become valuable. Vinhomes defines itself as not only a housing construction firm but also a community builder.

Community building is reflected through the chain of utilities accompanied such as hospital, convenient stores, trade centre,... when customers buy Vinhomes’ houses and apartments. Customers can easily get medical examination at Vinmec, send their children to Vinschool, and go shopping at Vincom or convenient store Vinmart.

Vinmec hospital

"The value of real estate has risen thanks to the convenient connection to utility services such as schools, hospitals and high-quality retail outlets," Vingroup emphasized. And similar to Vinhomes, each of these business lines has strategies to promote its scale as large as possible.

According to Vingroup, using a single brand name for all the business segments will help increase customer’ brand awareness and trust.

Vinhomes, thanks to the advantages that the ecosystem brings, can carry out numerous projects in the medium-high segment and still confidently collect stable cash flow. In 2017, Vinhomes’ revenue apartment sales reached over VN43 trillion ($1.88 billion), approximately half of the total revenue of Vingroup. Gross profit was estimated at VND17.2 trillion ($755 million).