Foreign moneybags take over from embattled property developers

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A view of the five star Legend Saigon Hotel in Ho Chi Minh City. South Korea's Lotte Hotels & Resorts in 2012 paid US$62.5 million to acquire the hotel from fund management company VinaCapital.

The real estate market is set for a surge in project acquisitions, mostly by foreign companies who have an eye on the main chance when the market recovers.

Le Chi Hieu, chairman of property firm TDH, expects more investors with cash to acquire property projects this year even as the prolonged housing slump continues.

Phan Xuan Can, chairman of property consultant Sohovietnam, said bank debts and losses have forced many local companies to sell off projects or even exit the market.

Some 300 projects now await new owners, three times the number at the start of this year, he estimated.

With prices falling sharply, developers are eager to scoop up projects before the market shows any signs of recovery, he said.

His company recently consulted for a US$2.39-million acquisition of an office building in Hanoi. It is now involved with two acquisitions, an $80-million office building in Hanoi and an unfinished office building-shopping mall worth $33.54-million in Ho Chi Minh City, he added.

Le Minh Dung, director of real estate consultancy CBRE, said buyers are more interested in completed properties rather than those under development due to oversupply.

Last year the property market saw strong local companies acquire most foundering projects, but foreign companies are likely to take over this year thanks to their deep pockets, Dau Tu newspaper quoted him as saying.

Sudico, a major local developer that used to acquire smaller projects, has announced a sale of its stakes in the $19-million Cactus Cam Ranh Resort & Spa project in the central province of Khanh Hoa.

Sudico reported a loss of $14.47 million last year.

Major construction firm Vinaconex posted a loss of $29.7 million in 2012 and has been selling stakes in several subsidiaries.   

Meanwhile, foreign companies moved in on a number of developments in the first quarter, Dung said.

Many international players are "eyeing" the depressed market, he added.

South Korea's Lotte Hotels & Resorts last quarter paid $62.5 million to acquire the five-star Legend Hotel Saigon from fund management company VinaCapital.

VinaCapital last year completely pulled out of 10 out of 36 housing projects it had stakes in. Don Lam, its general director, said at that time the company would withdraw from unprofitable real estate projects and make no new investments in the industry for the next two years.

Stephen Wyatt, managing director of real estate consultant Knight Frank, said a large number of foreign investors who are interested in the Vietnamese market have been seeking his company's services.

Vietnam would see an increase in acquisitions by foreign companies, he said.

Luong Tri Thin, chairman of developer Dat Xanh Group, expected investors from Singapore, Japan, and Malaysia to be the major buyers.

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