The global economic slump has offered local property developers a chance to replace foreign players in large projects and begin dominating the market, analysts said.
Many said Riviera Group's withdrawal from a US$500 million five-star hotel project in Hanoi, one of the largest in the capital city, was a harbinger of the situation today.
Following the announcement, a race began among local developers to take over the project, with Hanoi-based Kinh Bac City Development Share Holding Corporation finally winning the investment rights.
Kinh Bac even decided to expand the project from 550 rooms to up to 800 rooms over an area of 4.3 hectares. According to Kinh Bac Chairman Dang Thanh Tam, construction will start in the first half this year and the first phase of the project will be completed in two years.
Analysts said while the financial crisis last year forced many foreign developers to hold back their money, local companies seized the chance to strengthen their position by investing in large abandoned projects. The trend is likely to grow even stronger this year, they said.
As Vietnam's economy is less open than others, local developers were also less affected by the global downturn than their foreign peers, analysts said.
According to the Vietnam office of the world's largest real-estate broker, CB Richard Ellis Group Inc., the financial crisis has brought many changes to the property market.
Capital problems compelled many foreign developers to sell parts or all of their projects to local companies, the firm said, noting that most of the deals were not announced publicly.
CBRE Vietnam said it expects that local developers will continue to stand behind important office buildings, department stores and hotel projects in 2010.
Local developers will utilize increasingly sophisticated fundraising options in Vietnam and abroad this year, while foreign investment will begin to trickle back in slowly, it forecast.
Taking advantage of falling property prices amid the global slowdown, some local companies even plan to purchase assets overseas.
Leading tourism company Saigontourist, for instance, said it will buy hotels in the US and Japan. General Director Nguyen Huu Tho said property prices in the US are low and his firm is trying to buy the best hotels possible.
Analysts said taking over ongoing projects would help save a lot of time and money compared with starting a brand new project.
But Tam of Kinh Bac City Development warned that purchasing large projects could end up weakening developers with limited capital or poor management.