Foreigners sit on the fence

Hanel Corporation recently announced it would soon sign off on the purchase of the five-star Daewoo Hotel Hanoi from its partner, the Korea-backed Daewoo Corporation.

On prime land next to Thu Le Lake in Hanoi, the $177 million Daewoo Hotel is a joint venture project of Daeha with Daewoo Corporation holding a 70 per cent stake and Hanel the remainder.
The hotel opened its doors in 1996 and after a year it was listed as one of the world’s leading hotels. Hanel did not reveal the exact total value of the acquisition. However, according to a VIR source, it was worth approximate $100 million.

Meanwhile, in Hue city, Hong Kong-backed Crowndale International Corporation has sold a 50 per cent holding in the 135-room Century Hotel for only $2.6 million. The four-star hotel now belongs to Hue Investment and Tourism Company. In Ho Chi Minh City, Sao Sang Saigon has just coughed up $11 million for the JSM Indochina-owned Peninsula housing project in District 2 while C.T Group has purchased a 200 hectare, 36-hole golf course in Cu Chi district from Korea-backed GS Engineering & Construction Corp.

Cashed-up local buyers are also getting in on the act, expressing a preference for good value projects developed by cash-hungry local investors in prime locations. They are also interested in transparent procedures.

Dat Xanh Group has just acquired four projects from its domestic partners the Majestic property project in Dong Nai province’s Bien Hoa city, Bella in Ho Chi Minh City, Gold Hill in Dong Nai province’s Trang Bom district and Marina in Binh Duong province.

Meanwhile, Hiep Phu Investment has purchased Intresco’s Hai Au apartment project in Ho Chi Minh City’s District 9.

Dang Van Quang, director of Navigat, a realty consultant company forecast that the lion’s share of merger and acquisition activities in Vietnam’s real estate market this year would be carried out among Vietnamese developers, with foreign investors playing a minor role.

Quang explained that although there were hundreds of attractive property projects on the market it was very difficult to attract foreign investors at the time. This was because most foreign investors were facing financial difficulties and those with strong finance were hesitant about investing into Vietnam.

“Vietnam’s current realty market still has strong potential as an investment destination in the eyes of foreign investors. However, they are always cautious about committing because of Vietnam’s immature legal framework, low market transparency, complicated licencing procedures and differences in price expectations,” said Quang.