CapitaLand Development enhances its operations

CapitaLand Development (CLD) has entered into plenty of new development deals across many different businesses in Vietnam. What is your exact development strategy in Vietnam?

Ronald Tay, CEO of CapitaLand Development (Vietnam)

Vietnam is one of our core markets, and we are committed to being a long-term partner contributing to Vietnam’s economic development. Having been part of Vietnam’s growth for 28 years, CLD’s portfolio comprises one retail mall, two integrated developments, and more than 13,000 quality homes across 17 residential developments.

Over the next five years, we aim to accelerate our investment in the country, doubling our capital allocation to grow our portfolio in Vietnam. Our real estate expertise, coupled with our extensive local knowledge, places us in a strong position to scale up our investments in township developments, logistics, industrial, and business parks as well as seek opportunities to expand into data centres.

Our recent investments include the acquisition of a prime mixed-use site in Thu Duc city of Ho Chi Minh City, with an estimated total gross development value of about $720 million in July. The mixed-use project with an area of about eight hectares will comprise over 1,100 high-end residential units and shophouses to meet the residential demand from Thu Duc city’s growing workforce.

In February, CLD signed an MoU with the People’s Committee of the northern province of Bac Giang. The MoU outlines CLD’s and the provincial government’s mutual interest to explore the development of our first industrial park, logistics park, and township development in Vietnam with a total projected investment value of $1 billion.

In December 2021, we acquired our first large-scale residential project in Binh Duong New City. The project has a projected total gross development value of approximately $800 million. The acquisition marked our first expansion outside the tier-1 cities of Ho Chi Minh City and Hanoi. The prime large-scale residential project is expected to comprise over 3,700 freehold residential units across a mix of low, mid and high-rise residential developments, providing homes for about 13,000 residents.

The group as a whole has implemented a restructuring strategy. What strengths has this brought to the group’s business and operations, especially in Vietnam?

The restructuring is a continuation of CapitaLand 3.0 transformation. Under the restructuring, CapitaLand’s investment management platforms, as well as its lodging business, are consolidated into CapitaLand Investment Ltd. (CLI) and listed on the Singapore Exchange while the real estate development business CLD has been privatised.

In January, CLD announced the divestment of Capital Place, our international Grade A office building in Hanoi for $550 million. The divestment of Capital Place is in line with our ongoing capital recycling efforts to unlock the strong underlying value of our properties.

Tapping on the synergies of our ONE CapitaLand ecosystem and working closely with CLI, we successfully created value for our capital partner through our real estate development and asset management capabilities, divesting the prime asset at a premium to book value. We will redeploy the proceeds from this divestment into higher-yielding assets and as seed capital for future funds to be developed together with CLI in Vietnam.

How will new activities in areas such as industrial real estate resonate with CLD’s decades of experience in housing and commercial real estate products?

We have been actively exploring opportunities to diversify our asset class involvement beyond CLD’s traditional expertise in residential to new economy asset classes like township developments, logistics, industrial and business parks as well as data centres. The strategy to accelerate our growth and increase the scope of our business reduces risk concentration in any single city or asset class and enhances the overall resilience of our portfolio.

We are also exploring expansion into up-and-coming provinces surrounding Hanoi and Ho Chi Minh City such as Bac Ninh, Hung Yen, Haiphong, Binh Duong, Dong Nai, and Long An.

What are CLD’s criteria for selecting new development projects in this country?

Vietnam remains one of our core markets and we hold a long-term view of the country’s strong economic growth, underpinned by the fundamental megatrends including rapid industrialisation and urbanisation. This provides us with an opportunity to make a foray into the high-growth and higher-yield, better-performing asset classes in key city clusters across Vietnam.

Along with our proactive real estate investment and development, we are committed to growing in a responsible manner, delivering long-term economic value, and contributing to the environmental and social wellbeing of our communities.

Sustainability has become increasingly important, and there is a growing demand for sustainable developments in Vietnam. Having started our sustainability journey more than 20 years ago and guided by CapitaLand’s 2030 Sustainability Master Plan, we continue to generate sustainable value, and consistently embed environmental considerations into every stage of our real estate life cycle, from investment to development.

What are the challenges and advantages that CLD faces in acquiring new projects, and what solutions are available?

Anchored by CapitaLand’s strong governance and sustainable financial performance, we are able to scale up fast and be nimble in seizing opportunities as well as replenish our land bank in fast-growing markets like Vietnam. Our strong expertise in master planning, land development, and project execution has driven a competitive advantage for our business.

As the top-performing foreign developer in Vietnam, we are confident that our residential developments will continue to attract homebuyers and investors seeking quality, well-designed and well-located homes with good potential for appreciation in value. We will continue with our disciplined investment approach to build a sustainable residential pipeline while expanding our portfolio in new asset classes.

We are pleased to work closely with like-minded local partners on the journey to enrich lives and uplift communities in Vietnam.

What has CLD done to build human resources and community activities over the years to create a cultured, efficient, and sustainable business environment?

Having been contributing to Vietnam’s growth for almost three decades, we have remained steadfast in our commitment to developing well-loved, well-designed, and sustainable quality spaces for the community to live, work, and play.

Over the years, we have built a strong local team of more than 200 staff, imbued with the company’s values to manage and execute our projects effectively. As we scale up CLD’s presence and contribute to the Vietnamese economy, we continue to hire and nurture a strong local team, to exchange knowledge and build a network of local partners.

We focus on building a high-performing organisation with a learning, progressive, and fun culture to attract and retain talent, motivate performance, and build cohesion. Our culture is shaped by the group’s core values comprising a winning mindset, enterprising, respect, and integrity.

Along with building a strong workforce, CLD recognises that the long-term success of the company is closely intertwined with the health and prosperity of the communities in which it operates. Through CapitaLand Group’s philanthropic arm, the CapitaLand Hope Foundation, we are able to further our community development objective, promoting the social growth and development of vulnerable children.

We have four CapitaLand Hope Schools supporting over 1,400 children in Phu Tho, Hung Yen, and Long An provinces, and plan to build a fifth CapitaLand Hope School in 2023.

CapitaLand Development divests Capital Place in Hanoi for $550 million CapitaLand Development (CLD), the development arm of CapitaLand Group, on January 20 announced the divestment of Capital Place, its international Grade A office building in Hanoi for $550 million to an unrelated third party.

CapitaLand Development signs MoU for $1 billion investment in Vietnam CapitaLand Development (CLD), the development arm of CapitaLand Group, has signed an MoU with the People’s Committee of Bac Giang province valued at $1 billion.

CapitaLand restructures business focus and unlocks shareholder value CapitaLand Group has implemented a strategic restructuring of its operation and management to increase the business results and unlock shareholders' values. Ronald Tay, CEO of CapitaLand Development (CLD) Vietnam talked with VIR’s Bich Ngoc about the restructuring and its benefits.

CapitaLand Development acquiring prime mixed-use site CapitaLand Development (CLD) – the development arm of CapitaLand Group – is acquiring a prime mixed-use site in Thu Duc city in Ho Chi Minh City, with an estimated gross development value of $720 million.