Developers take a chance on depressed assets

The construction site of Novotel Phu Quoc Resort

Opposite the project, three buildings at the Duong Noi New Urban Area developed by Nam Cuong Group also remain abandoned at the foundation stage.

However, Pham Thanh Hung, chairman of Cen Invest and his partners claim they now have the finances to restart these long-abandoned developments.

Hung and his partners have signed a deal with Nam Cuong Group to take over the three buildings in the Duong Noi New Urban Area which includes 630 apartments. Cen Invest has poured around VND250 billion ($11.9 million) into the project.

“These delayed projects are an inevitable consequence of an over-heated property market. Several of these mothballed developments are just waiting for finance to restart,” Hung said.

The construction site of Novotel Phu Quoc Resort

“The real estate market has really recovered and now it’ll be about those developers who have vision,” Hung said.

Hung claimed that the sale of more than 10,000 apartment units in the capital last year was a good indicator for the real estate market, and warned that if the current rate of sales continued the city would face a shortfall in available properties.

Hung is also chairman of the Cen Group, which operates the STDA real estate transaction floor, and last year STDA sold more than 3,100 apartments in Hanoi alone in a range of projects like Vinhomes Nguyen Chi Thanh, Mipec Tower, Dolphin Plaza and HP Landmark Tower.

Figures from CBRE Vietnam show that there was a 50 per cent increase in apartments sold in the capital compared to 2013.

“The positive results in the apartment segment have encouraged investors to pour capital into property development. In our newly taken over project, we will focus on reasonable scale units at VND19 to 21 million ($904 to $1,000) per square metre,” Hung said.

Hung’s positive outlook has been shared by other developers such as Vingroup, Novaland and TNR Holdings.

Doan Van Binh, chairman of the CEO Group said however, that opportunities will not be available for all people and all segments.

Binh said that while apartments for sale were booming, other segments such as office for lease and retail were still facing challenges.

“Moreover, despite the apartment for sale segment seeing positive signs, the west of Hanoi is facing oversupply of high-end apartments, so we’re holding off on our plans to venture into this segment at the moment,” Binh said.

CEO Group however has decided to invest VND1 trillion ($47.6 million) into real estate development this year with a small amount spending on the construction of amenities at the Sunny Garden City in Hanoi and Riversilk City in Ha Nam province and a majority of the investment in Novotel Phu Quoc Resort.

CEO is currently constructing Novotel Phu Quoc with 400 rooms and 44 villas for lease, with the project expected to be finished by the end of 2015.

“I want to focus on Novotel Phu Quoc, rather than other projects, because we see very bright prospects for the island in the coming time. The island’s infrastructure has recently been upgraded with a new airport and tourism growth has been good. Phu Quoc now has the highest hotel room rates in the country,” Binh said.

“However, the opportunity won’t be around for ever. People are keen to get into the island and the early bird gets the worm,” Binh said.

He added that the company had contracted Accor Group to operate the resort with the aim to attract more European tourists whom other properties on the island did not focus on now.