Grabbing the reins to make every post a winner

Tran Oanh

Despite little experience and cash in hand, Vietnamese real estate developers have managed to survive the economic slowdown to grow on par with foreign peers. Tran Oanh, general director of Nam Cuong Hanoi Group - one of the biggest developers in Hanoi, gives VIR’s Son Tran the inside story.

Why are the properties developed by foreign investors able to sell at much higher prices than those by Vietnamese developers?

Foreign-backed properties are often developed in professional ways with high construction quality and design that enables them to set high prices. It is also the psychology of Vietnamese people that the higher the price is, the better quality the product has. Those properties which have the involvement of foreigners will also increase buyer confidence in the product’s quality.

Meanwhile, local developers often have weaknesses in real estate development. Local developers for a long time had not been able to build high quality and large scale projects of international standard.

That is why many high-end hotels, office and apartment buildings in Hanoi and Ho Chi Minh City over the last decade used to be built by foreign developers.

However, things are changing. Some local developers recently have built large scale townships or skyscrapers. The 68-storey Bitexco Financial Tower, Ho Chi Minh City’s tallest building, is a good example of how local developers have grown bigger.

Local developers are often said to have little experience and cash to develop high quality and large property projects. How have these issues been addressed by your company or other big local developers?

Most local developers are still small companies, but it does not mean that they cannot develop large and high quality projects.

Each developer must have their own investment and business strategies to survive the ups and downs of the real estate market and those who had good strategies had managed to get over the downturn of the real estate market in 2006 and 2008 while taking advantage of the market’s boom in 2007.

A handful of local developers have survived some of the most difficult times and won customer support, to grow stronger and bigger in terms of financial capacity and experience.

Recently, some local developers have developed high quality projects, which are able to sell at prices as high as foreign-built ones. Others even develop large scale townships of hundreds of hectares.

It is because these local developers have learnt a lot of experiences in real estate development and overcome their weaknesses by employing foreign consultants for their projects although foreign services are six to 10 times more expensive than local ones.

How have foreign consultants helped Nam Cuong Hanoi Group to better develop products?

We have not teamed up with other foreign investors to develop any real estate projects, but most of our properties have foreign consultants such as master planners, architects, or interior designers.

It is not because we prefer foreign brands. It is because foreign consultants have well-established experience in planning, designing, technology and construction management. They even have equipment and technologies that local developers have not seen before.

Foreign consultants from Australia, Singapore and China have worked with us to have a good master plan for the development of Duong Noi new township in Hanoi.

We have also designed reasonably-sized apartment units of 53-64 square metres in this township which helped us to sell around 900 apartments last year. We have learnt a lot of experiences in planning, designing and managing real estate projects from foreign consultants.

What skills do you think that local developers still have to master to be on par with foreign developers?

Another aspect that local developers will have to pay much attention to is the after-sales service. Foreign-backed developments such as Phu My Hung in Ho Chi Minh City and Ciputra in Hanoi are sought after by home buyers although prices there are high because they have good after-sales services.

If Vietnamese developers pay more attention to service quality after finishing construction they can win buyer confidence and sell their next projects more quickly.