Leasing plan stirs investors’ interest

Ever Fortune’s Pacific Place is creating a new breed of investors

The Taiwanese company is currently developing the $30 million Pacific Place, an office, apartment and retail block for lease on Ly Thuong Kiet street, in the capital’s Hoan Kiem district. Construction is expected to be completed in late 2006.
Instead of directly leasing to tenants and collecting monthly rental, Ever Fortune is selling long-term lease rights to individuals, both foreigners and Vietnamese, who can then act as sub-investors by leasing units at higher rental.
This approach would help the company quickly recover investment capital while sub-investors, who find few opportunities in this saturated downtown area, can join the development and earn profits from sub-leasing units.
Leasing rights for residential units at Pacific Place are being sold for $1,800 to $2,200 per square metre, for up to 40 years or the lifespan of the building. Office space will be rented at $23 to $25 a month, and sub-investors can enter three- to five-year agreements.
Under Ever Fortune’s calculations, a sub-investor who buys a two-bedroom apartment in Pacific Place can earn an annual return of 20 per cent compared to 4.8 per cent of bank interest rate if the unit is leased at $2,200 a month.
But company general director Shu Hsin Hung said buyers could earn even greater returns since the actual monthly rental for such a unit in this prime location was higher than the rate the company had fixed.
Sub-investors can also earn profits from buying long-term lease rights for the project’s office and retail space.
“Both the developer and the investor enjoy a fruitful profit based on a very strong tenant market and can have a high expectation of the upward market’s increment,” Shu said.
He added that this approach has been internationally popular and it will be especially more known in a capital of an 80-million population country. Through the practical reaction from the market, local but international-minded investors really know how to grasp the rare opportunity that they has never had before.
Shu said for the past decades, this concept has been developed in various capitals all over the world and obviously, professional and international-minded investors have made huge profits from their investments.
This method was recently employed by the Phu My Hung Corporation in Ho Chi Minh City, where the Khaisilk Corporation bought apartments and villas from the corporation to lease to expatriates.
The Pacific Place would offer 191 luxury residential units of varying sizes. For a couple or family, one-, two- and three-bedroom apartments, with floor areas ranging from 77 to 200sqm, would be available. A 46-sqm studio would meet the needs of business travellers who frequent Hanoi but prefer not to stay in a hotel.
Pacific Place would also provide a convenient community for expatriates, with its modern luxurious facilities including a swimming pool, babysitting services, fully-equipped gynasium, restaurants, boutique outlets and massage and beauty parlours.
An office area with 18,000sqm of rental space would stand alongside the apartment block, offering 1,200sqm per floor for clients in need of large office spaces.
The building would offer a solution to parking to Hanoi’s congested downtown area with plots reserved for up to 400 cars. These will be sold for long-term lease rights.
The Pacific Place project was originally licensed in 1994 as a five-star hotel to a joint venture between Ever Fortune Industrial of Taiwan and two Vietnamese companies. It was delayed for various reasons until the foreign company bought out the local partners a few years ago.