Local developers on equal footing with foreign firms

Bitexco has emerged as the developer of international quality properties

The reason for the change in business strategy, Ryder explained, is that Vietnamese developers have built up their position in the real estate market to become able partners.

When the American investor started his business in Vietnam two decades ago, almost all real estate projects were developed by foreigners, with the local investors simply being land contributors. However, local developers have gradually accumulated experience and built up the financial capability to develop real estate projects on their own. As such, now is the right time to partner with local companies who have connections within the market, Ryder says.

Echoing Peter Ryder’s view, Marc Townsend, managing director of property consulting company CBRE, has voiced his confidence in the ability of Vietnamese real estate developers. Over the past 12 years working in Vietnam, Townsend has seen local developers come on in leaps and bounds, particularly with outstanding firms including Bitexco, Vingroup, Sungroup, and Novaland.

These companies have shown their capability to successfully develop large-scale, quality real estate projects on par with foreign developers. Some projects in Vietnam are of a high quality comparable to properties in Hong Kong and Singapore.

Bitexco is a case in point. After successfully developing The Manor landmark residential projects in Hanoi and Ho Chi Minh City, the group has reached new heights in developing and opening internationally recognised projects, including the 68-storey Bitexco Financial Tower and five-star-plus JW Marriott Hanoi Hotel.

When Bitexco first announced these projects only a few believed they would be built, as they required sophisticated construction techniques and huge development costs. The investment for the skyscraper was $270 million, whilst the hotel cost $250 million, figures beyond the capacity of most local investors. However, Bitexco silenced the naysayers when they opened the tower in 2010 and the hotel three years later.

With these projects, Bitexco has become the first local investor group to have successfully developed a skyscraper and the first five-star-plus hotel meeting JW Marriott standards. International media and certification organisations have heaped praise on both properties. The Chicago-based Council of Tall Buildings last year voted Bitexco Financial Tower among the 50 most innovative buildings of the last decade, while CNN a year earlier ranked the tower in the Top 25 iconic construction works in the world. The JW Marriott Hanoi Hotel has scooped 12 awards over the last year only, including “The Best Hotel in Vietnam” and “The Best MICE Hotel in Vietnam” as granted by International Property Media.

Both projects are faring well, with the occupancy rate of the tallest building in Ho Chi Minh City achieving over 90 per cent, while JW Marriott Hanoi recorded a 79 per cent occupancy rate in the first half of 2015. This is no mean feat, considering that rental rates for the office-retail building and the hotel are among the highest in the country.

Bitexco has also shown its ability to survive and advance during the real estate market slowdown of 2010-2013 through tenacity and determination. When the market fell into crisis, office rents fell, hotel business declined, and banks tightened credit lines for real estate projects. These macro-economic challenges were major obstacles to completing the construction of Bitexco’s projects, especially the JW Marriott. However, the company’s management was determined not to cut investment, and so they rolled up their sleeves to source enough cash to power through construction while ensuring that they kept in line with JW Marriott standards.

At present, Bitexco is implementing other large-scale, quality projects including The One, a mixed-use development project in Ho Chi Minh City, and The Manor Central Park township in Hanoi.

Of these two, The Manor Central Park is larger in scale, with a total development cost of around $2 billion. Covering an area of nearly 90 hectares at a new commercial centre in the west of Hanoi, The Manor Central Park is designed with more than 1,000 villas and townhouses, over 7,000 apartments, a trade centre, a school, and a central park of 7 hectares reminiscent of New York’s Central Park. The masterminds behind the project are planners and architects from the US and Japan, who will help bring to life a modern township that the capital city has not seen so far. The township is expected to start construction this August.