Property firms cast net abroad as funds dry up

Some are casting their eyes north as they scratch around for buyers for their luxury residential projects despite low purchasing interest all over the country. Last week, GS E&C Company introduced District 2’s Xi Riverview Palace project to Hanoians through the real estate consulting company Jones Lang LaSalle Vietnam. This followed a similar move by developer Refico which used Knight Frank Vietnam as the sales agency for its City Garden project.

In a similar development, Dat Xanh Real Estate Company held a seminar in April introducing its nationwide projects in Hanoi to get a feel for the capital’s buyers.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said the slow sales and recent credit tightening policies had made things tough for real estate companies nationwide. This was especially true in Ho Chi Minh City where it had pushed them to the edge of bankruptcy.

Chau added the credit cap of 22 per cent for the non-production sector by the end of June had exhausted the funds for many real estate developers.

“Bank loan interest rates have become unbearably high and to boost sales, real estate developers have been trying to run sales promotion programmes. They offer flexible payment methods, offer gifts in cash, and even give gold to buyers,” he said.

The pressure for sales has also driven many local developers to seek partnership with well-financed foreign developers in Vietnam.

The trend has been underlined by the recent successful partnership of Singapore-based CapitaLand with three local developers for value-home projects.

The group, through its subsidiary CapitaValue Homes Limited, has recently acquired a 65 per cent stake in Quoc Cuong Sai Gon Company Limited for a development of approximately 9,000 square metres in Binh Chanh district, Ho Chi Minh City. The local developer intends to develop the land into approximately 800 homes with CapitaValue Homes spearheading the development.

Earlier, CapitaLand also forged a partnership with Khang Dien and NovaLand to develop residential projects in Districts 2 and 9. The 29,000sqm project in District 2 is set for launch by the end of this year.