Singapore property moguls move in

August 07, 2017 | 12:11

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The first half of 2017 has seen increased interest from Singaporean real estate firms in the Vietnamese market, with Sembcorp, CapitaLand, Mapletree, and Keppel Land among the biggest movers and shakers.

Apart from greenfield investments, Singaporean developers are now actively expanding their portfolios through mergers and acquisitions (M&A).

A wave of M&A

Singaporean investors are focusing on M&A in Ho Chi Minh City. Outstanding deals are the Duxton Hotel Saigon, Empire City, Somerset Vista, Saigon Centre, and the Kumho Asiana Plaza.

According to Leong Boon Hoe, CEO of CBRE Singapore, Singaporean investors are seeking new opportunities to diversify their portfolios, often after having already invested in previous emerging markets like Thailand or Bali.

After the laws regarding housing and real estate were changed for foreigners in July 2015, foreign real estate investment has become much more transparent.

“Owning property in Vietnam is a new trend among Singaporeans. In the ASEAN region, Vietnam is one of the more attractive nations for foreign investment into the property market,” Hoe said.

Keppel Land in March this year acquired from its Vietnamese partner, Southern Waterborne Transport Corporation, an additional 16 per cent stake in Keppel Land WATCO I to V – the joint venture entities for Saigon Centre. Keppel Land has also signed a memorandum of understanding with Vietnam’s State Capital Investment Corporation (SCIC) to collaborate on other investment opportunities in the country.

Keppel Land is one of the pioneer foreign real estate investors in Vietnam, and now holds a diverse portfolio of properties in Hanoi, Ho Chi Minh City, Dong Nai, and Vung Tau – including Grade A offices, residential properties, waterfront homes, retail centres, integrated townships, and award-winning serviced residences.

So far, Keppel Land has 20 licensed projects across Vietnam and more than 25,000 homes in the construction pipeline. To date, the firm has a total registered capital of about $2 billion in Vietnam.

Meanwhile, another Singaporean real estate developer, CapitaLand – which has developed more than 9,000 units in Hanoi and Ho Chi Minh City – in earlier this year announced a new commercial fund to acquire more residential development sites. The firm established a $500 million fund to invest in secured seed commercial properties, mainly in Ho Chi Minh City and Hanoi.

CapitaLand has recently been involved in two projects in Vietnam. The firm acquired twin 20 per cent stakes in Thien Duc Trading Construction and Twin Peak Development and Riverview, to the tune of $17.9 million and $51.9 million, respectively.

According to Chen Lian Pang, CEO of CapitaLand Vietnam, Vietnam’s strong growth outlook and positive market sentiment means the company is committed to long-term development here.

CapitaLand recently confirmed its plan to expand its business in Vietnam, announcing it was looking to increase its S$2.1 billion ($1.55 billion) multi-asset class presence in Vietnam, possibly including Raffles City - a CapitaLand’s flagship brand of integrated developments located in city centres with excellent connectivity to key transport nodes.

Mapletree in June last year paid $215 million to acquire Kumho Asiana Plaza from Kumho Industrial and Asiana Airlines. According to Hiew Yoon Khong, Group CEO for Mapletree, Vietnam presents a big opportunity for Mapletree.

“We will continue to seek investment opportunities in completed, quality assets that are immediately yield-accretive in Vietnam’s major cities such as Ho Chi Minh City and Hanoi. We are also keen to invest in greenfield opportunities to develop office, retail, residential, serviced apartment and mixed-use developments, either on our own or with local partners,” Khong said.

Singaporean investors note that the high-end real estate market in Vietnam has outstanding advantages in terms of development potential, as well as attractive prices compared to neighbouring countries. The beachfront real estate segment possesses many of the resort features and high profitability that investors look for in emerging markets.

Jacobus Hemels, representative from Alphanam Real Estate – the developer of Luxury Apartment Danang – said that Singaporean investors are well-versed in emerging markets, and they are on the lookout for the next property hotspot.

Lion City roars in

Lion City, a Singapore giant, is also growing its presence in Vietnam, with a total of around $1.85 billion invested in commercial properties in Vietnam’s major cities.

Mapletree is also investing more than $1 billion in a range of new projects in Ho Chi Minh City, including the Oakwood Residence Saigon and the RichLane Residence in District 7.

The Vietnamese property market has become so hot that Vietnam Singapore Industrial Park (VSIP), a developer specialising in industrial parks, has recently begun to delve into the township and residential segment.

John Lim HM, head of commercial and residential at VSIP, said that Vietnam is a land of immense growth potential. “As Vietnam grows, the community needs to evolve,” he said. “This is why VSIP has transformed our core offerings from standalone industrial parks to integrated township and industrial park models. It enables us to bring comprehensive solutions for living, work, and play, and also to apply urban planning best practices in Vietnam.

“We believe that successful implementation rests on a strong master plan that is backed by robust urban infrastructure and integrates utilities and facilities for enhanced living.”