Vietnamese real estate: a Singaporean success

With opportunities limited at home, many Singaporean firms have entered Vietnam’s emerging real estate market

The Singapore phenomenon

Over the last several years the number of Singaporean investors entering Vietnam’s real estate market has risen considerably.

Leow Siu Lin, the Singaporean consul in Ho Chi Minh City, said Vietnam is one of the top investment destinations for Singaporean companies.

“Singaporean businesses take a long-term approach when making foreign investments and acknowledge Vietnam’s strong foundations, which include a demographic advantage, given its young, skilled and growing labour force and rich endowment of different areas especially the real estate sector,” Lin said.

Koh Chong Yu, director of International Enterprise Singapore in Ho Chi Minh City, added that the island state also acted as a gateway for international groups looking for investment opportunities in the region, including Vietnam.

One such example is Kusto Home, part of the real estate corporation Kusto headquartered in Singapore, which has developments in many countries including Vietnam. Kusto Home is now directly investing and managing the large scale Diamond Island development in Ho Chi Minh City.

“We see Vietnam as a potential and motivated market for the real estate sector which has boomed in recent years,” said Kusto Home’s chairman Murat Utemisov.

With Singapore’s domestic real estate market reaching saturation, opportunities in Vietnam are becoming increasingly attractive to the island state’s developers.

Jeff Foo, chair of the Singaporean Real Estate Brokerage, said Singapore is no longer attractive to real estate investors because of their government’s cool-down policy, implemented in 2013 to mitigate against rising property prices. With opportunities limited at home, many Singaporean firms are expanding their horizons.

“Currently, half of every 10 Singapore investors in Vietnam belong to the real estate sector. Many investors are expanding their portfolios and pouring into new investment,” said Foo.

Traditional investors expanding

Many large-scale Singaporean developers such as Keppel Land, CapitaLand, Sembcorp, Ascott and Mapletree have been present in Vietnam for many years and enjoyed great success.

Vietnam Singapore Industrial Park (VSIP) is one of the most successful Singaporean projects in the country, with seven industrial parks in Binh Duong, Haiphong, Bac Ninh, Hai Duong, Nghe An and Quang Ngai province, attracting nearly 500 projects and more than $8 billion in registered capital.

Keppel Land is a pioneer foreign real estate investor that has grown to be one of the largest players in Vietnam. According to Ang Wee Gee, CEO of Keppel Land, the company has been privileged to play a part in Vietnam’s urbanisation over the years.

Keppel Land has a diverse portfolio of properties with 19 projects and a pipeline of about 25,000 homes in Hanoi, Ho Chi Minh City, Dong Nai and Vung Tau including Grade A offices, residential properties, integrated townships and award-winning serviced apartments. The company is also involved in a project to develop an 86 storey building in Thu Thiem New Urban Area.

“Vietnam is one of Keppel Land’s key growth markets. With its improving economy, the country is poised to be one of the best performing countries in ASEAN over the next few years,” said Ang Wee Gee.

“The country, particularly Ho Chi Minh City, continues to attract foreign direct investments. This, coupled with a young and dynamic population and a growing middle-class, will continue to drive demand for quality homes and investment-grade offices,” he added.

Another big fish from Singapore is CapitaLand, which has been active in Vietnam since the 1990s.

CapitaLand’s current Vietnam presence is in the six major cities of Ho Chi Minh City, Hanoi, Haiphong, Danang, Binh Duong, and Nha Trang where the company is involved in building residential properties.

In the residential sector, CapitaLand is the leading foreign investor with a portfolio of close to 7,850 quality homes across eight residential projects in Ho Chi Minh City and Hanoi. Its wholly-owned serviced residence business unit, The Ascott Limited, has a portfolio of more than 3,000 apartments in 17 properties across the six major cities, making it the largest international serviced residence owner-operator in Vietnam.

Chen Lian Pang, CEO of CapitaLand Vietnam, told VIR that Vietnam is one of the company’s key markets in Asia. He said apart from building residential projects, the company plans to diversify into the commercial segment with office buildings and integrated developments. “In the next three years, we hope to expand three times in scale.”

New arrivals coming

While Vietnam already enjoys the presence of a host of successful Singaporean firms, these embedded investors are likely to be joined in the near future by even more of their compatriots.

In April this year, Singaporean financial group SynGience signed a contract with Minh Nguyen Long and L&L-LuckLand to develop a property in District 12 of Ho Chi Minh City. The co-operation will see SynGience pump VND400 billion ($18.3 million) into the Depot Metro Tower-Tham Luong project. When finished, the development will inject 660 apartments to the market.

Another new addition will be Frasers Centrepoint Limited which has decided to buy out a 70 per cent stake in the G-Homes Housing Development Joint Stock Company, a member of the An Duong Thao Dien Real Estate company, to develop a residential project at a cost of more than VND1 trillion ($45.4 million).

Singaporean firm, Genesis Global Capital is also committed to investing into Phuc Khang Real Estate Group in the next six years to the tune of $300 million.

Genesis also asked Phuc Khang to provide a land fund valued at around $50 million per year to develop units constructed to Leadership in Energy and Environmental Design (LEED) standards.

Apartments with LEED standards are attracting another investment fund from Singapore – the Providence. This fund has bought 30 per cent of the more than 700 units in Diamond Lotus Lake View in order to re-lease them as serviced apartments.