ASEAN KEY DESTINATIONS
Local firms taking bigger slice
Armed with a thorough understanding of the needs of domestic consumers and a real estate environment that is now awash with the cash of speculators looking to hedge their investments from Vietnam's two securities exchanges, home grown firms are now poised more than ever before to make their mark on the industry.
Explaining the change in the tide, former Deputy Minister of Natural Resources and Environment Dang Hung Vo said, "Although the stock market remains attractive, its volatility has encouraged investors to redirect their capital back into real estate."
The former deputy minister also attributed the change partly to the growing demand for housing and office space in Vietnam's major cities as rapid urbanisation takes hold across the country.
Binh Minh Import-Export Production and Trade (Bitexco) were the first to make a splash in the industry with a US$125 million, 60-storey Financial Tower, it opened in the heart of Ho Chi Minh City in 2005.
The tower was regarded as a major signal that for the first time domestic companies that had shied away from direct competition with developers from abroad, were now able to compete both professionally and financially with multi-national players.
While HCM City is the country's economic hub and consistently records the highest economic growth rate of any municipality in Asia's second fastest economy, the capital of Hanoi has not been left behind as its own real estate market continues to boom.
Ruby Plaza, one of Vietnam's largest trade centres, wrapped up construction on what is now considered a typical example of a multi-million dollar real estate projects invested in and built entirely by a domestic company.
Developer, Phat Dat followed Ruby Plaza's lead by deciding to pour VND1 trillion (US$62.5 million) into The EverRich, a 25 floor, 300 apartment, high-rise building project that also houses five upscale retail floors. EverRich is slated for completion by May of 2009.
Vincom Joint Stock Company which owns one of Hanoi's first commercial office blocks, the Vincom Towers, has also announced plans to roll out a VND300 million office and residential complex in HCM City's District 1.
"We prepared for this project around three years ago and are very eager with this property to dive head first into what is an enormously lucrative market," said company board chairman Le Khac Hiep.
Construction will begin in the fourth quarter of this year and be completed by 2009. However, Vincom has made it clear that the company is not about to rest on its laurels with more projects on the way.
The Hanoi-based developer hopes to build a strong market presence that will enable the company to remain competitive when real estate prices begin to cool.
Vietnam is now home to close to 20,000 domestic property businesses, with most being relatively small in scale. However, analysts have pointed to the increased attention that the industry is drawing from State-owned banks that are armed with large amounts of capital as a core driver behind record breaking property prices.
The Bank for Investment and Development of Vietnam (BIDV), the Bank for Foreign Trade of Vietnam (Vietcombank), and the Saigon Trading Corporation (Satra) have been among the first of these to jump into the fray.
Just last month, BIDV announced that Singaporean firm DP Architects had won the design bid for its VND1.8 trillion (US$112.5 million) corporate headquarters in HCM City. The bank plans to quickly follow on from the HCM City tower with other commercial buildings in the country's other major municipalities .
As prices continue to surge unabated and local firms flood the market, pundits have gone on record as saying that, over the next decade, Vietnamese companies will not only remain competitive with foreign firms but supplant them as the dominant force in property development in the Southeast Asian country.
"Vietnamese companies have Vietnamese staff who understand Vietnamese traditions, habits and tastes. This helps us cut to the quick and slash waste which in turn helps us reduce our costs that get passed on to both investors and customers," said Ngo Duy Thai, managing director of the Nam Nguyen Real Estate Development and Consulting Company. VNA