Japan shifts realty investor approach

Japanese real estate investors are moving towards an increasing presence in a range of large-scale projects in Vietnam.

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Hinokiya Group, one of Japan’s leading housing companies, is the latest Japanese investor to invest in the Vietnamese property market, making a deal with Technical World Group (TWG) to build Japanese-style housing in Ho Chi Minh City.

Le Cao Minh, general director of TWG, said that the two groups will speed up the establishment of a 50:50 joint venture to carry out the project, covering a total area of 9.7 hectares in Ho Chi Minh City.

“Working with Hinokiya and researching the group’s housing developments, we are struck by their convenient, smart, and safe projects, and especially by their humanitarian values, as evidenced by building kindergartens and nursing homes located next to their housing projects,” said Minh.

Hinokiya, meanwhile, praised Vietnam for its stable economic growth and the population’s rising income levels, noting that the country is a market with great potential for Japanese businesses.

Vietnam’s real estate has been attractive to Japanese investors for the last five years. Early investors included Nikko, Daibiru, Tokyu, and Aon, with many prominent investors from Japan also joining the market. Among them are Nidec Group, Hankyu, Nishi Nippon Railway, ACA, Obayashi, Shimizu, Hitachi, Sumitomo Construction, Mitsubishi Corporation, Creed Group, and many others.

In Hanoi, Japanese corporation Sumitomo Asia and Oceania is planning to begin construction on a US$4.2 billion smart city along the Nhat Tan-Noi Bai route within the year, in co-operation with BRG Group. This is the largest project to come from Japanese investment in Vietnam so far.

Previously, Mitsubishi Corporation co-operated with Vietnamese property developer Bitexco Group to develop 240 low-rise housing units and two high-rise condominiums out of a total of more than 1,000 low-rise and 17 high-rise condominiums at Hanoi’s The Manor Central Park project.

Mitsubishi has recently decided to pour a total of around US$500 million into a range of projects developed by domestic Phuc Khang Group.

According to a representative of Mitsubishi, the company was already engaged in the real estate development business in two cities in Vietnam – Binh Duong and Hanoi – but this project will be its first in central Ho Chi Minh City, the country’s largest real estate market.

“Major cities like Hanoi and Ho Chi Minh City have high population density and large-scale economies, while the housing supply is still limited. The improving infrastructure system within the real estate market offers high potential for future investment,” the representative of Mitsubishi said.

“Japanese and Vietnamese investors have similar mindsets and development strategies. Therefore, investment targets from both sides will bring about new residential areas in Vietnam,” he added.

Nam Long Group, one of the leading mid-range and affordable housing developers in Vietnam, has also co-operated with Japanese partners Hankyu Hanshin Properties Corporation and Nishi Nippon Railroad to implement a range of housing projects in Ho Chi Minh City.

In addition, Haseko Corporation recently announced that it aims to build a high-end Japanese-style apartment project in Ho Chi Minh City after teaming up with Him Lam Corporation to successfully construct its first high-end apartment project in Hanoi–The Authentic, located in Long Bien.

According to Akihiko Iwatani, chief representative of Haseko Corporation in Hanoi, when Haseko came to Vietnam in 2012, the real estate market was spiralling, but it has improved recently and the mid-range apartment-for-sale segment will see an upward trend over the next 10 to 15 years.

According to Phan Xuan Can, general director of SohoVietnam, there are currently two groups of Japanese investors operating in the Vietnamese market. One is investors who usually buy 20 to 30 per cent of the shares of a real estate company to become this company’s strategic shareholder and then jointly develop its projects. These investors are also able to explore cheap loans for these projects and bring Japanese-style housing to these projects.

The other type is investors who usually buy or lease long-term properties such as luxury office buildings, four- and five-star hotels, and apartments. These investors prefer assets with steady and long-term cash flows to minimise risk.

“Frequently, foreign investors require projects with full documentation, already cleared land, and only a small number of investors prefer this approach to being involved in the project from the pre-investment stage,” Can told VIR.

VIR

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