Wave of arrivals
Japanese investors used to be absent in Vietnam’s property market, especially in the housing and commercial apartment segments. Singaporean and South Korean investors outshine those from other countries as they engage in developing the apartment building projects in the nation’s two biggest cities Hanoi and HCMC.
However, Japanese investors have started to step into the local real estate market (It means nha dat in Vietnamese), besides other sectors such as finance, communication and consumption. Notably, the Tokyu Binh Duong Garden City project worth US$1.2 billion got off the ground last week.
Japan’s Tokyu Corporation has made their way into the Vietnamese property market through the strategic partnership with Becamex IDC Corp. The Becamex-Tokyu joint venture invests VND25 trillion, or some US$1.2 billion, to develop Tokyu Binh Duong Garden City covering 71 hectares in Binh Duong New City, with space for entertainment, commerce and offices as well as some 7,500 housing units.
Tokyu Corporation is one of the leading Japanese firms operating in multiple fields including electric railway, urban development, transport, retail, hotel and education.
In December last year, Tama Global Investment Pte., under Japan’s Tama Home Group, entered the domestic market through buying a 20% stake in Cotec Real Estate Development and Investment Joint Stock Co. (Cotecland), a subsidiary of Cotec Group, to become a strategic partner in property investment and business.
Tama Home is active in housing development and real estate business with seven members under its umbrella. Tama Global Investment specializes in two major fields being property and finance.
Under the partnership, Tama Home will transfer advanced technology in property construction and construction management to the local partner in a bid to shorten building periods, reduce costs, improve product quality and increase profits in cooperation and investment projects of the two sides.
Meanwhile, in the office building segment, a Japanese property investment fund has acquired the Centre Point building on Nguyen Van Troi Street, Phu Nhuan District in HCMC. The fund is currently looking for another partner to transfer the building after a year of investment.
The industrial property segment is not less bustling, with Long Duc Industrial Park in Dong Nai to be developed by Vietnam’s Donafood in cooperation with three Japanese partners namely Sojitz Corporation, Daiwa House Industry Co. Ltd. and Kobelco Eco-Solution Co. Ltd. With the combined stake of 88% in the joint venture, the Japanese companies will join hands with the local partner to invest some US$100 million in the 281-hectare industrial estate that will get going on March 19.
In the field of property services, KMIX Corporation, a Japanese private company, has bought a 45% stake in Huy Bao Company to penetrate in the local high-rise building management and maintenance market. The chairman of this corporation said given the current trend of investment overseas, Vietnam is a good choice as an emerging market since Japan’s market has been saturated.
Su Ngoc Khuong, director of the investment department of Savills Vietnam, said 2011 was a year full of fluctuations and difficulties for the real estate market. However, from the angle of Japanese investors, they still see a potential and attractive market with young and dynamic population.
In addition, given the yen appreciation and the supports of Japan’s government for investment in emerging markets, Japanese businesses still enhance investment in Vietnam.
With the experience of a brokerage service provider that has organized an investment promotion seminar in Japan, Khuong said Japanese investors have set high expectation about the recovery of the local property market after Vietnam’s Government pledged to take measures to prop up the market.
Japanese investors make decisions based on the parameters of crowded markets, stable economic growth and rising income per capita. They often conduct thorough research before investing, and only invest in the areas with long-term potentials, aiming at the future rather than merely solving current problems.
“The current problem of Japanese businesses is their home market has been saturated, with the appreciation of the yen. Japanese investors are switching to new markets.” Khuong stated.
Meanwhile, in explanation for the appeal of Vietnam’s realty market to Japanese investors, experts deemed the local market an emerging market with golden population structure, low labor costs and strategic position in the region. Regardless of the global financial crisis, Vietnam still ranks fourth among the most attractive emerging markets to foreign investors, according to the Association of Foreign Investors in Real Estate (AFIRE).
Khuong added another reason why Japanese investors seek to enter Vietnam is the strategic partnership between the two nations. When Japanese investors arrive in Vietnam, they are provided sufficient information and protected by the two governments.
Despite certain shortcomings of Vietnam’s property market, attractiveness and economic growth will help the market make new breakthroughs in the coming time with the wave of Japanese investment particularly and foreign investment generally.
Khuong informed many trade affairs are under negotiation at present. Office building, commercial center, industrial park and new urban areas will attract the most attention of Japanese investors in the coming time.
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