Foreign investors buying licenced real estate projects

Foreign investors buying licenced real estate projects
16:40' 27/04/2007 (GMT+7)
VietNamNet Bridge – It is a growing trend that foreign investors are buying real estate which has been licenced instead of injecting money in completely new projects.



Within one month, Singapore’s Keppel Land signed two contracts on setting up joint ventures with local partners to develop accommodation projects in HCM City.

In mid April, Harrisonburg, a member of Keppel Land, set up a joint venture with An Phu Corporation to run a high-grade apartment bloc project, covering an area of 1.74 ha in district 2, HCM City. The legal capital of the joint venture is $14.4mil, of which Harrisonburg will contribute 60%. Eighty million dollars will be injected to build 500 high-grade apartments for sale early next year.

Two weeks before that, Keppel Land signed a contract on setting up a joint venture with Tien Phuoc to invest $106mil in a project on building 1,500 apartments for sale in district 2, HCM City.

Real estate projects located in advantageous positions are being hunted by many foreign investors, who want to take shortcuts in investment by buying licenced projects instead of starting up completely new projects.

In fact, foreign investors face a lot of difficulties in seeking places for projects and site clearance; therefore, they make wise deals by buying licenced projects. Regularly, foreign investors join forces with domestic investors to set up joint ventures, in which foreign investors hold the controlling stakes.

Two years ago, Hai An Corporation, a domestic owned company, announced the implementation of a high-grade apartment project, called Orchard Garden in district 2. However, as the market was gloomy at that time, the project sank into oblivion. However, the project did not disappear as people thought it might: it was renamed River Garden after Indochina Land Holding bought 90% of the total shares of the 206-apartment project.

Foreign investors, especially investment funds, are hunting for licenced projects involving apartments, offices, shopping centres and golf courses to buy.

Investment funds are being put under hard pressure to disburse as much as possible. In general, when raising funds, fund management companies always have to promise to disburse capital in one year. As there are not many operational projects to buy, foreign investors have to join forces with local partners to develop licenced projects.

Cooperating with foreign investors to develop projects proves to be a good choice for many domestic investors, who often lack capital. However, not every domestic investor chooses this way. In fact, it is not difficult to call for capital into projects at this moment, as idle capital from the public is profuse, and people are seeking suitable investment channels.

The Thuy Duong Company Ltd, the investor of the twin tower apartment and shopping centre TD Plaza in Hai Phong City, last week changed into a joint company, which will help it easily raise funds in the stock market. The strategic shareholders of the joint stock company are Prudential life insurance, Vina financial investment fund, and Phu Thai Group, a retailer.

(Source: Dau tu)