Southeast Asia’s largest property developer, CapitaLand, is doubling its real estate investments in Vietnam to up to US$2.5 billion over the next three to five years.
It is aiming to build affordable homes and shopping malls in major Vietnamese cities like Hanoi and Ho Chi Minh City, said CapitaLand’s CEO Liew Mun Leong on the sidelines of an event in Hanoi.
CapitaLand now spends about US$1.2 billion in real estate developments in Vietnam.
Mr Liew is in Hanoi where he witnessed the signing of an MOU between CapitaLand Vietnam and The Academy of Managers for Construction and Cities. The academy comes under Vietnam’s Ministry of Construction.
The MOU will enable both sides to exchange information and knowledge about infrastructure developments. It will also facilitate joint training and exchange programmes like study tours and site visits.
Building housing for the common citizens of Vietnam is CapitaLand’s key aim for the near future. It says a typical two-room apartment, occupying up to 70 square metres, will have basic facilities like toilets.
CapitaLand is targeting those between the lower 30 percent and 50 percent of the population in Hanoi and Ho Chi Minh for its new affordable housing projects.
This group of Vietnamese would have a monthly household income of about US$2,000, and CapitaLand says that currently there is insufficient housing to meet their needs. So the company believes that its new developments would help to plug that gap.
Mr Liew said: “In the case of Vietnam, we think that, from our experience, they have savings, but they need a home. So, we’ll build something which their savings can afford to buy.
“I checked with my own colleagues who work with us. They think that about US$1,000 per square metre – which is roughly a US$100 per square foot or S$140 per square foot – (is affordable). It’s like HDB (flats) in the early 70s. That sort of things is something that we’re pegging to.”
“We have roughly about 4,000 apartments to build. What we want to do is to increase this rapidly,” added Mr Liew.
“500,000 people need housing every year. That translates to about 120,000 homes to be built. And what is the supply? The supply today is only about 18,000 homes. I think this is a very good opportunity for us. So we will be aggressively chasing this prospect of building this housing that common people can buy.”
CapitaLand says it may also introduce suburban shopping malls, like Singapore’s Bugis Junction, in Vietnam.
Mr Liew said shopping malls are practically non-existent in Hanoi.
Such malls are good for Vietnam, he said. They can help to stimulate the economy through increased local consumption.
Mr Liew said: “Vietnam is progressing to the next stage of urbanisation. Our vision is to build shopping malls, firstly for what we call necessity shopping.
“It’s not ION in Singapore, it’s not Takashimaya. It’s Tampines Mall, IMM, Bugis Junction, maybe, that sort of shopping mall where they can buy their basic necessity plus a few things (like) Zara, Uniqlo or Muji, Watsons, that sort of images.
“Not ION, no Prada and LV. I believe that people migrate to these consumption progressively. If I do a shopping mall that does Prada and LV, I’m taking a high risk.
“But if I’m building a shopping mall that can sell basic necessity plus a few things that they can afford, then I think I’m addressing the needs of the population.”
CapitaLand also wants to introduce mixed developments in Vietnam. These would be similar to its Raffles City integrated developments, which house offices, shopping malls and residences.
But office space is something which CapitaLand is not keen on building in Vietnam yet. Mr Liew said there is currently an oversupply of office space in cities like Ho Chi Minh.
Source: Channel News Asia, 7 Jun 2010