Similarly, against the backdrop of such uncertainty, even Malaysian companies are holding back on their projects in Vietnam, says an analyst with TA Securities. Vietnam’s economic growth slowed to 6.2% for 2008, its weakest since 1999 largely attributed to lower demand for exports as recession hit the US, Europe and Japan last year.
“Basically, it is good that they should hold back first, given the situation in Vietnam.
“They are facing a high interest rate environment and growing economic pressure on demand, even though input costs have come down,” says the analyst.
Construction and property development costs are generally considered to have come down with the bursting of the commodities bubble since the middle of last year.
As for potential losses to Malaysian developers and construction players, “the amount committed so far is not large. Losses would be minimal,” the analyst adds.
The analyst, who covers WCT Bhd, SP Setia Bhd and Gamuda, also points out that many Malaysian companies have not begun work on any projects in Vietnam as they are held back by the global economic crisis.
He says in his coverage that only Gamuda Bhd has commenced infrastructure work on the RM8bil Yen So Park project.
Artist’s impression of Yen So Park (left) and Vietnam International University Township
Artist’s impression of Yen So Park (left) and Vietnam International University Township
The Yen So Park lake-side project in Hanoi covers 130.8ha that will include a five-star hotel, an international convention centre, offices, apartments, luxury condominiums and villas, a recreational club, community facilities and a botanic park.
Responding to StarBizWeek queries, Gamuda says there has been no further change in the company’s operations in Vietnam.
Last month, Gamuda announced that it would maintain the total value of its projects in Vietnam at RM10bil. However, it added that the financial crisis and investors’ difficulty in getting funding might delay the development of the retail mall, office block and hotel parcels for one or two years. It pointed out that although the project was scheduled to run for 12 years, the delay would not be significant.
Berjaya Land Bhd which has received investment licences in Vietnam for four projects covering 920ha, expects some slowdown in demand for properties there and is prepared to defer projects.
Berjaya Land chief executive officer Datuk Francis Ng says: “With the current economic situation, we expect some slowdown in demand for properties as purchasers adopt a more cautious attitude, and we may have to slow down or defer some of our projects if the demand is not there.”
Even so, Berjaya Land aims to launch the first phase of its Thach Ban project in Hanoi by the second half of 2009.
Thach Ban City in Hanoi is the company’s maiden project in Vietnam comprising 148 units of condominiums worth a total of US$550mil (RM1.97bil).
Ng adds: “We have started work on our Dong Nai Residential Development project, and are also planning to launch it in the second quarter of 2009.
“We have also received investment licences for the Vietnam Financial Centre and Vietnam International University Township projects, and are now awaiting construction permits for these projects.”
“We believe that once the global economy has stabilised, the take-up rate for property will improve.
“We view our investments in Vietnam on a long-term basis and we have confidence that the country is resilient enough to weather the downturn and recover when the global economy picks up.”
Berjaya Land currently has no contribution from its overseas projects in Vietnam as it only entered the market in the last two years.
The company has a target that all its overseas property development ventures will contribute some 30% to group revenue in three to four years.
Currently SP Setia, which has one ongoing project in Vietnam and another in the planning, says there would be no change in schedule and it was going ahead with the development.
Its on-going project is the 226ha township EcoLakes at My Phuoc, Ho Chi Minh City in a joint venture with Vietnam’s state-owned conglomerate, Becamex IDC Corp.
The project in planning is called EcoXanh, (meaning “Eco Greens”) which will be a range of villas with club house facilities on 31.6ha in Ho Chi Minh City.
EcoXanh is a joint venture between unit Setia Saigon East Ltd and Saigon Hi-Tech Park Development Co.
Tan Sri Liew Kee Sin, group managing director of SP Setia says: “We are going ahead. Where EcoLakes is concerned, our show village is almost ready and should be launched in the first quarter of this year.
Tan Sr Liew Kee Sin
“This will enable us to market our properties better. The Vietnam market has never seen or experienced such a development before, let alone an entire show village that showcases different types of properties.”
SP Setia says it is confident its ideas will take off in Vietnam, despite the current economic turmoil.
“We feel that the sub-urbanisation of housing and offices is inevitable given the congestion, inadequate infrastructure, cramped living quarters and expensive office space in central cities like Ho Chi Minh City and Hanoi.
“In this sense, we feel that SP Setia has a distinct advantage in Vietnam as building sub-urban townships is our forte,” he adds.
At present SP Setia’s revenue solely comesfrom the domestic market.
Main board-listed Ireka Corp Bhd’s exposure to the Vietnam market is mainly through its 19.6% stake in London-listed Aseana Properties Ltd as well as the appointment of wholly-owned subsidiary Ireka Development Management Sdn Bhd as the exclusive development manager for Aseana. The successful London-listing of Aseana in April 2007 was initiated by Ireka.
In mid-2008, Aseana received investment licences for Queen’s Place (formerly known as Horizon Place) and International Hi-Tech Healthcare Park in Vietnam; both are mixed developments with residential component.
Queen’s Place will cover 8,400 sq m adjacent to the central business district in Ho Chi Minh City and the Hi-Tech Healthcare Park will be a fully integrated “Medical City” with approximately one million sq m of gross floor area.
Meanwhile, all of Aseana’s other pipeline projects in Vietnam are still at the master planning and approval stages.
Ireka Development president Lai Voon Hon says: “This includes Wall Street Centre (District 1, Ho Chi Minh), Nam Khang Resort & Residences (Danang) and One Saigon.
Lai Voon Hon
“In July last year, Aseana also acquired a strategic stake in Nam Long Corp, one of Vietnam’s leading property developer with over 500ha of land bank in Ho Chi Minh City and neighbouring provinces.
“Through this partnership, Aseana is expected to co-develop at least four property development projects with Nam Long in Vietnam.”
On the company’s outlook for Vietnam, he says: “Vietnam is frequently compared to China of a decade ago and therefore is thought that the current challenging environment mirrors that of China in the mid-1990s. This is as a result of rapid growth, in which there is bound to be a reactionary correction but eventually will be followed by stabilisation and growth.
“Hence, though it may be a challenging environment today, I am optimistic that the property market will ride out this uncertainty and will be on an upturn in the next four to five years). We will take an opportunistic approach in our involvement so that we will be there when the market takes an upturn.”
That pretty much sums up most Malaysian companies’ aspirations in their Vietnam ventures.
By The Star (by Loong Tse Min)
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