SP Setia eyes move into Vietnam city centres

SP Setia Bhd, Malaysia’s second-biggest publicly traded developer, hopes to take advantage of lower prices in Vietnam’s property market by starting a development in downtown Ho Chi Minh City or Hanoi.

Setia’s first two projects in Vietnam are housing developments in Binh Duong province, adjacent to Ho Chi Minh City, the country’s business center. The developer is now looking for a “high-rise building with some branding” to boost its corporate image in Vietnam.

Vietnam’s property prices are falling amid a glut of high-end residential apartment developments, the U.K.-listed Vietnam Property Fund Ltd said last month. Asking prices have dropped over the past “six, seven weeks,” said Alex Loh, Setia’s chief resident representative in Vietnam.

“We are looking for opportunistic deals,” Loh said in an interview yesterday in his Ho Chi Minh City office, declining to give details on any potential projects or prices. “We have been trying for the last few weeks and months. We are looking at coming back closer to the city now.”

Vietnam marked SP Setia’s first move outside its home base and the company has now also expanded into Australia. Chief Executive Officer Liew Kee Sin said in 2008 that the Kuala Lumpur-based company planned to spend “a lot of effort and time” in developing its projects in Vietnam.

Sales in the country have been slow, hurt by commercial bank lending rates of “about 18 or 19 percent,” Loh said, as the Vietnamese central bank pushed up its policy rates to slow Asia’s fastest inflation.

“They’re not very happy with it,” Loh said about his company’s view on Vietnam five years after committing to its first project in the country. “The pace here is just not there. But head office understands it, so they’re still going along with a slower pace-type of sales over here.”

SP Setia expects to identify a downtown project in Vietnam by the second quarter, and be at the “negotiations stage” by that time, he said.

By Bloomberg