Putting bets on luxury property market niche
By Bao Chau in HCMC
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| A view of a Diamond Island apartment building underway in HCMC’s District 2 -Photo: Dinh Dung |
There have appeared no positive signs on the dampened property market despite the Government taking some effort to breathe fresh life into it and developers lowering sale prices.
A slew of real estate firms have been turning tail with the economic woes like high interest rates and poor demand continuing biting. Surprisingly, a few companies look more like adrenaline junkies than risk-wary investors. They are persistently working on big-ticket luxury housing projects. It seems they are placing their bets on this market niche for people who still have disposable incomes.
Super luxury projects underway
Phu My Hung Corporation, the developer of the well-known Phu My Hung town in HCMC’s District 7, has recently launched a sale of Chateau villas built in the second phase of the project. These villas’ prices are seen as the highest in the southern part of the city, aka Saigon South.
The Chateau villas measure between 460 and 760 square meters each and come with the price range of VND22.3 billion (over US$1 million) and VND70 billion (US$3.36 million) a unit. In phase one of the project, Phu My Hung quoted even whopping prices, between VND22 billion and VND90 billion a unit.
At a time when property developers are running away in fright by slashing land and housing prices in Saigon South, it seems Phu My Hung is taking risks in this costly project. But the Taiwan-Vietnam joint venture company looks confident. It says the project will be a business success as it has only 103 units and has a prime location in the modern town.
Phu My Hung is not alone. Other companies are also in pursuit of dazzlingly expensive property projects. Bitexco, an emerging local property developer, began work in late April on its super luxury The One Ho Chi Minh twin towers across the landmark Ben Thanh Market in downtown HCMC.
Bitexco will be spending half a billion U.S. dollars on the project which consists of a six-star hotel and a grade-A-plus office section. One of the two buildings has 48 storeys and the other 55, and they are scheduled to be up and running in 2015.
The still-bleak prospects of the office market have somewhat put pressure on this company. In fact, Bitexco is still working hard to have its landmark 68-storey Bitexco Financial Tower fully occupied.
Speaking to the media, the chief executive officer of Bitexco Group, In Suk Ko, says the company is having some financial constraints but it has wrapped up talks with investors over the financing. He says Bitexco as a professional developer will not take a rest just as business executives won’t stop flying business class.
“I have more than 30 years’ experience in doing business and learning from successful business leaders on the international front. In times of hardship, if you quit the game, then success will never come,” he says.
On the same boat with Phu My Hung and Bitexco are Saigon Co.op Investment Development Co. (SCID) and Mapletree of Singapore’s Temasek. SCID and Mapletree recently started construction of the SC VivoCity commercial center in District 7 with total capital of US$100 million.
SC VivoCity is a component of the larger Saigon South Place project covering 4.4 hectares and costing a total of US$360 million. The project is for individuals and organizations with deep pockets. Saigon South Place will have commercial, office and serviced apartment sections and target multinationals and expatriates living and working in HCMC.
Nguyen Ngoc Hoa, chairman of SCID, says his company is pinning high hopes on SC VivoCity. Cooperating with Mapletree will help SCID make the most of its experience in construction and management of a commercial center while Mapletree can tap SCID’s vast knowledge of the retail market, he says.
Also well worth mentioning is Binh Thien An, which is one of the companies that began foraying into the luxury property market segment. In late 2009, when the property market started feeling the impact of the global financial crisis, the local firm offered Diamond Island apartments worth a million dollars each in District 2. At the time, this was a real shocking price.
Demand for luxury homes exists
Commenting on the luxury property development trend, Trinh Quoc Trung, vice dean of the business administration department of the HCMC Banking University, says, “Luxury goods are present in all business fields, including real estate. No matter whether the market is in good or bad shape, it always has demand for luxury items. In Vietnam, there are numerous rich people willing to spend on luxury goods.”
In each and every crisis, Trung notes, there are both losers and winners. Those buying luxury houses have different purposes such as polishing their image, asserting their social status, giving to someone, or merely meeting their own needs.
He, however, warns such high-cost projects will be associated with risks because it is not always easy to find buyers.
The Saigon Times Daily