Singapore’s CapitaLand has been building apartments in Vietnam for over two decades. Now the biggest developer in southeast Asia is flexing its muscles in the country’s commercial real estate market by closing its first commercial fund targetting the Vietnam market at $300 million.
The new vehicle, CapitaLand Vietnam Commercial I (CVCFI), will be dedicated to investing in grade A commercial real estate in the country, which is CapitaLand’s third-largest market in southeast Asia by asset size, after Singapore and Malaysia. CapitaLand will hold a 40 percent stake in the eight-year fund while major institutional investors will hold the remaining interest, according to a statement.
CapitaLand Aims to Ride Vietnam’s Growth Wave
“We see increasing investor interest in Southeast Asia, in particular Vietnam,” commented Lim Ming Yan, President & Group CEO of CapitaLand Limited in a company statement. “CapitaLand is positive about the growth trajectory of Vietnam and foresee that this trend will continue for at least the next 10 years. Besides the growing demand for residential properties with urbanisation, we also see strong potential upside in the commercial real estate sector given the mismatch between demand and supply of quality office space.”
The new fund expands CapitaLand’s global portfolio of assets under management, which totalled S$47.9 billion ($33.1 billion) at the end of 2016, and follows the $1.5 billion close last October of its Raffles City China Investment Partners III (RCCIP III), which invests in prime integrated developments in major Chinese cities. CapitaLand did not identify its capital partners for the new vehicle.
Going Commercial in Key SE Asia Market
CapitaLand has been active in Vietnam since 1994, establishing footholds in major cities including Ho Chi Minh City and the capital, Hanoi. The property group made its first commercial real estate play in the country this past January by acquiring a site in downtown Ho Chi Minh City for the development of a 240-metre, grade A office tower, slated for completion in 2020.
Besides that landmark project, CapitaLand has nine residential developments and 22 serviced residences with over 4,700 units across six cities in Vietnam. The company has also dabbled in retail by opening a three-storey shopping mall at the base of its high-end residential project The Vista this past March. CapitaLand partnered with Toong, Vietnam’s largest flexible office brand, to open a co-working space in the mall.
The developer, whose assets under management in the country totalled S$2.1 billion ($1.5 billion) as of March, said that it is considering building a Raffles City mixed-use complex in Ho Chi Minh City as part of its Vietnamese expansion drive.