Singapore’s CapitaLand continues to ramp up its Vietnam presence as the city-state’s biggest developer suggested that it would consider building one of its Raffles City commercial projects in Ho Chi Minh City.
The signature development comes as part of a plan to expand the company’s S$2.1 billion ($1.5 billion) in multi-sector assets already in Vietnam, as the Temasek-controlled developer aims to roll out 2,500 residential units this year in its fast-growing southeast Asian neighbor.
The announcement of CapitaLand’s plans come as the Singapore-listed company’s CEO and President Lim Ming Yan met with Vietnamese Prime Minister Nguyen Xuan Phuc and reaffirmed the company’s commitment to Vietnam’s urban modernization, adding that Ho Chi Minh City could be a “potential home to a Raffles City.”
“CapitaLand plans to acquire more sites in Vietnam for residential development – possibly yielding 2,000 to 2,500 units this year – and will continue to keep a lookout for investment opportunities in offices, serviced residences and integrated developments,” Lim said. “With more than 9,000 homes and about 4,600 serviced residence units across the country, Vietnam has become one of CapitaLand’s key markets.”
CapitaLand No Stranger to Ho Chi Minh City
Just after China and Singapore, Vietnam has become CapitaLand’s third largest market. With a market cap of more than $11.1 billion, the company’s Ascott serviced residence division launched a serviced apartment in HCMC under its Somerset brand in the fourth quarter of 2016, and construction is set for the company’s first Grade-A office tower in the country, due for completion in 2020.
Ascott, owned by CapitaLand, is the largest serviced residence owner and operator in Vietnam and, as of the end of 2016, owns 22 properties and 4,600 units across six cities. According to CapitaLand Ascott is on track to achieve its target of 7,000 units in Vietnam by 2020.
“With more than 9,000 homes and about 4,600 serviced residence units across the country, Vietnam has become one of CapitaLand’s key markets, after China and Singapore,” Lim said, noting that the company has been working in Vietnam for 22 years.
Coming up this Friday, CapitaLand will be will be topping out its quad tower Seasons Avenue development in Hanoi’s Ha Dong district.
CapitaLand Booms as Vietnam Slows
Having ended the last quarter of 2016 on a high, CapitaLand is looking to expand. CapitaLand’s fourth quarter report showed that net profits jumped 73.8 percent year-on-year, and much of that was due to its 56 malls in mainland China – with Raffles City projects set for Hangzhou, Changning and Shenzhen in 2018. Recent reports also put CapitaLand in the running to purchase the Asia Square Tower 2 in Singapore.
CapitaLand’s interest in Vietnam comes in no small part from the country’s rapid economic growth, chalking up GDP growth of six percent for the second year in a row – one of the best performers in southeast Asia. In the first quarter of 2017, however, growth in Vietnam seems to be slowing, with annual growth at just 5.1 percent for the period from January to March, according to government data.
This slowdown may be temporary and could be a direct result of a slowdown in Samsung phone manufacturing; the World Bank forecasts that Vietnam’s economic will grow at a rate above 6 percent this year, despite the country being vulnerable to trade protectionism from the US, according to Bloomberg.