The strongest capital flow to real estate sector is from China

VietNamNet Bridge – Cash from China and Chinese-speaking territories has been and will continue to be the main funding source for the Vietnamese real estate market, analysts say.

The investor of an apartment project in District 2, HCM City, revealed that he sold 200 apartments within a short time, despite the fact that only the foundation of the building has been completed.

How could the investor sell so many apartments under the current economic climate, with the real estate market still hibernating with very few successful transactions? Who were the buyers of the apartments?

The answers to the questions could be found at a meeting between the investor and the clients. Of the first six clients, two were foreigners. One of the two said he was from Taiwan. He bought five apartments. The other, from Singapore, bought three.

One could see in the list of customers of a resort real estate project in Da Nang that prior to 2012, the buyers were mostly from Hanoi, the northern provinces and HCM City. However, things have changed notably in the last two years. The real estate developer realized sales of $12 million from early 2013 to the end of the first quarter of 2014, and most of the buyers were from China, Hong Kong, Singapore and Macau.

These are just a very small part of the huge capital that investors from China and the Chinese speaking community are bringing to Vietnam. Analysts are noting that something which no one imagined before is coming to pass: China is becoming the biggest funding source for the Vietnamese real estate market.

The Hong Kong-based Sunwah Group, which has been present in Vietnam since 1993, earlier this year contributed $200 million to an apartment project in Binh Thanh District in HCM City. The investment helped increase the total foreign direct investment (FDI) capital in the real estate sector in the first quarter of the year to $288 million, or 8.6 percent of the total registered FDI in Vietnam.

Jen Capital, a subsidiary of Chiaphua Group in Hong Kong, which has been in Vietnam since 1991, is considering developing a project in District 2, HCM City.

While Sunwah and Jen Capital make direct investments in real estate projects in Vietnam, others have injected money into Vietnamese real estate firms.

In 2013, Warburg Pincus, an investment fund from Hong Kong, spent $200 million to buy 20 percent of Vincom Retail, a subsidiary of Vingroup, which is now considered the biggest real estate group in Vietnam.

Just some months later, EXS Capital, a group specializing in making investments in Asia, with the offices in Hong Kong and Tokyo, poured $37 million into Son Kim Land, a subsidiary of Son Kim Group. EXS Capital committed to increase its investment capital to $50 million, or possibly $80 million in the future.

In the first quarter of the year, FLC, a real estate group based in Hanoi, reported that GEM Global Yield Fund had committed to buy FLC’s shares in an affair worth $40 million.

Investors from China’s mainland have also injected money into Vietnam, though more silently than Hong Kong’s. A senior executive of Phat Dat Property JSC revealed that it may cooperate with a big Chinese company to develop a major project in 2014. Insiders said this could be a resort project in the sea city of NhaTrang.


real estate, chinese capital