Photos: Hyatt Regency Danang (Indochina Capital)
Joint venture secures site and is now seeking necessary approvals for development.
The first project of the new joint venture between Indochina Capital, one of Vietnam’s leading real estate and financial services firms, and Kajima Corporation, a major Japanese construction and real estate development company, has already begun in Ho Chi Minh City, according to Peter Ryder, CEO of Indochina Capital. “We have secured the site and are now going through the process of obtaining all requisite approvals for the development,” he said. He also revealed that by the end of this year, he expected that ICC-Kajima would have two additional projects, one in Hanoi and one in Da Nang underway.
The ICC-Kajima joint venture sealed in September last year is the result of a 30-year-relationship between Mr. Ryder and Kajima Corporation, going all the way back to Mr. Ryder’s time as an investment banker in Tokyo in the late 1980’s. With an investment of $1 billion targeted for the next ten years, ICC-Kajima promises to offer high quality, luxury product to the country’s real estate market. According to Mr. Ryder, the joint venture’s strategy focuses on “accommodation” assets (hotels, serviced apartments, residential and combinations thereof) developed on “urban infill” sites (key city centre locations).
The New Vehicle Gears Up
ICC-Kajima will be Indochina Capital’s principal development vehicle in the coming years, according to Mr. Ryder. “Vietnam’s real estate market remains attractive and we see many opportunities here,” he said. “The joint venture will concentrate on the high-end in market segments in which we have a lot of experience. With the capital backing and global real estate development expertise of Kajima, we are highly confident about our future deliveries.”
Indochina Capital’s indelible mark on Vietnam’s real estate market has been created through the development of a series of landmark projects. Beginning with the Furama Resort, Vietnam’s first 5-star luxury resort, located along Danang’s legendary coastline, and 63 Ly Thai To, the first premier office development in Hanoi, and then followed by a series of extraordinary and award-winning developments like The Nam Hai, Six Senses Con Dao, Hyatt Regency Danang, Montgomerie Links Vietnam and Indochina Plaza Hanoi, Indochina Capital has proven that well-located, dramatically designed and superbly managed high-end properties produce outstanding results in both up markets and down markets, in the process transforming Vietnamese buyers’ definition of luxury.
In December 2015, Indochina Capital also entered into a joint venture with Vanguard Hotels, a Southeast Asia-focused no-frills hotel developer and operator that is now rolling out properties in Malaysia and the Philippines, in order to launch a Vietnam-branded product. Indochina Vanguard will initially focus on the major urban areas of Hanoi, Ho Chi Minh City, and Da Nang, and ultimately expand into a number of Vietnam’s secondary markets and other capital cities in Indochina including Phnom Penh, Vientiane and Yangon. The concept remains “no frills” but with Indochina Capital adding a chic “affordable luxury” theme.
“We will continue pioneering with our vision of sophistication and luxury,” said Mr. Ryder. Indeed, Indochina Capital has a clear strategy that addresses the current and future demands of the market, with a focus on delivering accommodation assets while maintaining its unwavering commitment to architectural excellence, environmental sustainability, and social responsibility.
Committed to Quality and Excellence
Although he perceives an enormous ongoing opportunity through ICC-Kajima and in the specialty hospitality arena in Vietnam’s property market, Mr. Ryder has not lost sight of the many challenges remaining for real estate developers, especially in the high-end segment. “Today’s biggest impediment to success is inflated land prices,” he said. “A lot of money is being thrown at property now. Land is over-priced and it is difficult to find a good site. I think that many other developers have overpaid for land, and it is likely that we will see in the next two or three years a market downturn. We have patient capital and will not be overly aggressive given our market perspective”.
The second challenge is the difficulty in realizing truly luxurious end-product. “Properly implemented design, engineering, and construction remains challenging in Vietnam,” he said. “Many other developers in Vietnam have attempted developing luxury real estate but few have been successful.”
Mr. Ryder and his team, however, hold a firm belief that there are today and will remain for the foreseeable future opportunities in the high-end segment in Vietnam.
Indochina Capital’s re-emergence has been accompanied by a strong rebound in Vietnam’s economy. In 2016, GDP increased 6.2 per cent, which makes it one of the fastest growing countries worldwide. Vietnam also attracted more than $24 billion in newly-registered foreign direct investment (FDI) last year and over $15 billion was disbursed, a record 9 per cent increase against 2015.
Vietnam’s property market continues to show resilience with consistent growth across different sectors despite the gyrations of the global economy. The market’s long-term upward trend will boost the real estate sector in general and Indochina Capital in particular going forward.