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It used to be Singaporean and South Korean investors rather than the Japanese who were interested in the local property market, especially apartment buildings in Hanoi and HCMC.
However, Japanese investors have started to step in after entering other Vietnamese markets such as finance, communication and consumption.
One good example is the US$1.2 billion Tokyu Binh Duong Garden City project which got off the ground last week.
Japan’s Tokyu Corporation has made their way into the Vietnamese property market through a strategic partnership with Becamex IDC Corp.
The Becamex-Tokyu joint venture invests VND25 trillion, or $1.2 billion, to develop the project which covers 71 hectares in Binh Duong New City, with space for entertainment, commerce and offices as well as some 7,500 housing units.
Tokyu Corporation is one of the leading Japanese firms operating in multiple fields including electric railway, urban development, transport, retail, hotel and education.
Last December, Tama Global Investment Pte., under Japan’s Tama Home Group, entered the domestic market by buying a 20 percent stake in Cotec Real Estate Development and Investment Joint Stock Co. (Cotecland), a subsidiary of Cotec Group, to become a strategic partner in property investment and business.
Tama Home is active in housing development and real estate business with 7 members under its umbrella. Tama Global Investment specializes in 2 major fields, property and finance.
Under the partnership, Tama Home will transfer advanced technology in property construction and construction management to the local partner in order to shorten building periods, reduce costs, improve product quality and increase profits.
Meanwhile, in the office building segment, a Japanese property investment fund has acquired the Centre Point building on Nguyen Van Troi Street, Phu Nhuan District in HCMC.
The fund is currently looking for another partner to transfer the building after a year of investment.
The industrial property segment is similarly bustling, with Long Duc Industrial Park in Dong Nai to be developed by Vietnam’s Donafood in cooperation with 3 Japanese partners,
Sojitz Corporation, Daiwa House Industry Co. Ltd. and Kobelco Eco-Solution Co. Ltd.
With the combined stake of 88 percent in the joint venture, the Japanese companies and the local partner will invest US$100 million in the 281-hectare industrial estate.
In the field of property services, KMIX Corporation, a Japanese private company, has bought a 45 percent stake in Huy Bao Company to penetrate the local high-rise building management and maintenance market.
The chairman of this corporation said Vietnam was an attractive destination for Japanese investors who have been facing a saturated market at home.
Su Ngoc Khuong, director of the investment department of Savills Vietnam, said 2011 was a year of fluctuations and difficulties for the real estate market.
However, from the viewpoint of Japanese investors, it is a potential and attractive market considering the young and dynamic Vietnamese population.
The yen appreciation and the Japanese government’s support of overseas investments have also encouraged Japanese investors to come to Vietnam.
Khuong said Japanese investors had high expectations about the recovery of the local property market particularly because the Vietnamese government had pledged to take measures to prop up the market.
Japanese investors make decisions based on the parameters of crowded markets, stable economic growth and rising income per capita and often conduct thorough research before investing, Khuong said. They only invest in areas with long-term potential.
Other experts said Vietnam’s realty market was attractive to Japanese investors because Vietnam was an emerging market with a golden population structure, low labor costs and strategic position.
Regardless of the global financial crisis, Vietnam still ranks 4th among the most attractive emerging markets to foreign investors, according to the Association of Foreign Investors in Real Estate (AFIRE).
Khuong said another reason was the strategic partnership between the two nations. When Japanese investors arrive in Vietnam, they are provided sufficient information and protected by the two governments.
Despite certain shortcomings, Vietnam’s property market will see breakthroughs in the coming time with the arrival of Japanese investors, Khuong said.
He said many partnerships were being negotiated. Office buildings, commercial centers, industrial parks and new urban areas will attract the most attention of Japanese investors.
T.T