Foreign investors rush to develop low-cost apartments in HCM City

The HCM City real estate market has for the first time, for example, seen Taiwanese investors ‘squeezing’ into the low-cost housing market.
 
The apartments at Vision project, located in Binh Tan district, developed by Dacin, an investor from Taiwan, were launched in mid-2016. 
 
With the price of VND15 million per square meter, one 45 square meter apartment sells for VND650-680 million, depending on the position. The products target buyers with medium incomes who have real demand for accommodations.
 
In September 2016, The Global Group, a Japanese real estate developer and manager, signed a cooperation contract with Vietnamese Nha Mo JSC under which The Global Group would pour $50 million into projects under construction.
 
In addition to the capital contribution, Global has also engaged in project development and Japanese standardized construction technology transfer. Nearly 1,000 apartments in district 8 with the starting price of VND868 million are part of the cooperation contract.
 
Global’s president Hidekazu Nagashima said the Vietnamese real estate market shows great potentials and has similarities with the Japanese market some decades ago. The company spent time to learn about every project of the Vietnamese partner before making the investment decision.
 
In the last decade, foreign investors poured money into mid- and high-end real estate projects, but today Japanese, South Korean, Taiwanese and Malaysian prefer developing affordable products priced below VND1 billion.
Another Japanese investor – Hankyu Realty – now joins forces with Nam Long Investment JSC to develop a series of housing projects with the apartments priced at around VND1 billion in the eastern part of HCM City. The projects include Flora Anh Dao and Flora Fuji, while it is considering the third project – Glora Kikyo.
 
The apartments that attract Japanese investors have the selling average price of VND1.5 billion, while 10 percent of which are priced at below VND1 billion.
 
N.H.O, the investor from South Korea, has sold the apartments at two projects in Thu Duc and district 9 with the starting price of VND900 million.
 
Nguyen Anh Dao, CEO of Viethome, said many foreign investors from Japan, South Korea, Malaysia and Taiwan have recently joined the low-cost market segment. 
 
According to Dao, foreign investors are doing so because the demand for such products has been increasing rapidly in urban areas. Also, low-cost projects have lower risks and the investment capital is recouped more quickly thanks to high liquidity.
 
High-end products bring higher profitability than other property products, but the demand for expensive products is limited.