Keppel Land expands in Vietnam

Of all the Singaporean companies in Vietnam, few have more confidence in the long-term future of Indochina’s largest country than Keppel Land (KepLand), the property arm of one of the island’s largest conglomerates, Keppel Corporation.

It’s putting its money where its mouth is with its plans to invest $1 billion in Vietnam’s tallest building, an 88-storey complex of shops, offices and residences in the commercial capital of Ho Chi Minh City.

It is, by far, the biggest Singapore-based landlord in Vietnam, with more than 25,000 homes in the pipeline in not only Ho Chi Minh, but also in Hanoi and elsewhere in the country of 86 million people.

“Vietnam is where China was 10, 15 years ago; a country with a rapidly growing middle class,” says Mr Linson Lim, KepLand’s chief representative in Vietnam.

Like many others, Mr Lim thinks the current slowdown of the Vietnamese economy is a temporary phenomenon and that the long-term picture is still bright.

“Much of the weak sentiment is due to the high inflation, but the government appears to have inflation under control now. In the last few weeks, the stock market has shot up quite a bit, with the VN Index rising from about 430 points to about 580 points now,” said Mr Lim.

The Vietnamese stock market was the world’s fourth-worst performer this year, with the VN Index falling from 900 points at the end of last year to just over 366 points on June 20 of this year.

Stock market guru Mark Mobius is also optimistic about the Vietnamese market and was reported to have said at the opening of his Templeton Asset Management’s office in Ho Chi Minh last week: “Vietnam’s stock market now is down, so there are more opportunities … The market will go up and will be much more valuable in about three years.”

This confidence is boosted by the continued flood of foreign direct investment promises, which totalled over US$40 billion ($56.6 billion) in the first seven months of the year.

Despite the weaker property market, Keppel is not delaying any of its projects in Vietnam.

The showflat for KepLand’s The Estella development, which is expected to yield up to 1,500 high-end apartments, was fairly teeming with young potential buyers during a visit to the site a fortnight ago. The company has sold more than half of the 500 units of its first phase it put up for sale a month ago at prices between US$2,000 and $2,300 per sq m.

Singapore developers like KepLand are known for putting up quality projects – KepLand’s sold-out gated waterfront project called Villa Riviera, which is in the choice District 2 sector and comprises 101 villas. Prices are now double what they were in 2007 when the project was completed.

With a presence in Vietnam since the early 1990s, KepLand has built up a vast landbank of choice projects, including a 64-hectare site in the heart of Ho Chi Minh called Saigon Sports City, which will be home to a fully integrated residential, commercial and sporting complex with about 3,000 high-rise apartments. One of the conditions imposed on the site was that KepLand use 14 hectares of the land for a public sports complex. “It’s also our way of thanking the Vietnamese people for their hospitality,” Mr Lim said.

“Leveraging KepLand’s first-mover advantage and established network, we have built up a sizeable portfolio of residential developments and townships for a strong pipeline of homes to meet genuine demand for quality housing in Vietnam. They are all on track and in various stages of development. In fact, we have obtained investment licences for our Dong Nai Township and residential developments in Districts 7 and 9, for which we hope to launch the first phases,” Mr Lim added.

In fast-growing Dong Nai Province, KepLand is developing a township on a vast 509-ha site. Leveraging on a 2km frontage along the Dong Nai River will be 14,000 homes with commercial and public amenities.

The current shortage of office space has spurred the company to embark on two huge multi-purpose towers, one 88-storeys high and the other 66-storeys high, adjoining its Saigon Centre in Ho Chi Minh’s central business district. “There’s a severe shortage of Grade-A office space in Saigon with rentals now at up to US$60 per sq m,” says CB Richard Ellis (Vietnam) managing director, Mr Marc Townsend.

In the southern city of Vung Tau, 130km from Ho Chi Minh, KepLand has built the 10-storey PetroVietnam Towers, which has attracted office tenants from the petrochemical, oil and gas and finance industries.

Apart from homes and offices, KepLand also operates its Sedona serviced apartments in Hanoi and Ho Chi Minh.

“Keppel Land is one of the few foreign developers with a proven and successful track record in Vietnam for a diverse portfolio of properties ranging from residential, serviced apartments to international standards office developments. This stands us in good stead to continue to be the developer of choice amongst home buyers, international tenants and customers,” Mr Lim noted.

Source : Today – 28 Aug 2008

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