Japanese gear up to pour capital into VN real estate
It is expected that $2 billion worth of investment capital will be invested by Japanese in Vietnam’s real estate sector in the time to come.
Many of the developers of large-scale real estate projects recently are from Japan. Aeon Mall opened a new mall in Binh Tan district in HCMC, while Takashimaya, called the ‘new rising star’, has opened in the central business district.
Japanese have also jumped into the apartment, office and infrastructure development sectors. Toshin, the Japanese company that backs Takashimaya, plans to develop a $100 million project this year.
Meanwhile, Mitsubishi teams up with Vietnam’s Bitexco planning to develop a housing project capitalized at $290 million in Hanoi. Kajima, in cooperation with Indochina Capital, plans to buy the real estate projects with the total investment of up to $1 billion in the next 10 years.
Most recently, Lemongrass Master Fund announced the additional investment of $100 million into Son Kim Land after the first investment deal of $37 million in 2013.
Japan is now the second largest foreign direct investor in Vietnam, after South Korea.
By the end of November 2016, Japan had invested in 53 projects with total investment capital of $1.91 billion, or 4.5 percent of total FDI capital. Meanwhile, the figures were $8.2 billion and 16.1 percent for South Korea.
One of the biggest deals made by South Korean was the $382 million one in which Mirae Asset and AON BGN bought Keangnam Landmark 72 Building in Hanoi.
“Twenty years ago, Japanese investors did not have interest in the field,” Masataka Sam Yoshida from Recof said at the M&A Forum held last July. However, things are getting different. From 2015 to July 2016, Vietnam was the Number 2 among ASEAN countries in terms of Japanese M&A deals.
The Vietnamese market is now especially attractive to Japanese investors because the investment environment has improved considerably. Besides, Japan is now a big creditor which provides preferential ODA loans to Vietnam. With abundant capital, the investors have jumped into Vietnam’s real estate, the capital intensive sector.
According to Ben Gray from Cushman & Wakefield, the low borrowing cost in Japan and narrow profits have prompted investors to pay attention to the real estate sector which can bring high profits in Vietnam.
In the ‘real estate game’, Japanese are expected to have great advantages as Japan has made heavy investments in infrastructure in Vietnam. The city’s authorities last May asked the government to consider appointing Toshin, which represents a group of investors, to implement the Ben Thanh underground shopping mall project.
Thanh Mai, VNN