It's biggest market potential for group in S-E Asia outside S'pore, says CEO
CapitaLand Ltd, South-east Asia's biggest developer, is turning to Vietnam as growth slows in its home market of Singapore, after apartments at the company's first project in Ho Chi Minh City sold out in a day last June.
Demand for homes in the country of 85 million people is 'great' and supply isn't keeping up, CapitaLand chief executive officer Liew Mun Leong said.CapitaLand, with residential projects in 10 countries including China and Australia, is developing four sites in Vietnam, where it expects to build as many as 2,800 homes.
'Vietnam will be what I saw in China 10 years ago,' Mr Liew said in an interview in Singapore.
'The total picture in terms of economic growth is very, very strong. I'd say it's the biggest market potential for me in South-east Asia outside Singapore,' he said.
CapitaLand last week said fourth-quarter profit jumped 49 per cent, led by home sales in its three biggest markets: China, Australia and Singapore.
The developer is turning to fast-growing markets with slowing economic expansion back home where Singapore faces the risk of a recession this year.
Demand for homes in Vietnam has soared as overseas companies moved into the South-east Asian country after it joined the World Trade Organization in January 2007.
Foreign direct investment commitments increased to US$20 billion last year, from US$12 million in 2006, helping boost economic growth to the fastest in more than a decade.
'Vietnam is currently going through a huge growth in the economy, the government has been very pro- business and is welcoming foreign developers, so prospects are quite exciting,' said Wilson Liew, an analyst with Kim Eng Securities Pte in Singapore. 'The impact would be even more visible in the next few years.'
CapitaLand said in June more than 400 people lined up for 273 units on offer at The Vista, a 750-home project in Ho Chi Minh City. The apartments were sold by 2pm local time that day.
The second set of apartments released for sale at the development also sold out within a day, the company said. The homes were priced at between US$1,200 and US$1,600 a square metre.
CapitaLand said last year it may increase the number of homes it is building in Vietnam to 6,000 in the next three years. The company also may consider developing offices, shopping malls and leisure centers.
CapitaLand shares closed 12 cents, or 1.9 per cent, up to close at S$6.30, the highest in a week, after rising as much as 2.9 per cent. The Straits Times Index gained 0.6 per cent.
The Singapore-based developer also has expanded abroad by investing in a Tokyo project worth as much as US$1.5 billion with Mitsubishi Estate Co.
CapitaLand has spent 32 billion yen (S$417 million) for a 20 per cent stake in the project to build a 35-storey office tower and a 20-storey condominium, CEO Liew said on Feb 22 at a presentation.
Mitsubishi Estate, Japan's biggest builder by market worth, is leading the development at a golf driving range near the country's busiest train station, where construction is set for completion by 2011. Heiwa Real Estate Co also is taking part in the project.
CapitaLand is seeking to expand abroad as price gains in Singapore are expected to slow.
The government cut the city's 2008 economic growth forecast to 4 to 6 per cent earlier this month, from 4.5 to 6 per cent previously.
CapitaLand plans to offer at most 1,000 homes in Singapore this year, down from the 1,430 it sold last year. -- Bloomberg
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