Long beach real estate agent

When enterprises fail to realize their commitment of interest payment, investors would be on the losing side.

Lack of attention from regulators has resulted in the market being flooded with corporate bonds of three Nos: no credibility rating, no guarantee asset, and no payment guarantee, according to economist Dinh The Hien.

Hien made such comments when there has been a growing trend of real estate firms issuing corporate bonds with high interest rates to attract investors – which is currently seen as one of the fastest ways to raise fund in Vietnam.

Corporate bonds from real estate firms remain a risky business for investors. Photo: Tieu Thuy

For the banking sector and other fields, corporate bonds are offered with interest rates of 7-8% per annum, but real estate firms coming up with much higher rate of 11-13%, or even 18% in some case.

“For this chaos, the loser would ultimately be investors,” Hien told Hanoitimes .

“Without guarantee asset, corporate bond is actually a debt note, while enterprises’ payment capability is dependent on their operation efficiency and financial status,” Hien added.

These bonds, estimated at VND120 trillion (US$5.23 billion) in 2020, or 65.6 of the totals, are not guaranteed and pose major risks for investors.

For corporate bonds associated with stock guarantee, Hien said it still remains risky for investors as in a crisis situation, all these stock value would go downhill in no time.

“Corporate bond is not for individual investors, as they are often issued for long-term of up to five years, and investors could not withdraw in case of urgency,” Hien stated.

“When enterprises fail to realize their commitment of interest payment, investors would be on the losing side.”

Vu Duc Thanh, an individual investor at District 2, Ho Chi Minh City, told Hanoitimes of his purchase of corporate bonds from a property development firm worth VND8 billion (US$350,000) five months ago.

“This enterprise is now unable to pay the interest rate, and for us, we cannot withdraw out money,” Thanh said.

A report from SSI Research revealed in 2019, real estate firms mobilized a total of VND57 trillion (US$2.48 billion) via corporate bonds issuance and accounted for 19.25% of total value in the market.

However, the figure for the first two quarters of 2020 was equivalent to 80% of total amount for 2019, of which corporate bonds without asset or stock guarantee stood at nearly VND63 trillion (US$2.74 billion), or 34.5% of total bonds issued.

Last September, Apec Group, owner of real estate projects in cooperation with US-based Wyndham, offer their corporate bonds with interest rate of 18% per annum. Other firms also provide their respective bonds with attractive rates, including TNR Holdings (10.9%), Sunshine Group (11%), or Van Don Tourism Development and Investment (10.5%).

Chairman of the Ho Chi Minh City Real Estate Association (HoREA) Le Hoang Chau said such high interest rates are kind of “bait” from bond issuers to convince investors to put their money on.

“Even firms issuing bonds with guarantee assets being future projects are already risky enough, it is needless to say regarding those without any guarantee at all,” he said, adding investors that only go for high interest rates would be at huge risk.

Banking expert Nguyen Tri Hieu told Hanoitimes said along with stronger measures from competent authorities to ensure healthy development of the bond market, a secondary market for corporate bond is needed to boost bond’s liquidity.

“Profit for investors at that time would not only come from interest rates, but also from the difference between selling and buying prices of bonds in the secondary market,” he noted.

Dat Xanh Services will offer 71,66 million shares at its IPO

From March 31, 2021, Dat Xanh Real Estate Service JSC officially launched an initial public offering (IPO) together with listing shares on the Ho Chi Minh City Stock Exchange in order to increase transparency in the operations and business activities of the company, creating favourable conditions and diversifying methods of capital mobilisation in the stock market. The company will use the entire amount raised from the issuance to serve the company’s operations and business activities.

The specifics are as follows:

1.Stock name: Dat Xanh Real Estate Service Joint Stock Company.

2.Stock type: Common stock.

3.The number of shares offered: 71,660,228 shares, of which:

a.Number of shares offered by the issuing organisation: 35,830,114 shares; accounting for 11.11 per cent of the number of shares of the same type in circulation

b.The number of shares offered for sale: 35,830,114 shares.

i.In which:

1.The ratio of the number of the shares offered for sale and the total number of shares owned: 13.20 per cent

2.The ratio of the number of the shares for sale and the total number of outstanding shares of the same type of public company whose shares are offered for sale: 11.11 per cent.

4.Offering price: VND32,000 per share.

5.Total value of expected mobilised capital: VND2,293,127,296,000, in which:

a.The value of capital raised by the issuer: VND1,146,563,648,000;

b.Value of capital collected from shareholders: VND1,146,563,648,000.

6.Distribution method: Through the issuing agent.

7.Minimum subscription amount: 1,000 (one thousand) shares, registered in multiples of 100 shares.

8.Time to receive subscriptions: From March 31, 2021 to April 19, 2021.

9.Time to receive stocks purchasing payment: From March 31, 2021 to April 19, 2021.

10.Where to register to buy shares:

– Viet Capital Securities JSC (VCSC)

– Ho Chi Minh City Securities Corporation (HSC)

– MB Securities JSC (MBS)

– Mirae Asset Securities (Vietnam) LLC (MIRAE ASSET)

– SSI Securities Corporation (SSI)

– VNDIRECT Securities Corporation (VNDIRECT)

– Yuanta Securities Vietnam Limited Company (YUANTA)

– VPS Securities JSC (VPS).

11.Blocked account to receive shares purchasing transfer:

– Name of account: Dat Xanh Real Estate Service JSC

– Account number: 113 002 873 493

– Operated at: Vietnam Joint Stock Commercial Bank for Industry and Trade – Thu Thiem branch.

12.Location of prospectus announcement and offering documents:

Website of Dat Xanh Real Estate Service JSC:

https://datxanhservices.vn/cong-bo-thong-tin/

Website of Group Dat Xanh Real Estate: www.datxanh.vn

The Long Thanh International Airport and associated transport infrastructure have provided momentum to the property market in HCM City’s eastern region.- VNA/VNS Photo

In particular Aqua City ecological urban area has become appealing thanks to its connectivity, standardised planning, convenience, and ideal geographical location.

The first phase of the Long Thanh Airport project began early this year. It is scheduled to open no later than 2025, with an initial annual capacity of 25 million passengers, eventually rise to 100 million.

Centennial growth momentum

Designed to meet the 4F level, the highest of its kind set by the International Civil Aviation Organisation (ICAO), Long Thanh is projected to serve as an aviation hub, both regionally and globally.

Once operational, it will ease existing airport congestion, pave the way for investment and tourism, and contribute 3-5 per cent of the country’s GDP.

Major infrastructure projects such as airports have always helped give a facelift to urban areas. They also facilitate production and business, and trade and tourism, while forming a busy residential community. The central city of Da Nang and the island district of Phu Quoc in the Mekong Delta province of Kien Giang are examples of this.

Many airport-based urban models have been created globally, contributing to local economic, trade, and tourism development, with Amsterdam Schiphol in the Netherlands an outstanding example.

The Long Thanh International Airport is connected with urban areas and economic zones, so is expected to drive investment and economic development in the southern region.

The project will also give a boost to component projects like warehouses, transport infrastructure, services, and satellite urban areas, leading to an increase in land demand.

Real estate consultancy Savills said the southern province of Dong Nai should reach a new level of development, with a more international focus instead of relying on industry and services, as has long been the case.

It suggested the province develop a closed-loop industrial chain, from production to logistics, and warehouses and transportation to deep-water ports.

The establishment of Thu Duc City in 2021 has also given a facelift to the local area and increased housing supply in HCM City’s eastern area. The scarcity of real estate in the city prompted investment in adjacent provinces such as Dong Nai and Binh Duong, which will spur the market this year.

“The recent positive signs from key infrastructure projects like the construction of the Long Thanh International Airport and the establishment of Thu Duc City will create momentum to restart the market,” said Duong Thuy Dung, Senior Director of CBRE Vietnam.

Anticipating investment waves

To optimise such opportunities and complete the infrastructure network connected with Long Thanh, Dong Nai authorities have begun the construction of transport projects such as Huong Lo 2 and the Bien Hoa-Vung Tau Expressway.

The province has also proposed building two routes leading to the airport: a 3.8-km route running from National Highway No 51 to the airport, and another, measuring 3.5 km, from the HCM City-Long Thanh-Dau Giay Expressway to the first route, running in parallel with National Highway No 51. The total funding for the two routes has been estimated at more than VND4.8 trillion (US$209.46 million).

Located within the open urban-economic area in the southern part of Bien Hoa city, Aqua City, invested by Novaland, has found favour among both buyers and investors thanks to its ideal geographic location and scientific planning.

Covering 1,000 ha, it lies on Huong Lo 2, linking National Highway No 51 and the HCM City- Long Thanh-Dau Giay Expressway.

Located within Aqua City, the urban island of Phuong Hoang opened late last year and has proven its attractiveness thanks to its natural surroundings.

With its unique advantages, from location to planning, Phuong Hoang and Aqua City are expected to rouse the real estate market in HCM City’s eastern area in the time ahead.

DKRA Vietnam JSC said street houses and villas are moving towards areas adjacent to HCM City that boast abundant land funds and convenient infrastructure.

As such, Dong Nai expects to continue making up a large share of supply this year. Major projects on hundreds of hectares each and with scientific planning, like Aqua City, will further catch the attention of customers thanks to their potential for high growth values.

Land and property prices are pushing upwards in areas such as Long Bien and Hadong in Hanoi. Photo: Duc Thanh

Thu Huong recently returned to work as a freelance broker when she realised the rising attraction of land and property in the outskirts of Hanoi.

She explained that her former company used to sell apartments, land plots, and adjacent villas in Hadong and Hoang Mai districts. These areas are far from the city centre and were offered at a more reasonable price range, targeting mostly homebuyers looking for a place to live. However, a few months ago, these and neighbouring suburban districts like Hoai Duc and Dong Anh suddenly heated up.

“A few years ago, vacant lots next to the abandoned villas of the Geleximco project on Le Trong Tan street in Hadong district were hard-pressed to get customers’ attention but have doubled or even tripled in price since then. Most shophouses are priced at around VND120-130 million ($5,200-5,650) per square metre, while apartments fetch VND25-27 million ($1,000-1,200) per sq.m,” said Huong.

Meanwhile, brokers offer residential land in the area at VND60-70 million ($2,600-3,000) per sq.m depending on proximity to the main road. In peri-urban villages such as Tay Mo (South Tu Liem district), Vinh Ngoc (Dong Anh district), and La Duong, La Phu (Hadong), prices range from VND25-50 million ($1,000-2,200) per sq.m. Some areas such as Kim Chung-Di Trach (Hoai Duc district) now come at up to $2,200 per sq.m and continue to fluctuate by day, while one square metre of residential land in An Khanh, An Thuong, and Van Canh (Hoai Duc) can fetch over $3,500.

“Estate transactions are bustling, and many older projects that could not be filled for 10 years are now almost completely sold out,” said Huong.

Explaining this increase, Nguyen Thi Hong Van, associate director of Valuation Services, Savills Hanoi, said inner-city land funds are growing gradually limited and complicated investment procedures have reduced investors’ interest. Meanwhile, infrastructure at peri-urban areas is rapidly improving, making these areas more appealing to investors. However, she warned prices are moving at a wide spectrum in these areas so buyers should make thorough comparisons and estimate the correct value of the property before entering into a transaction.

Indeed, investors and property buyers’ have been turning to peri-urban areas with a lot more gusto since Hanoi announced the master plan of Hoa Lac Urban Area last July. This has had a buoyant effect on property prices in villages and communes around the capital. Additionally, prices in Dong Anh, Gia Lam, Thanh Tri, and Dan Phuong districts (all just outside Hanoi) started to increase after the investment project was approved to build these four districts into urban hubs from 2025. In areas in Dong Anh district where Lien Ha, Duc Tu, and Thuy Lam industrial clusters will be established, prices have also received heavy upward momentum.

Recently, as rumours took flight about the Red River urban zoning plan being approved and issued by Hanoi in June, land prices in neighbouring areas began shooting up.

Last week, prices at the riverside areas of Xuan Canh commune, Dong Anh district fluctuated around VND17-18 million ($740-780) per sq.m. Since then, however, they have risen to VND28-30 million ($1,200-1,300). Nguyen Van Minh, a real estate broker in the area, shared that he had just dealt with a customer of a nearly 200sq.m of land with the price of VND28 million per sq.m, only to be offered VND30-35 million ($1,300-1,500) by someone else.

At another land lot near the Red River dykes, adjacent to Vinhomes Co Loa, Minh said that offer prices have nearly doubled, reaching $2,200 per sq.m and by the time the project breaks ground, they could reach as much as $3,500.

Land prices in neighbouring areas such as around Thach Cau street in Long Bien district also increased by about $130-220 per sq.m compared to last year. Many plots along the Red River in the district’s Ngoc Thuy ward are offered at similar prices, two or three times as much as before. Linh Nam ward of Hoang Mai district has been quite active with prices along the main road at VND65 million ($2,800) per sq.m, while properties on smaller streets and alleys are offered for VND35 million ($1,500).

The buoyant effects have in fact been rubbing off in a radius of 50km of Hanoi, with the prices of residential land steadily increasing, especially in provinces that have many industrial zones with modern infrastructure such as Bac Ninh, Bac Giang, Hai Duong, Thai Nguyen, and Ha Nam.

Vietnamese real estate goes global

The first branded apartments of Grand Marina were purchased by customers of the Asia Bankers Club with a starting price of $1 million, equivalent to a unit price of $18,000 per square metre. This price is significantly higher than other luxury apartments in Ho Chi Minh City with an average price of nearly $7,000 per sq.m, according to CBRE Vietnam’s 2020 Real Estate Market Spotlight.

Artist’s impression of Grand Marina, Saigon designed to Marriott standards

However, this price is comparable to those of branded real estate projects in the region such as The Residences at Mandarin Oriental in Bangkok and The Residences at the St. Regis Singapore. On the other hand, compared to Hong Kong – one of the most expensive housing markets in the world – this price is significantly lower than the unit price of the city state’s luxury segment, estimated at an average of $46,800 per sq.m, according to Savills.

The potential of Vietnam’s real estate is catching the attention of international investors

The emergence of a new real estate model in Vietnam – the urban branded real estate – has caused the price of luxury apartments to jump and catch up with other countries in the region. With the endorsement of global brands, Savills’ Branded Residence 2020 report stated, “The average price difference of the branded real estate market and the unbranded luxury real estate is about 31 per cent.”

The Asia Bankers Club announced that many customers have boldly decided to invest in Grand Marina, Saigon, although they did not have the opportunity to visit the project or a model house.

Kingston Lai, founder and CEO of the Asia Bankers Club said, “The project is backed by the Marriott International brand, which has created confidence for customers. Moreover, in the context of the global economy, Vietnam is the only Southeast Asian country to record GDP growth in 2020 and is forecasted by the World Bank to increase its GDP by 6.81 per cent in 2021. Vietnam’s real estate market is emerging as a bright star, promising growth and opportunities for foreign investors like those from Hong Kong.”

The South China Morning Post wrote, “Vietnam to host Marriott’s largest branded residence project as investors bet on Southeast Asian nation’s stellar growth.” The article reports that Marriott International is making a foray into Vietnam’s branded real estate sector, starting with Grand Marina, Saigon.

The success of the Grand Marina, Saigon launch event in Hong Kong is a milestone marking the success of a new export product – branded apartments, in addition to long-established products such as rice and coffee. The appearance of the Marriott International brand in the segment has placed the Vietnamese real estate market on the world map and caught the attention of foreign investors.