Vietnam Daily News

Office buildings on sale in HCM City

Written by Dailynews.vn Saturday, 10 December 2011 17:22

The office-for-lease market in HCM City has seen a series of project transfer projects in the recent years and the trend is increasing in the current difficult context when many projects are in negotiations and will be changed in terms of owners, according to the Saigon Economic Times.

Actually, the M&A deals of property projects are common in business when investors gained expected profits. However, the economic crisis pushed many investors to fall in financial hardships, which was one of factors forcing investors to seek partners for transfer. Due to this, the project transferring market is getting busy.

Notably, it took one year for the consulting firm Jones Lang LaSalle Vietnam to complete the deal of transferring Centre Point office building in Nguyen Van Troi St Phu Nhuan Ward, HCM City from the investor Refico to a Japanese property investment fund.

Yet, the fund has decided to hire Jones Lang LaSalle Vietnam in seeking a buyer to transfer the building after almost 7 months from the repurchase deal.

David Lyons, general director of Jones Lang LaSalle Vietnam said that the decision was made based on the deadline of closing the fund in Q1 of 2013 so the fund is divesting capital from all investment projects.

The matter is whether the fund is able to find another prospective investor to transfer this project or not while the office-for-lease market is suffering much pressure of price discount as well as difficulties in seeking renters.

Lyons added, the transfer is the fund's investment strategy and now the leasing capacity in Centre Point building is almost 100 percent, much higher than previous period. Thanks to the effective management helping reduce costs and increase revenues, the fund will likely earn profits as transferring the project.

According to him, the brokerage Jones Lang LaSalle Vietnam is working with three investors from Japan (1) and Singapore (2) on the transfer deal.

In another deal, Royal Tower trade centre and office building in Nguyen Luong Bang St, Phu My Hung urban area is also seeking the help of other investors to complete the work via the brokerage of Jones Lang LaSalle Vietnam.

80 percent of workload of the 21-storey Royal Tower with total floor area of 41,000 square meters (consisting of 17 offices for lease and four retail floors) has been finished. It will be completed in next 6 months.

As stated by Jones Lang LaSalle Vietnam, the investor of this building is a local firm who is seeking to cooperate with the investor who has financial strength and experiences in managing office building.

Investment in available projects is also an option of foreign investors who do not have offices in Vietnam and experiences in contractor management in the country. Instead of spending on establishing offices, these investors only need to invest in available buildings to minimise risks. There are three foreign investors paying attention to Royal Tower, according to the general director of Jones Lang LaSalle Vietnam.

Market observers said that selling back real estate projects is attributed to lack of experiences in developing projects and pressure of repaying bank debts.

Uncompleted Lam Son Square retail and trade centre complex in Vung Tau City, thanks to the brokerage of Jones Lang LaSalle Vietnam, reached the partner for transfer. The 8-storey complex was invested by a local firm in venture with a Vietnamese overseas investor. Only two stories of this building were finished and investors are seeking buyers with a price of $10 million.

Similarly, Vingroup lately announced it would transfer whole office block B of Vincom Centre Hanoi in Ba Trieu St, Hai Ba Trung Ward to Vietnam Technological Commercial JS Bank (Techcombank). Previously, the group had sold Block A to Bank for Investment and Development of Vietnam (BIDV).

The market also started to see office wholesales [selling whole floor instead of monthly leasing. For example, Petroland Tower in Phu My Hung urban area (Dist 7, HCM City) was operational from December 2, but around 80 percent of total 30,500 square meters of office-for-lease area has been sold to the companies with strong finance.

The developer Petroland said 17 of 21 stories of the tower were sold at 37 million dong per square metre and the method has been applied since the work was started.

Petroland will sell back 10 stories of office building totalling over 2,800 sqm in Truong Dinh St, Dist 3, HCM City but the particular price has not been announced.

In other markets, investors of trade centre or office buildings used to sell projects as the projects were performing well to take capital to invest in others. But the trend is increasing in Vietnam recently.

Source: www.intellasia.net/news/articles/business/111350352.shtml