Vietnam Daily News

More office building projects changing hands

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

The office-for-rent market in HCM City in the past few years has witnessed several project transfer transactions, and this trend will likely rise under the current tough market conditions, with a number of projects reportedly under negotiation to change hands.

Many investors have been running into financial problems due to the troubled economy, and thus seeking partners to sell their property projects. This has resulted in a more bustling market of project transferring.

A wave of project trading

The most notable transaction is the transfer of Centre Point office building project on Nguyen Van Troi Street, Phu Nhuan District. It took over a year for Jones Lang LaSalle Vietnam to settle down a stake transfer from project owner Refico to a Japanese investment fund.

However, seven months after its acquisition of the entire office building, the foreign fund decided to ask Jones Lang LaSalle Vietnam as a broker to look for another partner to transfer the project.

David Lyons, the country head of Jones Lang LaSalle Vietnam, said the investment fund planned to close in the first quarter of 2013, thus divesting capital in all invested projects.

It will be difficult, though, for the Japanese fund to find a potential investor to change hands, especially when the office-for-lease market is under pressure to offer discounts and struggling to find tenants.

In another transaction, the owner of the building office and commercial centre project Royal Tower on Nguyen Luong Bang Street in Phu My Hung was seeking another investor to join hands to finalise the project via the brokerage of Jones Lang LaSalle Vietnam.

At present, the 21-storey office building, covering 41,000 square meters with 17 stories for lease and four for retail, is 80 percent complete and may be fully ready within the next six months.

According to Jones Lang LaSalle Vietnam, the project owner being a local firm hopes to cooperate with an investor with financial potentiality and experience in office building management depending on the equity percentages.

The investment director of Jones Lang LaSalle Vietnam said that three foreign investors have shown interest in the project.

Investment in existing projects is an option for foreign investors who have yet to have Vietnam offices and experience in monitoring of construction contractors here. Market observers ascribed the lack of experience in project development and the pressure from bank credits to the trend of project transfers.

The commercial centre and retail project Lam Son Square in Vung Tau has recently hired Jones Lang LaSalle Vietnam to seek a partner to sell the half-done project in Bai Truoc area of Vung Tau for $10 million.

The project with eight floors developed by a local and overseas Vietnamese investor has two floors completed.

In another recent announcement, Vingroup said it would transfer the entire Tower B office section of Vincom centre Hanoi on Ba Trieu Street, Hai Ba Trung District to Techcombank. Previously Tower A had been sold to Bank for Investment and Development of Vietnam (BIDV).

Along with the transfer of entire projects, the market has also witnessed the wholesale of office floors, or strata sales, instead of monthly leasing.

For example, the Petroland Tower project in Phu My Hung new urban area starting operation last Saturday has around 80 percent of the 30,500-square-metre office space sold to financially-capable companies.

Petrocapital and Infrastructure Investment JSC (Petroland) said 17 of the 21 office stories had been sold at VND37 million per square metre. This method had been applied since the project's commencement.

Also, Petroland said it would sell the 10-storey office building on Truong Dinh Street, District 3 but did not inform the specific offering price for the 2,800-square-metre premises.

In addition, Jones Lang LaSalle Vietnam has revealed two other projects in Danang and HCM City are approaching buyers.

The property service company said project owners used to focus on leasing their office space rather than transferring their projects, whereas in other countries, office building investors often sell their products to recover capital for other investments. However, this seldom happens in Vietnam.

Source: www.intellasia.net/news/articles/business/111350373.shtml