Nguyen Hoai Nam, CEO of Berjaya Vietnam, on March 4 denied rumors that the company--a subsidiary of Berjaya Land Berhad in Malaysia, has decided to return two large-scale property projects in Ho Chi Minh City but confirmed downsizing its investments in an ailing real estate market in Vietnam.
Nam said that the company was over-optimistic when starting the Vietnam Financial Center in District 10 in Ho Chi Minh City. After several buildings were constructed in District 1--providing large retail spaces for lease--the company realized that it would not be able to compete with those in the downtown area. Therefore, the company had to adjust the design of Vietnam Financial Center from five 48-storey towers to two towers and a lower area serving as a shopping center later.
The new design which reduced the area for offices, apartments, and hotel rooms, was considered to be suitable with the current market demand. Hence, according to the original design, the project would cover an area of 600,000 square meters, but now the construction area had declined by half, dragging total investment capital down in tandem.
Nam said that his company had presented the new design to the City People’s Committee and was awaiting permission. He affirmed that the project will be carried out immediately on approval as his company had paid VND1 trillion for land rental five years ago and has just built a school at a cost of more than US$3 million recently, in District 10.
The 8.1-hectare Vietnam Financial Center project was licensed in February 2008 with a total investment capital of $930 million. The area is enclosed by Cao Thang, 3 Thang 2, and Le Hong Phong Streets in District 10. The project was expected to break ground in 2010 after site clearance finished but it has stood still since then.
In 2008, the City also licensed the company’s Vietnam International University Township which was funded at a cost of $3.5 billion and covers an area of 925 hectares in Hoc Mon District. According to the design, the investor will use more than 100 hectares to build the most modern training center in Southeast Asia.
Besides universities, the township will also provide 20 more schools of kindergarten, primary and secondary grade level. The rest of the area will be a complex zone, including residential areas, an administrative and culture center, a 15-hectare medical center, physical training center, entertaining center, and a park.
Nam said that the company had paid compensation for 200 hectares of land but it was drawing a new investment plan. If the company pays compensation for 900 hectares of land at once, it will not be able to start construction on the entire area instantly but will have to bury a large sum of money. So the company planned to ask for permission to construct on an area of 150 hectares first.
As for 11 projects that Berjaya has been investing in Vietnam, Nam said that two five-star hotels, a four-star hotel, and a securities company were in operation. The apartment project in Hanoi was almost complete but only 20 percent of houses were sold. Even in the Bien Hoa City Square only 50 percent of houses have been sold.
Late in 2012, the company returned the Nhon Trach New City Township project to Dong Nai Province which was licensed in October 2009. The project, which covers an area of 600 hectares, was funded at $2 billion.