Mr Lim Hua Tiong, General Manager, South Office, CapitaLand Vietnam spoke with VET about the company's upcoming developments.
CapitaLand Group is known for its prestigious high-end condominium projects, but in Vietnam, after completing a number of high-end projects it has recently built PARCSpring, which is in the affordable housing segment. Can you tell us why?
We realise that Vietnamese buyers are looking for a property of good quality that is within their budget. As a developer we build two types of products: in the high-end segment and in the affordable housing segment. The high-end segment gives us greater margins, while affordable housing generates lower margins. In building high-end products we contribute more to Vietnam’s economy because the project budget is larger. For example when we built The Vista we spent $200 million on construction materials and worker’s salaries. PARCSpring is our first affordable housing project in Vietnam. To be honest, we did not make much profit from the project. We launched PARCSpring in 2012, but due to difficult market conditions we stopped the launch in the same year. We continued to construct the project, however, with additional capital from our Singapore Head Office.
Mr Lim Hua Tiong, General Manager, South Office, CapitaLand Vietnam
Can you tell us more about PARCSpring and how affordable it is?
Firstly, I would like to share some of the project’s background. We bought it from a local developer. At that time the foundations had been completed. After buying the project we inspected the display apartment that had been built and realised it was larger than an actual apartment. CapitaLand is a prestigious Singaporean developer, so we want our homebuyers to trust us. We must have a display apartment that is exactly the same as an actual apartment. What they see must be what they get. So we convinced our partner to adjust the display apartment, which cost us money.
Secondly, I want to strengthen the lessons learned from this project. In the beginning we simplified the layout to save on construction costs in order to offer homebuyers as low a price as possible. In Singapore, an affordable apartment comes without facilities like a swimming pool, children’s playground or gymnasium. But Vietnamese homebuyers prefer to have all such facilities, even in the affordable housing segment. So we decided to sacrifice two apartments and build a gymnasium and outlay the funds to build a swimming pool. I am so proud to say that we will complete the project in April and so far the apartments have sold quite well.
How many units remain unsold at The Vista?
The Vista is a high-end project in District 2 in Ho Chi Minh City and homebuyers are very happy with it. Because the project has been completed and is able to demonstrate to buyers its high quality standards, homebuyers can taste and feel the actual atmosphere. They find The Vista to be like a resort. I would like to highlight that our sales services at The Vista are top-notch. When homebuyers receive their apartment we make sure that they are happy. If they find some problems we will resolve them immediately. In the contract, the guarantee period is 12 months, but after 12 months, if residents have a problem, we will find a solution to help them fix it. We partner with Savills to manage the building, but we also have a special team to support Savills to repair any technical problems.
What do you expect to see in Vietnam’s property market during 2014? And if the market turns bad, what is your strategy?
The property market remains challenging at this time and so is no easy task for my team. But we have advantages in the market, as all three of our projects are completed or to be completed by early next year. Buyers who plan to buy at our projects are able to visit the actual apartment, so they can feel and touch an actual product. If the market turns bad, we are a unique developer who holds advantages in partnering with the serviced residence, The Ascott. This is a wholly-owned business of CapitaLand Group and in Vietnam is very popular with the brand name Somerset. At The Vista we can convert 100 residential apartments into serviced apartments, managed by The Ascott. And we can also convert one tower to corporate leasing, managed by The Ascott as well. These steps give greater value to The Vista.
You said that this year is no easy task for your team. What can you tell us about your team in Vietnam?
The key to success lies in managing talent and not just property assets. The company’s credo of “Building for People to Build People, Building People to Build for People”, illustrates CapitaLand’s belief. Bad times, good times - once you have the human capital you can do a lot. If I get good people, even during bad times they will be able to solve problems. The company believes the challenging time represents an opportunity for a new generation of leaders to be trained within CapitaLand. The proportion of expatriate staff has fallen to just 5 per cent from 35 per cent when we first commenced operations in Vietnam in 2006. We have promoted young local talent to be heads of departments, such as sales and marketing, IT, investment and asset management, and human resources. Today, 70 per cent of department heads are Vietnamese, against 25 per cent in 2006.
- CapitaLand Group