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CapitaLand to establish new $500 million fund

Released at: 15:30, 23/11/2016

CapitaLand to establish new $500 million fund

Photo: CapitaLand

$500 million fund to start next year and invest in commercial property.

by Do Huong

CapitaLand will establish a $500 million fund next year to invest in commercial property, primarily in Ho Chi Minh City and Hanoi.

“Given the mismatch between demand and supply, the Group sees strong demand in the Grade A office sector, particularly in Ho Chi Minh City,” a CapitaLand spokesperson told VET.

“We see opportunities in the commercial space in Vietnam so we are prepared to take a position,” President and Group Chief Executive Lim Ming Yan said on Straitstimes.com. “I think the general trajectory for Vietnam is favorable and we foresee that this trend will continue for at least the next ten years.”

Seed projects for the new commercial fund have been identified and the group is in talks with capital partners. Mr. Lim said. “If you talk to many of these sovereign wealth funds and pension funds, they feel they are underexposed to Asian real estate at this point and are prepared to allot more capital,” he explained.

This will be CapitaLand’s second investment fund in Vietnam, after a $200 million fund launched in 2010 that has been fully invested in the development of three residential projects in Ho Chi Minh City and Hanoi. Capital partners were sovereign wealth fund GIC and Mitsubishi Estate Asia.

The developer has set a target of raising funds with total assets under management (AUM) of up to $10 billion from various private investment vehicles by 2020. CapitaLand Vietnam aims to grow its funds under management to $1 billion by next year to support the group’s AUM goals.

It also plans to acquire more sites in Vietnam for residential development - possibly yielding 2,000 to 2,500 units - as demand for housing is expected to increase amid rising urbanization and a growing middle class.

There are many opportunities to acquire land and CapitaLand Vietnam is focusing on sites within a ten-minute radius of metro lines. It has launched nine residential projects with more than 9,100 units in Ho Chi Minh City and Hanoi.

Eighteen of the 30 units launched at the 102-unit D1mension - a residential project in Ho Chi Minh City’s prime District 1 - had been sold as at the end of October. CapitaLand, which also marketed the project in Singapore, intends to launch more units in Vietnam next month.

The company said it had sold 656 out of about 1,700 units of its Vietnamese stock as at the end of the third quarter, for a total sales value of $114 million.

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