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Hoa Sen pushing into real estate

Released at: 07:13, 21/07/2016

Hoa Sen pushing into real estate

Photo: Duc Anh

Giant steel maker has been promoting its investments in tourism real estate in recent times.

by Ngoc Chi

Steel-maker the Hoa Sen Group (HSG) is now stepping up its investments in real estate after unsuccessfully attempting to enter the sector seven years ago.

HSG has poured significant sums into tourism real estate in recent times, which is considered a “gold mine” by many real estate giants, and reflect its ambition to become a major investor in resort real estate.

At the end of May it invested VND1.2 trillion ($54.5 million) in a four-star hotel in northern Yen Bai province. “Hoa Sen Yen Bai is the first tourism, service and real estate project of the group, marking a new step in a completely new business sector,” it said in a press release at the time.

Covering 1.5 ha, the project is expected to be completed by 2020 and will be the largest international-standard hotel and commercial center in the province, with a 15-storey building that will include a four-star hotel, a business center, a conference center, a restaurant, a café, and luxury apartments.

The steel giant has also established four subsidiaries to invest in real estate: Hoa Sen Yen Bai Co., Hoa Sen Hoi Van Co., Hoa Sen Van Hoi Co., and Hoa Sen Quy Nhon Co. HSG holds 70 per cent of Hoa Sen Yen Bai and Hoa Sen Hoi Van and 45 per cent of the other two companies. The remaining shares in the four subsidiaries are held by HSG Chairman Mr. Le Phuoc Vu.

The vegetarian Chairman has told local media of his plans to invest in other projects in Yen Bai. In particular, the group will invest in a spiritual resort on an area of 1,000 ha, including the 400-ha Van Hoi Lake. HSG will also build a hotel and resort complex in south-central Binh Dinh province.

According to real estate experts, HSG’s investments in tourism real estate at this time make perfect sense. Ms. Duong Thuy Dung, Associate Director and Head of Research and Consulting at CBRE Vietnam, told local media that 2016 is a key time for the resort real estate market.

“The growth in tourist numbers to beach resorts is very positive,” she was quoted as saying. “HSG has captured this positive sentiment to invest in resort real estate.”

HSG first stepped into real estate in 2009, investing in the Phuc Thanh Dien residential project in District 9, Ho Chi Minh City. Two years later it then invested in two other apartment projects in District 9 - Hoa Sen Phuoc Long B and Hoa Sen Riverside Apartments.

The investments, however, came at a time when Ho Chi Minh City’s real estate market was in decline. In 2011 HSG announced its withdrawal from the real estate market after results were not as expected.

Steel sheet manufacturing remains its core business. On July 15 the group announced it would seek shareholders’ approval at an extraordinary shareholders meeting on September 6 to take over a 6-million ton steel mill at the Ca Na Industrial Park in the south-central province of Ninh Thuan.

The group has estimated that total investment capital for the delayed project would be some $3.8 billion. The 6-million ton mill would bolster HSG’s total capacity significantly.

Established in August 2001, HSG is now among the leaders in steel sheet production and trading in Vietnam and Southeast Asia. Its products have a domestic market share of 40 and 20 per cent in steel sheet and steel, respectively, and its products are present in over 60 countries and territories around the world.

The group owns numerous steel and steel sheet manufacturing plants in Vietnam. On March 17 it held a breaking ground ceremony for the Hoa Sen Ha Nam steel mill at the Kien Khe I Industrial Cluster in the northern province of Ha Nam.

In January it began construction of the Hoa Sen Nhon Hoi steel sheet plant at the Nhon Hoi Economic Zone in Binh Dinh province. The 12.4-ha, $89-million facility is expected to commence operations in June 2017 and supply 180,000 tons of galvanized steel sheets and zinc-aluminum alloys, 90,000 tons of color-coated steel sheets, and 200,000 tons of cold-rolled steel to domestic and foreign partners.

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