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Leading the way

Released at: 23:35, 05/01/2015

Leading the way

The Hoa Binh Green City project has been surrounded by some debate but it's hoped to be the catalyst for the recovery of the luxury segment.

by Nguyen Quynh

When talking with VET about the prospects for Vietnam’s luxury segment, Mr. Jonathan Tizzard, Associate Director, Valuation Research at Cushman & Wakefield, said it’s true that the mid-end segment will continue to lead in terms of property transactions into the future but the luxury segment still has potential because there are more and more Vietnamese people with the financial capacity to buy an apartment of high quality in a convenient location and a reasonable price. Mr. Tizzard’s view is shared by many investors, including Mr. Nguyen Huu Duong, General Director of the Hoa Binh Co., Ltd, who is one of the investors of Hoa Binh Green City.

Hoa Binh Green City is jointly invested by Hoa Binh and the Agricultural Products Joint Stock Company, in the luxury segment and combining residential apartments with a commercial center. The project includes two blocks (H1 and H2) with 27-storey towers on 1.7 hectares and investment capital of VND1.5 trillion ($71.3 million). In 2011 about 17 per cent of its apartments were sold after sales began in late October. Block H1 was finished and handed over to buyers in July 2014, while construction of Block H2 continues and is expected to be completed in the middle of this year.

According to Mr. Duong, its Minh Khai Street location is the southern gateway of Hanoi, with easy access to industrial zones in Bac Ninh and Hung Yen, which makes it a good location for foreigners. He added that, due to the project’s quality meeting the living standards sought by foreigners and the amendments to the Law on Housing, allowing foreigners to buy housing in Vietnam and approved by the National Assembly in December, Hoa Binh Green City should attract more and more foreigners.

While he is confident about the project, industry experts said it won’t be easy for Hoa Binh Green City to attract foreigners because Minh Khai Street is not ideal place for them to live. A representative of the Hanoi Real Estate Club explained that most foreigners prefer to live in places that are quiet and have clean air, while Minh Khai is quite animated and not near the city center. 

Other experts, however, believe the project’s location is favorable. According to Mr. Pham Sy Lien, Vice Chairman of the Vietnam Construction Association, there are many investors from Japan and South Korea who work at industrial zones around Hanoi but want to live in the capital. “If a foreign investor has a factory in a Bac Ninh industrial park, for example, he may choose this area ahead of the city center,” he said.

Hoa Binh Green City is also known as a six-star project, with the quality fittings associated with a luxury residential apartment block. And having “green” as its main criterion will help to ensure Hoa Binh Green City makes a mark on the capital’s real estate market. But Mr. Nguyen Van Duc, Deputy Chairman of the Ho Chi Minh Real Estate Association, said that decor is not so important. “The main goals of a project are living space, not meticulous decoration,” he said. He also pointed that the word of “green” means friendly on the environment. “If a project abuses natural resources too much, it can’t really be called ‘green’,” he explained.

Although a prestigious investor in the real estate market, thanks to its development of the Somerset Hoa Binh Serviced Apartments in Hoang Quoc Viet Street and Hoa Binh Green Condominiums in Buoi Street, Hoa Binh was also entangled in a scandal relating to a construction made without a building license in 2013. The project was forced to stop by the Hanoi Department of Construction, before the company was issued with a license. Progress was delayed significantly and the investor had to arrange three construction shifts a day to meet the timeline agreed to with customers. Questions then arose at to whether quality was compromised as a result.

On December 16 the investors had finished the roof on the H2 block and announced that Hoa Binh Green City would open the V+ commercial center in early January. Mr. Duong also revealed that there will be more than 2,500 sq m of lease space at V+, with all lessees to be Vietnamese companies. When asked how many years it would take Hoa Binh to get a return on its investment capital from the commercial center, Mr. Duong told VET that the VND500 billion ($32.3 million) spent was an act of charity, not an investment. Many experts said that this is a way for Hoa Binh Green City to promote its image. For his part, Mr. Liem said that the project’s investors will not lose because once the retailers at the commercial center start to do well more and more people will know about Hoa Binh Green City.

It can’t be denied that Hoa Binh Green City is a popular project that promotes the image of its investor. But nobody knows what the future will hold. Looking back on the projects of the Tan Hoang Minh Group, it’s difficult to predict the prospects for Hoa Binh Green City. Tan Hoang Minh declared it would add to the luxury segment with buildings in “golden” locations around Hanoi. Due to fluctuations in the real estate market, however, it lacked the financial capacity to do so and its projects have now been suspended for quite a while. It recently returned to the real estate market and changed the project’s names of D.’ Sans Raffles, D.’ Le Roi de Soleil, and D.’ Palais de Louis into Vietnamese in order to attract renewed attention.

Ms. Hoang Phuong, Associate Director and Head of the Residential Sales Department at Tan Hoang Minh, predicted that the property market in 2015 would see the recovery of the luxury segment, especially projects with high quality, favorable location and timely progress. If the Hoa Binh Green City project has good liquidity, it will have a positive influence on the real estate market in 2015. 

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