Japan, South Korea developers building new towns in Vietnam
ATSUSHI TOMIYAMA, Nikkei staff writer
HANOI -- Japanese and South Korean developers are building urban residential quarters in Vietnam, encouraged by increasing demand from middle-class earners and relaxed regulations on foreign ownership of properties in the country.
Daewoo Engineering & Construction is developing the Starlake New City project near West Lake in central Hanoi, targeting wealthy locals and more than 100,000 Koreans on overseas job assignments in and around the city.
The South Korean developer plans to sell 182 units that become available this year and 600 next year, most of which are four-story detached houses featuring Korean-style floor plans and room designs.
The houses will be sold in the price range of $720,000 to $2.35 million. That may sound pricey for a house in Vietnam, but the developer is confident that its residences will appeal to South Koreans who work for leading companies back home, such as Samsung Electronics and LG gFroup. They are typically assigned 10-year posts, and an increasing number have been buying houses during their stay in Vietnam.
Daewoo also hopes that the Korean style homes will attract local Vietnamese as a posh and sophisticated investment. Particularly among young women in the country, hallyu, a boom of South Korean drama TV shows, pop music and other cultural attractions, has remained popular.
Meanwhile, in southern Vietnam, Japanese developers hope to attract buyers by capitalizing on Japan's reputation for quality. In May, Tokyu, a railway operator and land developer in the Greater Tokyo area, started work on a large, urban residential neighborhood in Binh Duong Province, just north of Ho Chi Minh City. At a cost of $800 million, the company will build some 9,000 houses on the 630,000-sq.-meter property, making it the largest residential development project outside of Japan for a Japanese company.
The houses in Binh Duong New City, as the development is called, will be priced at about $290,000 to $390,000, with total floor spaces of 260 sq. meters to 330 sq. meters. Tokyu aims to build a Japanese-style urban town, where houses are neatly laid out along some tree-lined streets and surrounded by greenery, as well as having creeks.
In addition to the nature-focused atmosphere, high-tech security systems, including anti-theft and fire alarms, connected with a security company will be equipped in each house. Tokyu is also in charge of operating the bus routes in the town and has been building shopping areas. The company is basing designs on areas it has developed in Japan.
Maeda, a Japanese building and construction company, is working to provide high-quality Japanese houses in Vietnam together with the Japan International Cooperation Agency and Mitsubishi UFJ Financial Group. An effort led by a Japanese public-private collaboration is preparing to launch a housing loan scheme for middle-class earners in Ho Chi Minh City as early as next year. Maeda expects to leverage the opportunity to sell its precast concrete houses in the city.
Vietnam rarely experiences earthquakes, and people often live in traditional brick-and-mortar houses. The lack of major residential construction companies means the quality of houses in Vietnam is often not sufficient enough to be able to guarantee a loan. On the other hand, with a growing economy -- humming along at a 5.52% pace during the first six months of this year -- demand for houses from middle-class earners is increasing
In addition, the Vietnamese government in July last year lifted some ownership restrictions for foreigners. Non-Vietnamese are now allowed to own property for up to 100 years, which has led to more foreigners buying houses.
Not wanting to miss out on the opportunity, developers and construction companies from neighboring countries, including Singapore and Malaysia, are joining in the race to grow the housing market in Vietnam.