Northern buyers look to the south in Vietnam

Luxury property developers in southern Vietnamese provinces, especially Ho Chi Minh City, are fine-tuning their projects to suit a new taste – buyers from northern Vietnam, especially those in the capital city of Hanoi.

The property market lately has witnessed many investors from the north come in to buy tourism properties in the central coast city of Danang, where there are luxury resorts with apartments and villas being developed along the beach. These investors are now moving further southwards, and many property developers in the south have studied the trend and launched their products to receive a new channel of investment capital from the north.

Market observers say most investors coming from the north are professional investors and have a strong financial capacity. In penetrating other markets, these buyers often target the luxury segment with properties worth from billions of dong to even a million dollars each.

For instance, the Diamond Island Sky Resort located in District 2. is among luxury property projects attracting many northern investors. The condo project is under construction on an eight-hectare islet that is surrounded by the Saigon River and its branch Giong Ong To, near the new urban town of Thu Thiem.

The project has offered 250 among 500 luxury apartments and villas with prices starting from US$400,000 to $3 million per unit. According to the developer, among 60 per cent of products sold in the first sales program, there were 30 per cent of buyers coming from the capital city of Hanoi.

In another project, Khang Dien Housing Trading and Investment JSC has wrapped up its first sales program of the Villa Park project with 213 villas and row houses being developed on Lien Phuong Street at Phu Huu Ward in Ho Chi Minh City’s District 9. The developer says up to 60 villas with prices ranging from VND3 billion to VND9 billion per unit have sold out after only two days upon the launch of its first phase\ of sales. Among the buyers, nearly 30 per cent come from the northern region.

Other projects also see the same trend. The luxury project Six Senses Saigon River, which is under construction with 150 villas worth millions each, has captured the attention of many northern investors although it has not yet been launched into the market.

It is not only properties in Ho Chi Minh City but also those in the neighboring provinces such as Binh Duong and Dong Nai have drawn attention from investors from Hanoi. For example, Long Thuan Loc Corp. has launched its second sales program for its Green Valley project located at An Phuoc in Long Thanh District in the southern province of Dong Nai, near the new provincial administrative center. The housing project is developed on a 45-hectare site with some 1,200 land lots for villas, row houses and a commercial center.

According to Nguyen Thi Thanh Huong, director of Tinnghia Land – a distributor of the project, the selling prices are offered at around VND3.6 million (US$187) per square meter, or from VND350 million to VND450 million for a row house and VND750 million for a villa.

There were three companies and investors in Hanoi seeking to buy all 400 land lots in the second sales program, but the company had refused the suggestion because it has to balance local buyers and investors, she said.

“In terms of business, wholesale is much better but our policy is to reserve from 30 per cent to 50 per cent of the total products to local buyers, who are of real demand for accommodation,” Huong said, adding “this helps ensure the urban town development.”

Some project developers in the southern region have planned to promote their products to the north to seek new customers. Among the companies, Saigon Thuong Tin Real Estate JSC or Sacomreal has planned to list its shares on the Hanoi Stock Market next month. In its preparation, Sacomreal invited three firms for consultancy, including a northern firm which will help the company expand its brand and introduce potential projects to investors in the northern region.

Tran Nhu Trung, associate director of research for Savills Vietnam, said the trend that northern investors move to the south for property investment has taken place for long, but it is emerging lately as a phenomenon.

“This proves that Vietnam has an open economy and the administrative and geographic borders are not a hindrance to investors,” Trung said, adding that it was not just northern investors who have invested properties in the southern and the central region, but also investors in Ho Chi Minh City who have invested in other provinces.

The move comes because there are abundant property products in the south, while there are fewer options for investors in the northern region, he added.

The market research firm says its experiences collected from marketing luxury properties shows that tourism properties attract some 80 per cent of buyers from the north. They are interested in villa and land lot products.

“This is a real demand,” Trung confirmed. “Investors have become more active and quickly pour their capital into a new investment channel.”