Mr Peter R. Ryder, Managing Director of Indochina Capital, spoke about new projects in the its recently-closed Indochina Land Holding 3.
Indochina Capital began to raise funds for its Indochina Land Holdings 3 in 2008. Why has it only just closed?
We commenced our fundraising process for Indochina Land Holdings 3 (ILH3) in 2008 and held the first closing in July of that year. Our intention was to have a final closing in July of 2009. However, the effects of the financial crisis that roiled markets in the latter part of 2008 influenced us to postpone the final closing until October 2010, a decision widely supported by our initial investors.
Who are its main investors?
Subscribers to our latest real estate fund represent leading institutional investors, the great majority of whom have participated in our previous funds, demonstrating enduring confidence in our ability to generate superior returns. Despite the challenging investment climate, our core base of global institutional investors continues to recognise the potential of Vietnam’s real estate market.
What is the investment strategy for ILH3?
We will focus on urban and suburban residential properties and mixed-use developments with significant residential components in Vietnam’s two primary urban markets: Hanoi and Ho Chi Minh City.
Why Hanoi and Ho Chi Minh City?
Vietnam’s major urban centres continue to benefit from the country’s positive economic growth, compelling demographics and rapid urbanisation. In the context of global real estate investment, Vietnam’s residential property market has demonstrated attractive domestic demand dynamics, supported by the country’s long term fundamentals.
The second-home market - villas and condominiums part of a hotel/resort/golf club - has emerged in Vietnam. Do you think there is potential in this market in Vietnam?
An increase in supply will naturally put pressure on developers. However, higher competition can actually be positive for the market, by increasing the diversity of product offerings.
As a real estate investment firm, we are confident in Vietnam’s long term growth potential as a top-tier tourism destination and have contributed significant amounts of capital towards developing the country’s resort market. Indochina Land and many other developers understand Vietnam’s natural attraction as a tourism destination and are capitalising on positive trends in the market.
In particular, Indochina Land is the largest foreign investor in the Da Nang-Hoi An area, through a series of tourism related projects, including The Nam Hai, Hyatt Regency Danang Resort and Spa, and Montgomerie Links Golf Course and Estates.
The central coast, encompassing Da Nang and Quang Nam province, is positioned to become Asia’s next great resort destination, with the combination of a 30 kilometre beach, which Forbes magazine describes as “one of the six most luxurious beaches in the world”, three nearby UNESCO World Heritage Sites, and other recreational offerings such as golf.
What difficulties face investors like Indochina Land in developing and selling villas/condominiums at this time?
We are actually seeing an increase in renewed interest from both domestic and foreign investors to acquire luxury vacation properties in Vietnam. We have a limited number of units available at the Hyatt Regency Danang Resort and Spa and have just launched the Estates at Montgomerie Links, which are designed as private residences secluded within the confines of a championship golf course.
In addition to the central coast we have other active developments in the market, including Indochina Plaza Hanoi, where we have seen an increase in transactions with approximately 30 units sold in the fourth quarter 2010 alone, and Six Senses Con Dao, where we have registered several new sales from foreign buyers. For Six Senses Con Dao, we are gearing up for the opening of the resort and are scheduled to welcome our first guests in December.
While the market has appeared to be sluggish, we are seeing increased momentum in residential sales and believe this to be a result of prudent buyers seeking high-quality projects.
Indochina Land is the real estate division of Indochina Capital, a financial services firm developing and financing real estate projects covering the full range of property types, from residential, retail, office, resorts, hotels and leisure. With total capital commitments of $180.3 million, ILH3 increases Indochina Land’s total funds under management to nearly $500 million across three private, closed-ended real estate funds.