SINGAPORE - CapitaLand Vietnam has entered into a joint venture with Saigon Commercial & Tourism Corporation, a subsidiary company of Thanh Nien Corporation (Thanh Nien) to develop a prime residential site in District 2 of Ho Chi Minh City.
The estimated project value is US$55 million (S$78 million), parent CapitaLand said in a filing with the Singapore Exchange on Tuesday (Oct 27).
CapitaLand will hold an 80 per cent stake in the ventures and Thanh Nien will hold the balance 20 per cent interest.
The development, which is pending regulatory approval, will be CapitaLand's sixth residential project in Ho Chi Minh City, and its eighth in the country.
In June this year, CapitaLand set up a joint venture with Thien Duc Trading-Construction Company to develop a $200 million, 1000-unit upscale project, also in District 2.
The latest site, located in the expatriate community of Thao Dien ward, will be two kilometres from the new Metro line, a 10-minute drive to the future Thu Thiem Central Business District (CBD) in District 2 as well as a 15-minute drive to the existing CBD in District 1.
There are plans to develop a one-hectare residential development with approximately 350 units.
With its proximity to amenities like shopping malls, cinemas and established international schools such as the British International School, Australian International School and European International School, good housing demand is expected from a ready pool of tenants, CapitaLand said.
Mr Chen Lian Pang, CEO of CapitaLand Vietnam, said the company sold 873 units in the first nine months of 2015, achieving sales of about $138.5 million, making it one of the top performing foreign developers in Vietnam.
As at end-June, CapitaLand's total asset size in Vietnam is $618 million. The latest project will increase CapitaLand's residential portfolio in Vietnam to about 7,850 homes across Ho Chi Minh City and Hanoi.
"It also presents long-term business relationship potential as we explore more development opportunities with Thanh Nien for several other projects in its pipeline," said Mr Chen.
In July 2015, a slew of legislative changes were announced to allow foreign investment and ownership of real estate in Vietnam. Foreigners previously could only lease one property in Vietnam. Now, they can buy and own more than one 50-year leasehold property in Vietnam for their own occupation, lease or sell it.
In addition, Singapore developers will now be able to not just sell their units onshore in Vietnam, but also market them in Singapore.
In the light of this change, CapitaLand will be launching two of its Vietnam properties for the first time in Singapore - Vista Verde and The Vista - on Nov 7-8.
Both developments are within a 15-minute drive from the existing CBD in District 1. The units come with guaranteed rental yield of 6 per cent per annum for two years and will be managed by The Ascott Limited.
Said Mr Lim Ming Yan, CapitaLand president & group CEO: "As a committed and long-term developer in Vietnam, CapitaLand welcomes the opening of its property market to foreign investment and ownership in July."
"Coupled with the country's strong economic growth forecast of 6.5 per cent and continued population growth, Vietnam is now CapitaLand's third largest market in Southeast Asia and one of our fastest growing in the region."