19 October 2011
For immediate release
VinaCapital Investment Management Ltd
Update on residential project sales and marketing
Ho Chi Minh City – VinaCapital, the leading asset management and real estate development firm focused on Vietnam, announces today the results for sales and marketing of residential properties during the quarter ending 30 September 2011.
The past quarter has seen significant volatility in both the global and Vietnamese markets, resulting in reduced confidence among investors and home buyers. Inflation is the major concern in Vietnam, and government policies to restrict liquidity have driven interest rates to over 20 percent, increasing the cost of debt and significantly slowing activity in the property market for both developers and mortgage home buyers. Landed property (land and houses) has continued to sell, albeit at a slower rate, while the condominium market is now extremely challenging.
During the three months ending 30 September 2011, a total of 71 sales contracts were signed at projects that have controlling stakes owned by VinaLand Limited (VNL) and Vietnam Opportunity Fund Ltd (VOF), two AIM-traded funds managed by VinaCapital. The 71 contracts represent a value of USD18.0 million (Q2 2011: 246 contracts worth USD16.7 million). For 2011 year-to-date, total contracts signed represent a value of USD55.6 million (2010YTD: USD66.2 million). The majority of these sales contracts relate to pre-purchase agreements, whereby home buyers will make staged payments throughout the construction period, with collections occurring over a 18-24 month timeframe. Given the current high cost of debt, revenue from pre-sales is being deployed to pay down debt for start-up construction costs and infrastructure.
The third quarter of 2011 saw a decreased volume of sales in terms of unit numbers, but a slightly higher total value of sales contracts signed, compared to the previous quarter. The third quarter saw a lower volume of unit sales of high-value Norman Estates villas at the Danang Beach Resort, while the second quarter saw a high volume of lower value land lot and foundation packages sold at the My Gia township project in Nha Trang.
David Henry, Managing Director of VinaCapital’s real estate division, said: “The real estate market in Vietnam continues to be slowed by high interest rates, tight liquidity, and a general concern in both the global and domestic markets. Notwithstanding this, our sales and collections for the year to date have been relatively stable, with only a minor drop from the same period last year. While the fourth quarter will remain slow, we hope that 2012 will see the right conditions for the launch of sales at new projects.”
My Gia – township in Nha Trang, central Vietnam
VinaLiving held an official launch event on 15 October 2011 for this large-scale township project, with 25 new reservations taken during the launch weekend. The first four phases are now for sale, consisting of 680 land lots ranging in size from 100-300sq.m. During Q2 and Q3, some 237 sales contracts were signed, bringing total sales to 470 lots and over USD25 million since the project launched in early 2011. Average sale prices during Q3 2011 were up eight percent over the previous quarter. VNL and VOF own a combined 71 percent stake in this project.
Danang Beach Resort – integrated resort in Danang, central Vietnam
Sales are underway for units at three villa enclaves and one condominium tower at this award-winning 260-hectare integrated resort in Danang, central Vietnam. The quarter saw the launch of the Norman Estates luxury villas, with 20 of the 40 units already reserved for sale. A small 15-home enclave located off the beach sold out during the previous quarter. VNL and VOF own a combined 100 percent stake in this project.
World Trade Centre Danang – mixed-use development in Danang, central Vietnam
Construction of the first residential tower of this mixed-use urban development in downtown Danang has reached top-off stage, with sales contracts signed for 53 units of the 225 units. The project recently announced the signing of tenancy agreements with Parkson Vietnam and Lotte Cinema, with negotiations underway with a hypermart operator. Concept planning on the 60,000sq.m retail centre is nearly finalised, with a delivery date planned for the second quarter of 2013. The retail centre progress is expected to boost sales at the residential component. VNL and VOF own a combined 51 percent of Phase 1 and 2 of this project.
Dai Phuoc Lotus – township in Dong Nai province, near Ho Chi Minh City
The quarter saw 32 new sales contracts signed at this 200-hectare island township project, and the completion of the marina near the show villas. To date, 162 out of 242 townhouses and villas released have sold, a strong result given market conditions. VNL and VOF own a combined 72 percent of this project.
Upcoming project launches
Two residential – mixed use projects are undertaking preparation for the sales launch phase, although actual launch events will be held when market conditions have improved, expected in early 2012. The first, Trinity Park (formerly called HUD Dong Tang Long), is a 30-hectare residential development in District 9, Ho Chi Minh City, in the same area as the launch of The Garland, a 53-villa development in 2009-2010. The second, Ceana Hotel and Villas, is a 31-villa, oceanfront project in Hoi An, south of Danang.
This news release may contain statements that constitute forward-looking statements that include but are not limited to statements regarding the expected income generated from residential real estate sales of both built and unbuilt properties owned by funds managed by VinaCapital Group (“the Group”). Undue reliance should not be placed on forward-looking statements. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Group and described in the forward-looking statements. These risks and uncertainties include but are not limited to construction risks and delays, and unforeseen changes to general economic and business conditions. Forward-looking statements are based on the estimates and opinions of the Group's management at the time the statements are made. The Group assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change, except as required by law.
VinaCapital is the leading investment management and real estate development firm in Vietnam, with a diversified portfolio of USD1.7 billion in assets under management. VinaCapital was founded in 2003 and boasts a team of managing directors who bring extensive international finance and investment experience to the firm. Our mission is to produce superior returns for investors by using our experience and knowledge to identify the key trends and opportunities that emerge as Vietnam continues to develop its economy. To achieve this, VinaCapital has industry-leading asset class teams covering capital markets, private equity, fixed income, venture capital, real estate and infrastructure.
VinaCapital manages three closed-end funds trading on the AIM Market of the London Stock Exchange. These funds are: VinaCapital Vietnam Opportunity Fund Limited (VOF), VinaLand Limited (VNL), and Vietnam Infrastructure Limited (VNI). VinaCapital also co-manages the USD32 million DFJ VinaCapital L.P. technology venture capital fund with Draper Fisher Jurvetson.
VinaCapital has offices in Ho Chi Minh City, Hanoi, Danang, Nha Trang, Phnom Penh (Cambodia) and Singapore. More information about VinaCapital is available at www.vinacapital.com.
Michael L. Gray
VinaCapital Investment Management Limited
+84 8 821 9930
Grant Thornton Corporate Finance, Nominated Adviser
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LCF Edmond de Rothschild Securities, Broker
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David Benda / Hugh Jonathan
Numis Securities Limited
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Financial Dynamics, Public Relations (Hong Kong)
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Financial Dynamics, Public Relations (London)
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