VinaCapital Plans $350 Million Vietnam Real Estate Fund

SINGAPORE (Reuters) – VinaCapital, Vietnam’s largest asset manager, aims to raise $350 million in a real estate private equity fund in September to tap a local sector that it thinks has bottomed, a company official said on Tuesday.

The proposed VinaCapital Vietnam Land II fund will focus on residential developments, shopping malls and business hotels, David Blackhall, deputy managing director of VinaCapital’s real estate arm, told Reuters in an interview.

“Vietnam is already showing signs that it has stabilised,” he said, adding the residential sector offered the greatest potential because prices had fallen sharply since the end of 2007 and the country’s growing middle class could afford to buy homes.

For instance, an apartment near Ho Chi Minh’s city-centre that used to cost around $3,500 per square metre is now worth about $2,100 per square metre, Blackhall said. Borrowing costs too have fallen to around 12 percent from 20 percent last year, he added.

“Vietnam doesn’t have many credit cards and it doesn’t have much mortgages. There’s not a lot of debt finance outstanding that is why it’s going to recover quickly,” he added.

The volume of home sales in China, Hong Kong and Singapore have recovered in recent months as developers cut prices and consumers draw down their huge savings. Home prices are beginning to edge upwards.

VinaCapital manages four funds with total assets of $1.6 billion. Its flagship properties include the Sofitel and Hilton hotels in Hanoi.

Blackhall said the firm’s proposed Vietnam property fund will have a lifespan of around eight years and will focus on developments in Vietnam’s two main cities of Hanoi and Ho Chi Minh. The fund may also invest in Cambodia and Laos.

The fund itself will not carry any debt although it may borrow up to 60 percent at the project level, he added.

Vietnam’s government said earlier this month the country’s economic growth will likely drop to a 10-year low of 5 percent this year before rising to 6.5 to 7 percent in 2010. 

By Kevin Lim

(Editing by Muralikumar Anantharaman)