Domestic firms aim at big projects

CA - There are now more and more domestic enterprises investing and developing five-star hotel projects, skyscraper office buildings and luxury resorts meanwhile foreign investment reduced their portfolio due to heavy impact from the world financial crisis. This tendency, according to specialists, will continue to develop this year.

The event that domestic firms raced to develop the Hoa Sen (Lotus) five-star hotel project in Hanoi in the middle of last year when the foreign investor-Riviera Group (Japan) withdrew from the project made attention for many investors.

Finally, Kinh Bac Urban Development Joint Stock Co (KBC) won to develop Hanoi's the largest hotel project including 550 hotel rooms with a total investment of some $500 million. In addition, KBC took full advantages of large land area of 4.3 hectares near National Conference Centre in Tu Liem Dist to build a larger hotel than initial design of foreign investor with total number of hotel rooms of up to 800.

Dang Thanh Tam, director board's chair of KBC, said that as planned, the project will be started work in H1 and finished the first phase after 24 months of construction.

According realty specialists, KBC-a domestic firm taking full advantages of the global economic recession to replace foreign investor is not special during last year. This tendency is developing during this year. People can say that the global economic and financial crisis has forced many foreign investors to narrow their portfolio in foreign countries including Vietnam due to hardships in mobilising capital for their investment projects. This is an opportunity for domestic firms to replace foreign investors.

The Raffles high-class villa and hotel project in the central coastal city of Da Nang is also considered evidence in transferring investment projects between domestic and foreign firms. This is a five-star hotel complex with 142 rooms and 39 villas on an area of 15.4 hectares and total investment capital of $100 million.

This project has been faced many difficulties for nearly six years with two transferences. The first transference was from the US-based Magnum Investment Group and then Vegas Hotel & Villas Ltd Co that was co-established by Kingdom Hotel Investments and European Hotel Corporation. However, the global economic crisis forced the enterprise to cut down its portfolio. Vegas Hotel & Villas Ltd Co had to seek another investor to transfer the project. Then the project was restarted construction in last November by Vingroup. According to Vingroup, the project, once in operation, will be managed by Raffles hotel management group.

According to real estate consultancy firm CB Richard Ellis (CBRE) Vietnam, due to difficulties from the market and pressures on investment capital, many foreign investors had to sell their projects to pay for their debts. However, these projects have been sold to domestic enterprises but not foreign firms.

In a recent press conference, Marc Townsend, CBRE Vietnam's managing director, said that 2009 was a development year of domestic firms with large-scale projects and this trend will be maintained till 2010 when a series of important projects like office buildings, trade centres and five-star hotels are being carried out by home firms such as 68-storey Bitexco Financial Tower in HCM City, Vincom centre Shopping Mall trade centre and office building in Dist 1 in HCM City that will be put into operation this year.

According to enterprises, receiving these projects, domestic firms can save time for finishing legal procedures. In addition, the transference price is much cheaper than costs of previous investor. Especially, these projects are located in comfortable investment locations.

The domestic firms' tendency of investing in hotels and buildings is being carried out not only in domestic market but also in foreign countries.

Saigon Tourism Corp (Saigontourist) recently confirmed that it still plans to buy back hotel in the US and Japan to develop Saigontourist's infrastructure in these two big markets aiming to develop and attract tourists. At present, Saigontourist's plan is to buy back hotel in San Francisco. In addition, the company is working with some other companies to seek the best hotel with suitable price.

Meanwhile, Saigon Investment Group (SGI) is planning to invest in three-star international SGI-LaoHung hotel in Houaphan in Laos. The project is built on an area of six hectares with total investment of some 62.5 billion dong. As planned, the project is expected to be completed in 2012.