Here's why Vietnam is a safe haven for Singapore property developers

CapitaLand just acquired $70M prime site here.

CapitaLand announced on Monday (Sept 26) that is that it has acquired for US$51.9m (~S$70m) a 0.5 hectare prime site in Ho Chi Minh City, Vietnam as it remains confident about the country's economy and healthy home demand.

According to the management, residential sales in the country were strong in 1H2016 with about 460 units sold (worth about S$80m), which translates to a 20% YoY growth in terms of sales values and volume.

The group was also one of the top performing foreign developers in Vietnam last year with 1,321 homes sold at a value of S$226.5m.

"We like that this project will deepen the group’s exposure to the growing Vietnamese market and note that this is CapitaLand’s third acquisition in the country since June 2015," said Eli Lee, analyst at OCBC Investment Research.

In particular, Eli said that the serviced residences component will generate incremental recurring income from a market with strong demand, as evidenced by the 94% occupancy rate at Somerset Vista Ho Chi Minh City.

"Looking ahead, we believe that management will focus on opportunities in offices, serviced residences and integrated developments.

Located in Cau Kho ward of District 1, the site is expected to be developed into a project with a 17-storey residential tower and a 22-storey serviced residence tower.

Slated to be launched in 4Q2016 and completed in 2018, the project will have an estimated gross development value of US$106m (S$143m).

The serviced residence component comprises 200 units and will be managed by the group’s serviced residence arm, The Ascott Limited, under its Somerset brand.

In addition, the residential component will consist of 102 units and facilities such as a swimming pool, gym and a clubhouse.