Do Ngoc Olivier Dung affirms that mid-end condo segment has the most potential and will become the largest segment in the Vietnam property market.
EZ Land is a real estate developer operating under the Affordable Housing Fund, SLP (previously called Key SICAV SIF), an international investment fund from Luxembourg. With a strong capital base from Europe, the developer is targeting the mid-income segment in Ho Chi Minh City. Its first project, HausNeo, is located in District 9 with a total investment of over $25 million. Do Ngoc Olivier Dung, CEO of EZ Land, shares his opinion on the mid-income segment and homebuyers in Vietnam.
Together with local real estate companies, many international investors are also targeting the mid-income market, creating fierce competition. Knowing that to be the situation, why did you decide to target this segment?
I started investing in Vietnam in the luxury hospitality sector; however, after 10 years of living here, in addition to our expertise regarding similar markets in other countries, I believe that we have the local knowledge now to understand consumers in the mid- income segment which has explosive growth potential and will become the largest segment in Vietnam.
Nowadays, young Vietnamese people are more active and independent. They want to live their lives in their own way and have their own homes. A good opportunity to enter the mid-income market is to provide properties that meet these demands yet remain affordable.
What strategies do foreign invested companies like EZ Land adopt to compete with experienced local rivals?
This segment has mostly been a playground for well established local developers, so this is the most challenging segment to thrive in. However, we have our own advantages. First and foremost, as a European Fund, we havea very strong capital base and financial capability..
Our second advantage lies in our unique architectural style and interior design. We go beyond familiar and common architecture and choose a European inspired style – Bauhaus. Our philosophy is to build houses that provide comfort to their owners. We do this by optimizing living spaces and reducing redundant details, which results in a more spacious feeling than other comparable projects. On top of that, we also assure buyers of the overall quality of the building and of the apartment interior.
How can EZ Land’s strong capital flow support homebuyers?
Strong capital flow allows us to offer flexible payment schemes to homebuyers. For instance, with HausNeo – a mid-market project in District 9 – buyers are only required to pay up to 47 percent upon handover.
More specifically, for a 2-bedroom apartment at HausNeo, the buyers initially deposit VND 450 million. During the construction period of 15 months, a repayment of 1 percent is then made, approximately VND15 millionper month. As such, buyers pay only a total of 47 percent by handover time. As we typically attract young urban white collar workers, and 25 – 30 years old, usually married, the average household income typically ranges from VND 30-40 million/month so, this payment scheme works well for them but also for many other buyers categories that do not fall within those typical criterias. Two years later when HausNeo hands over the apartments, buyers can easily borrow from local banks the remaining amount if needed but also by that time they would generally have seen their incomes increase and managed to put aside more savings. .
How does a HausNeo 2-bedroom apartment (priced at VND 1.4 Billion) stand out from comparable products?
‘Affordable price – comfortable life’ – this is the investment opportunity that HausNeo offers to our customers. The project is affordable due to cost optimization, without compromising on quality. For example, we chose District 9 instead of locations closer to the CBD, where it would be a lot more expensive. Land prices in District 9 are still reasonable, and there is rapidly developing infrastructure. In addition, District 9 is now attracting many young white-collar people who want to settle down in up and coming new urban areas.
On top of that, at HausNeo we offer fully furnished kitchens with upper and lower cabinets and fully furnished bathrooms. The living rooms are spacious enough for the sofa to be placed at a reasonable distance from the television, and our doors are sound-proofed for more security and privacy.
We use leading Vietnamese and regional (Thailand) suppliers, along with imported products. We also work with COFICO, one of the top 3 contractors in Ho Chi Minh City, whose reputation has been built mostly in luxury projects. The contractor is known for its quality, professionalism and to only cooperates with international and top local real estate developers, making this the first mid-market project that COFICO has ever built in the city.
For property investors, they know that District 9 is developing rapidly, with land prices potentially rising, so a quality apartment in the center of District 9 like HausNeo is profitable for their portfolios and also is very likely to yield superior rental returns to other market segments along with future capital gains.
What are EZ Land’s long-term plans after HausNeo?
After HausNeo, we will continue with the second and the third project with the same brand philosophy. The key is to source land plots that are suitable for 500 to 600-unit projects minimum to optimize construction costs and maintain a certain project scale, while being able to offer mutually beneficial contracts for suppliers and best value for homebuyers.
In the long run, our mission is to become one of the leading developers in the mid-market segment. The company will launch 1,500 – 2,500 apartments in 2018 and targets 4,000 apartments in 2019 and therefore aspires to become a platform to attract even more foreign investors to the residential market in Vietnam.
Source: Thu Ngan