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CapitaLand plots $500m Vietnam fund

The Singaporean property group is targeting to increase its funds under management in the country to S$1bn by next year as strong GDP and rising urbanisation buoy investment opportunities.

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Singapore-based property developer and fund manager CapitaLand is planning to set up a commercial real estate fund focused on Vietnam by next year.

In a company statement released earlier this week, the group said it is targeting to launch a $500 million vehicle that will be invested in commercial projects focused in the gateway cities of Hanoi and Ho Chi Minh City.

The fund capital will be deployed in both completed assets and development projects with a build to hold or build to sell strategy. The firm said it has secured some seed projects for the vehicle but did not disclose further details.

Several growth drivers, such as strong GDP that is expected to average 6 percent over the next three to five years, continuing urbanisation, and increasing number of multinational companies, especially the Korean and Japanese companies, that are entering Vietnam for diversification purposes, have prompted CapitaLand to expand its presence in the developing economy.

According to the firm, these factors have created a strong fundamental demand for housing and opportunities of long-term capital appreciation of a core investment portfolio.

In a further sign of the firm’s growing investment ambitions for the developing country, CapitaLand will target to grow its funds under management to S$1 billion ($700 million; €660 million) in Vietnam by 2017.

CapitaLand has been an active developer and investor in Vietnam’s residential sector. In September, the firm made its ninth investment in the country with the acquisition of a development site in Ho Chi Minh City for $51.9 million with plans of building two residential towers on the 0.5-hectare site.

The firm has laid out a target of acquiring 2,000 to 2,500 units for residential development in 2017 and about two commercial projects together with its capital partners.

As of end June this year, CapitaLand’s total asset size in Vietnam was S$748 million ($550 million; €489 million), making it the group’s third largest market in Southeast Asia, after Singapore and Malaysia.