OCBC Credit Research says according to reports from South China Morning Post, CapitaLand Development (CLD) is offering a buy now, pay later (BNPL) scheme for a residential project in Vietnam, exclusively available to buyers in Hong Kong, with 30% down payment. In addition, the project is fully furnished, so it is easy for the buyers to move in.
The privately held CLD is offering 59 fully furnished flats in Zenity, a residential project in Ho Chi Minh City, exclusively available to buyers in Hong Kong, at prices starting from HK$3.5 million, the SCMP says.
This ties in with a press release by Asia Bankers Club on June 16, announcing CapitaLand Development is launching Zenity, a "rare riverside project situated in District 1 CBD", with Asia Bankers Club, Golden Emperor and Ashton Hawks, offering all of their exclusive foreign quotas in their launching event that will be held on June 25-26.
Under the BNPL scheme, units at the riverside project situated in District 1, close to Nguyen Hue Walking Street and Ben Thanh Market, can be handed over to buyers upon 30% down payment. That means 10% upon signing of the sale and purchase agreement and 20% in the third quarter. The rest can be paid by end-September 2024, SCMP says.
The payment plan is available to both foreign investors and local buyers. Foreigners may not be eligible for mortgage loans in Vietnam under local regulations, according to OCBC Credit Research.
"This move is likely due to slowing residential sales in Vietnam, with 46% y-o-y reduction in property sales in 1Q2022 according to Savills while average prices declined by 14%. Meanwhile, developers find difficulty to raise funds via bonds and loans," OCBC Credit Research says. The slowdown in sales is reportedly due to the prolonged Covid pandemic and recent measures from the government to curb speculation, the research note adds.
On the other hand, anecdotal evidence, and the press release indicate that many international corporates moved their manufacturing bases to Vietnam during the pandemic in an attempt to diversify their risks. As a result, Vietnam's Foreign Direct Investment (FDI) has increased exponentially, recording US$$10.8 billion net FDI inflow in the first four months of 2022, up 88.3% y-o-y.
"Within Vietnam, the processing and manufacturing industry has gained the crown with the largest amount of investment summing up to US$6.2 billion, which translates to 57.2% of total FDI received. The second place goes to the real estate industry, with US$$2.8 billion invested which is 26.1% of total investment," the press release says.
Over the years, multinational giants like Apple, Samsung, LG and Microsoft have been expanding their manufacturing bases in Vietnam that have led to the rise of the middle-class population. "HCMC has also become the city with the highest growth in the number of UHNWI. In 2021, there are 1,234 people with a net worth of US$$30 million or more. There are 72,135 [people] with assets accumulating to over a hundred million US dollars, it is estimated that the number of UHNWI is increasing at an annual rate of 26%, meaning that there will be a millionaire in every 850 people in Vietnam in just 4 years," the press release says.
Separately, the listed CapitaLand Investment has established its first onshore renminbi fund worth RMB700mn ($144 million) in China, holding a 12%-stake in partnership with a domestic asset management company. The fund is acquiring a quality office building in Shanghai at an attractive price according to CLI. CLI is looking to further tap on China’s domestic capital and launch more RMB funds to capture special situation and other investment opportunities in China.
