Real estate developers race to build skyscrapers

Thirty-seven, sixty-eight, seventy, even 102 storeys – in Hanoi and Ho Chi Minh City, bigger and bigger buildings are reshaping the skyline.

Most skyscraper projects have been developed by heavyweights in Vietnam’s real estate sector. In the south, everyone’s heard about Bitexco’s 68 storey ‘Bup Sen’ (Lotus) Financial Tower in Ho Chi Minh City. It’s been under construction since 2005 and will be completed at last this year. The Bup Sen tower will dethrone the 37 storey Saigon Pearl and the 35 storey the VCB – Bonday – Ben Thanh Tower and Saigon Trade Centre buildings as Vietnam’s highest structure.

However, the Bup Sen Tower won’t keep its title for long. By 2012, the Keangnam Group’s Hanoi Landmark Tower will top out at 70 storeys. The South Korean firm is investing $1.05 billion in the skyscraper on Pham Van Dong Street in Cau Giay District.

The Landmark Tower could lose bragging rights in turn to another building planned for Hanoi. Ocean Group and PetroVietnam signed an agreement on May 7 to build the 102 storey PVN Tower at a cost of $1 billion.

It’s often heard that building skycrapers will give Vietnam more ‘international stature’ and attract more investors and tourists to Vietnam. In a number of other rising nations, skyscrapers have become icons. Dubai has its Burj Khalifa tower (168 storeys), a building in Taiwan is 101 storeys and Malaysia has the 88 storey Petronas twin tower, for example.

According to Johan Nyvene, General Director of the HCM City Securities Company, only availability of capital and investors’ business capability limits the height of skyscrapers. Real estate developers see great potential for such development in Vietnam and they are rushing to build office complexes, hotels and retail premises which will well serve clients in the next few years.

According to Bitexco, the biggest profit an investor can gain from building skyscrapers is prestige. Dinh Dung, a Bitexco executive, said that Bitexco Financial Tower’s eye-catching design pushed up construction expenses by 30 percent. And it’s worth it, he says: “the thing that we want is to position Bitexco’s brand in Vietnam, and Vietnam’s brand in the world.”

PetroVietnam Chairman Dinh La Thang expects to see considerably more development of skyscrapers in Vietnam, saying that Vietnamese enterprises have opportunities and capability to implement big projects.

“I think that enterprises must make heavy investment in design consultancy, project management, and especially in technology and workforce, so that they can undertake big projects,” Thang explains.

Meanwhile, some other real estate executives consider skyscraper building ‘just a risky game for the big guys.’ Dang Van Quang from John Lang LaSalle Vietnam warns that investors in such big project will only recover their investment capital only after a very long time. A normal real estate project, he says, pays back its investors in seven to eight years, whereas the investors of 60-70 storey buildings will only be able to recover capital after 15 years.

Vietnam’s new skyscrapers are mostly located outside the center of the cities, build with one eye on the urban development plan. Because the office leasing market segment has not been fully recovered, and only lower storeys can be used for retail premises, the decision to move ahead requires a measure of boldness and faith in the real estate market of the future.

Source: VnExpress