Amidst Vietnam’s real estate relative stagnation in 2022-2023, Malaysia’s Gamuda Berhad has managed to buck the trend, earning big revenues and starting work on big projects.
The multi-award winning engineering and construction company posted real estate sales of RM1.52 billion ($322.1 million) in Vietnam in fiscal year 2023, accounting for 76% of its overseas real estate revenue.
Also last year, it kicked off construction of two projects: Elysian in Ho Chi Minh City and Artisan Park in neighbouring Binh Duong province.
In the first quarter (Q1) of FY2024 (ending October 31, 2023), Gamuda recorded total overseas real estate sales of RM176 million ($37.3 million), 69% of which was contributed by the Vietnamese market (RM121 million).
Fully legal
The group says full legality is a great advantage in the market, given that developing projects on prime locations in HCMC have proved quite difficult in recent times because of legal problems.
Credit tightening has also pushed domestic real estate developers into financial difficulties, forcing them to restructure and divest strategic assets.
For Gamuda, however, the Vietnamese market has been contributing the most to the group’s overseas real estate revenue for many years.
The group entered the Vietnamese market in 2007, establishing the Gamuda Land Vietnam Co., Ltd., headquartered in Yen So Park, Hoang Mai district, Hanoi. It has invested in two large urban areas: the 500-hectare Gamuda City in Hanoi and Celadon City in Ho Chi Minh City.
Since 2021, the group has aggressively pursued mergers & acquisitions (M&As) to create growth momentum for the next phase. Andrew Chan, CEO of Gamuda Land, said they had many investment plans for Vietnam worth billions of U.S. dollars to expand access to land funds in various forms including M&As.
At the end of 2021, Gamuda Land bought a 5.6-hectare land plot from Becamex TDC, listed on the Ho Chi Minh Stock Exchange (HoSE) as TDC, for nearly $54 million to develop the Artisan Park project.
In August 2023, it held a groundbreaking ceremony for the $117 million project, which is expected to supply the market with around 350 townhouses and shophouses.
In July 2022, Gamuda Land acquired a 2.8-hectare land fund in HCMC’s Thu Duc city to develop the Elysian project, which will have 1,398 apartments of one to three bedrooms, penthouses and eight shophouses. This project’s groundbreaking ceremony was held in February 2023.
The two projects, Elysian in Ho Chi Minh City and Artisan Park in Binh Duong, began to contribute positively to the company’s revenue in 2023 and the first quarter of 2024.
By the end of Q1 of FY2024, the Elysian project had sold 85% of its products while Artisan Park had a 80% sales record. At the same time, the group’s existing urban area projects, Celadon City in Ho Chi Minh City and Gamuda City in Hanoi, have operated well with combined revenues of about RM753 million ($159.6 million) in 2023.
In addition, in July 2023, Gamuda pulled off a big surprise by spending $315.8 million on buying the entire stake of Tam Luc Real Estate Corp., which owned a 3.68-hectare project in Thu Duc City. This was also a project with full legality.
The group is developing the Eaton Park project on this land plot with a total investment of up to RM5.1 billion ($1.08 billion). Expected to be launched this year, the project has been advertised as a complex of luxury apartments and world-class trade-services area, including six 39-storey apartment towers with 1,980 units, 51 shophouses and 21 commercial townhouses.
Lawsuits, accusations of violations
Gamuda's products are appreciated for its green landscapes. The Celadon City project in HCMC’s Tan Phu district covers 82 hectares but the construction density is just 20%, with the remaining 80% earmarked for public amenities and natural landscapes. The Gamuda City project in Hanoi’s Hoang Mai district is also considered a living space meeting the green-smart-modern criteria.
However, these two projects have been involved in problems regarding alleged construction violations, theft, degradation of many items and lawsuits filed by residents for failing to fulfil contract obligations.
In 2021, Gamuda Land was fined VND45 million ($1,833) for construction violations in the Gamuda Gardens urban area and forced to dismantle the violating construction.
In 2023, the HCMC People's Committee imposed an administrative fine of VND900 million ($36,700) on Gamuda Land Joint Stock Company for selling properties at a housing project that is still under construction in Tan Phu district without a construction permit. It was forced to refund customers all the money raised improperly.
Even the newly launched Elysian project has been accused of being offering properties for sale even before getting a construction permit.
It is in this context that the group has trained its focus on “full legality” so that customers are confident that their properties do not came with legal difficulties attached.