“Japanese Real Estate Giant Makes its First Move into Vietnam with a $150 Million Investment in Binh Duong, Aiming to Produce 1,000 Affordable Homes Annually.”

Vietnamese people are undoubtedly familiar with Japanese brands such as Ace Cook, Toshiba, Hitachi, Panasonic, and Yamaha. The latest addition to this list is the large AEON shopping centers, which showcase the long-standing and ever-growing investment of Japanese businesses in Vietnam.

According to a meeting between high-ranking officials of the two countries earlier this year, Japan remains Vietnam’s most important economic partner. Japan is the top provider of ODA loans (with a total ODA of nearly USD 30 billion to date), the second-largest labor partner (with over 520,000 Vietnamese in Japan and approximately 22,000 Japanese in Vietnam), the third-largest investor (with 5,304 valid projects and a total registered investment capital of USD 74.4 billion), and the fourth-largest trade partner (with bilateral trade turnover reaching USD 45 billion in 2023).

As shared by the co-chairs of the Japan-Vietnam Economic Committee with the Vietnamese government, KEIDANREN and Japanese businesses consider Vietnam one of their most important partners. “According to a survey by JBIC (Japan International Cooperation Bank), in the medium and long term, Vietnam is ranked second among the countries where Japanese businesses want to invest the most,” said the representative of KEIDANREN.

Statistics from the General Statistics Office also show that in the first five months of 2024, Japan poured over USD 1.2 billion into Vietnam. This made Japan the third-largest investor out of 78 countries and territories investing in Vietnam during that period.

Japanese businesses are not only focusing on retail, consumption, electronics, and finance but are also expanding their capital into potential areas, including real estate.

Recently, Cosmos Initia, a Japanese company, announced an investment of USD 150 million in affordable housing in Binh Duong, a new and promising city in the south. Their goal is to introduce approximately 1,000 apartments to the market each year.

Cosmos Initia, which started in the real estate industry in 1974, has since developed numerous housing projects in Japan. In addition to developing various types of housing, such as high-rise apartments, townhouses, and detached houses, Cosmos Initia also offers investment solutions and accommodation services in other countries like the US and Australia.

In Vietnam, Cosmos Initia is a member of the Daiwa House Group, a company with a 50-year track record of developing premium real estate projects globally. Daiwa House Group is currently in a joint venture with TTCapital and Koterasu Group to develop the TTS Avio apartment project in the center of Di An, Binh Duong. This is the first project of the joint venture, comprising approximately 2,000 apartments with an area of 50-60m2 each and priced below VND 35 million per m2, equivalent to less than VND 2 billion per unit.

For Cosmos Initia, this is also their first foray into the Vietnamese real estate market.

During a discussion about the investment strategy of Japanese companies in the Vietnamese real estate market, Mr. Shin Ogawa, Director of Housing Operations at Cosmos Initia, emphasized: “We have great confidence in investing in affordable housing in Vietnam.”

According to Mr. Shin Ogawa, before investing, the company thoroughly researched both the market and their local partners. Ho Chi Minh City has a population of over 10 million people, yet the cumulative supply of various types of housing is only about 300,000 units. Moreover, in the past two to three years, the supply has been limited to around 10,000 units annually, which is modest and fails to meet the substantial housing demand.

A simple comparison between Tokyo (Japan) and Ho Chi Minh City (Vietnam) reveals a significant disparity in housing supply. Tokyo, with a population of 14 million, has a cumulative supply of 2,000,000 units, with approximately 20,000 units added in the last year alone. This indicates a severe housing shortage in Ho Chi Minh City, presenting an opportunity for the affordable housing segment to thrive in the city and its vicinity in the future.

On the other hand, the availability of land suitable for developing affordable housing in Ho Chi Minh City is decreasing, and escalating prices make it challenging to enter the market. Therefore, Cosmos Initia prioritizes land adjacent to Ho Chi Minh City, such as Binh Duong, which offers easier access to the city’s demand. Additionally, while many enterprises are already operating in the affordable housing segment, creating fierce competition, most of the current offerings lack distinctive features. Thus, investing in the Vietnamese market is expected to introduce unique products within this segment.

“Our joint venture targets the affordable housing segment, but ‘affordable’ does not mean ‘low-end.’ It’s like enjoying a delicious specialty dish that isn’t necessarily expensive because the portion is ‘reasonable.’ Everything is tailored to provide the best experience,” emphasized Mr. Shin Ogawa.

The Japanese company plans to invest approximately USD 150 million over the next five years, aiming to introduce 1,000 affordable housing units to the market annually. After this first project, the joint venture is looking to acquire additional land to ensure a continuous supply. They prioritize land in provinces adjacent to Ho Chi Minh City, ensuring soft prices and sound project legality.

Regarding the real estate market, many believe it is gradually warming up. According to Batdongsan.com.vn data, property searches in the first half of 2024 have been increasing since the “bottom” of Q4 2022 – Q1 2023, with a noticeable surge in Q1 2024. This cyclical pattern is typical of the real estate market. In major markets like Hanoi and Ho Chi Minh City, all types of real estate have seen positive search trends in the first two quarters of this year.