South Koreans are shifting from being tenants to homeowners and from staying to living. They are becoming a strong force shaping every segment of Vietnam’s real estate market.
Korean touch in every space
Many experts suggested that Hanoi and Ho Chi Minh City still lack Grade-A offices and will see constant future demand, but most South Korean investors did not hold their Grade-A offices for a long time: Diamond Plaza sold to Lotte and VN Steel, Kumho Asiana Plaza sold to Mapletree (Ho Chi Minh City); Daeha Business Center sold to Hanel, or Keangnam Landmark 72 sold to Aon (Hanoi).
The only exception is Lotte when it did not only take over Posco E&C’s position in Diamond Plaza but also began the construction of Lotte Mall Hanoi, a US 600-million-dollar complex of residential and commercial space.
South Koreans have long been well-known for developing iconic Grade-A office buildings in Vietnam, like Daeha Business Center in Hanoi and Diamond Plaza in Ho Chi Minh City. However, the future might suggest a new trend shifting from Grade-A offices to lower grades. KORAMCO REITs & Trust is an example when it spent US $62 million dollar buying the Grade-B office building TNR Tower Nguyen Cong Tru (Ho Chi Minh City).
Moving on to retail, the convenience store chain GS25 is probably the busiest one among South Korean firms in Vietnam in terms of finding locations. Due to scarce space and poor urban organization, especially in the old quarters of Hanoi and Ho Chi Minh City, the battle for inner-city convenience stores has been intense. It is likely a reason why GS25 purchased Zakka Mart, which had about 50 locations in HCMC before the acquisition.
Besides, GS possesses a strategic advantage, which is the partnership with Son Kim and their know-how about local realty as the Vietnamese firm lives in the real estate and fashion retail spheres. Therefore, the ambitious goal of 2500 stores within 10 years is not infeasible and owners having retail space that meet GS25’s qualifications can expect rising future demand for their properties.
Not only coming to Vietnam for business, a huge number of South Koreans is also travelling to the country, and South Korea tourism has been a major push for Vietnam’s leisure properties.
Hanoi and Da Nang on South Korean channels MBC and KBS.
To many South Koreans, Da Nang is known as one of the top destinations for honeymoon and winter vacations, and they have recently outnumbered the total of visitors to Vietnam's most livable city from every other country of origin.
Because of the rising number of tourists, real estate services for South Koreans to capture their leasing/owning demand have aroused accordingly. Dahan Real Estate Consulting, a Vietnam-registered company established by a South Korean in August 2018, is an example. The firm liaises owners to rent apartments or houses to South Korean visitors and also promotes hot projects to South Korean potential buyers, like The Monarchy Apartment, where it sets its office.
From tenants to homeowners, from accommodations to communities
Dahan is not the only case of a rising niche: flipping properties between Vietnamese and foreigners as well as among foreigners themselves, particularly South Koreans. In Hanoi, there is even a closed group with over one hundred brokers specializing in serving foreigners to share trading information of alien owners, and many of them come from the East Asia country.
Ads posted by some professional brokers liaising their South Korean owners.
An interesting point in this niche is that the information is publicly shared, like prices and full addresses, and unlike most online estate ads posted by middlemen that hide addresses (so they can charge clients per visit or not getting kicked to the curb by homeowners), as these brokers hold higher levels of trust from foreign owners.
In recent months, South Koreans have been aggressive foreign buyers of high-end projects like Vinhomes D’Capitale or Kosmo Tay Ho, and they are also generous homeowners who tend to offer handsome commissions at 2% plus when selling. Nonetheless, by no mean they are throwing away money as their typical, wide-eyed markups are 5-10%, translating to at least VND 300 million dong.
Not just shifting from leasing to owning or flipping accommodations, South Koreans have also been developing their own residential projects and communities in recent years.
Booyoung and Hyundai Hillstate were among the first residentials. South Korean FDI projects, in early 2010’s and after years of disputes and delays, are now reliable homes for many South Koreans and Vietnamese. But the best thing so far is that they have succeeded in building mixed communities between South Koreans and the locals.
Following those successes, major Vietnamese cities have just seen big new plans or reoperations of residential complexes from large South Korean corporations.
These projects may still have a long way to go but clearly, it shows that Vietnam is no longer just a stay but a place for living to South Koreans, and we have reasons to believe in a bright future for South Korean – Vietnamese communities and for Vietnam’s residential real estate.
