CÔNG TY CỔ PHẦN ĐẦU TƯ NAM LONG (HOSE: NLG)
Số 6 Nguyễn Khắc Viện, P. Tân Phú, Quận 7, TP.HCM
Điện thoại: (84.28) 54 16 17 18
Fax: (84.28) 54 17 18 19
From Construction Contractor
"B’ must become B" was Mr. Quang's mindset since 1992, when he opened a 7 person company doing the work of private construction contractor. Nam Long Construction Co., Ltd operates in an office at 47 Dinh Tien Hoang, District 1, HCMC, which was rent out at “friendly” price.
B’ means "subcontractor". It explains the fact that Mr. Quang and his associates had to stay in the shadow of another government company in order to get the job. After the company was established, the "construction contractor" became party B in the construction contract.
The progress to change from “B’” to the official B on a contract of construction cooperation, took many years.
Mr. Quang graduated from the HCMC University of Architecture in 1983. The fresh graduates was given a position at the Southern Institute of Planning and Design, which was very "attractive" at the time. But after five years going everywhere in the South, drawing planned maps, he realized that the government working environment did not give him enough inspiration to work and dedicate himself. He thought if he should come and work in the Soviet Union? The Soviet Union was a “luxury” destination for young intellectuals at that time, but it would not help the young man continue his passion in architecture. He needed a community with like-minded people to satisfy his expectations.
Keeping that dream in mind, he quitted and started building house for a living. His friends and him looked around for projects from government companies and offices. After several years, Quang's group became one of the famous construction contractors on the market.
During those years, the market had given him first lesson of real estate. Collecting all of his saving and even borrowing from family, he bought 2 hectares of land in District 2 with 36 ounces of gold, following his dream of “an international joint venture”. But his land was quickly withdrawn as it was inside the city’s planning of new urban area.
"I did not know how dangerous it was. The previous landlord used my money to buy a Dream bike, karaoke machine, and I lost all money. The first lesson about real estate is that you must know the law well", he recalled.
1991 marked a milestone for the planned economy as Vietnam's first Enterprise Law came into effect. It allows the establishment of a private company. 95% of existing companies are government-owned with names like: Tong 25, Xay dung 8, Xay dung 14 ... Nam Long is one of the first private companies with a proper name ...
"Nam Long Company" established in 1992 is a dream come true for architect who is also a construction contractor. “Even the company is just a way to make a living, I still dream big as every architect does. That is why my company was named "Nam Long”, which means “Dragon of the South”, said Mr. Quang. Nam Long was different with all other companies wih a numbered label, and was one of the first private companies in Vietnam.
He still remembers when him and his friends discussed and decided on the company credo as “quality reputation”, which was rarely seen in the corporate scene at that time.
A friend who used to cooperate with Quang’s team had a 4x7 meter house on Dinh Tien Hoang street and let his company rent the ground floor while he stayed on the first floor. Seven people worked in the 28 suqare meter office, but everyone was very vehement and willing to work more than the regulated hours Quang also remembers his partner, Mr. Dong, who just graduated from school, moved to Saigon from Can Tho, stayed with his wife family and worked for the company. The couple only had a tiny place at the base of the staircase. Everyday Mr. Dong would took his bike 67, his most valuable asset to go to work at Nam Long, as a chief accountant.
Seven members of the team used to say that the company is self-managed, even the director is self-elected. Quang was the director but sometimes he had to pay employee salary out of his pocket.
Startup life back then meant to “survive first” without thinking too far, as everything is difficult in the closed economy.
He wants to make his company a “professional playground” for great architects with big dream. But the good and famous people that he invited them all refuse as they didn’t believe his small company can last long.
In fact, the company did more than just existing. After 25 years, 28 meter square office became a 14-storey building with over 500 staffs, not to mention project construction teams everywhere in the south.
That is the story of Nguyen Xuan Quang, Chairman of Nam Long Investment Joint Stock Company.
Real estate ecosystem
As the company had its own name, legal status, changed from “B’" to "B", diffilcutlies did not end there, since the market was small, making it hard to find a job. The industry wasn’t really regulated, so winning a contract took people lots of sweat and tears.
During this time, destiny brought Quang to a specialist who he has been deeply grateful to meet. Mr. Hoang Nguyen Dan, a consultant for the director of Ho Chi Minh City Construction Department after 1975. He became Nam Long's first economic advisor and jointly outlined the company long term direction with Mr. Quang. In particular, the most important turning point was making the decision to bring Nam Long from B to A, from hired construction company to a real estate developer. "That’s when we could be independent and able to assign work to our team rather than chasing to win a bid," - said Mr. Quang.
It was the last day of 1996, in the hall at 35 Nam Ky Khoi Nghia, Mr. Quang presented "Nam Long Housing Program" to the authorities, the city chief architect, Mr. Le Van Nam, the deputy minister of construction, the press, who supported business with breaking idea to form up the market.
Mr. Quang presented Nam Long’s plan in the next 3 years to support the execution of the national housing program, including number of houses that would be built, size of land fund, target customers... He did not think it was one of the company's first manifestations of a professional real estate developer.
Enterprise Law for private companies was established in 1991 but until 1995, only government-owned companies were allowed to develop real estate. In 1995, the boundary was removed and Nam Long became one of the first five companies to announce real estate development at the same time as Minh Phung and Huy Hoang.
Nam Long’s housing program was put into action very quickly. In 1996, the An Lac project with simple residency model of divided foundation soil in Binh Chanh was established. In 1998, the first blocks were built under the Nam Long’s Housing program were launched in Phu Thuan, followed by the Tan Thuan Dong project in 2005.
The first project - An Lac located in the outskirts of HCMC was only about 5 hectares, very small size compared Nam Long’s latter projects. The company not only sold gound soil in portion but also reconstructed the area’s infrastructure. Binh Chanh only had rice field, marsh, and coconut trees. The company drilled wells and built water treatment factory, roads for local people, brought electricity to remoted residential areas. At that time, the Nam Saigon urban area was not even formed but only planned pon paper.
The first 200 pieces of ground soil were not very impressive as his team was learning on the ob and tried to survive. They were just “trying to do better market." Even they did not determine to be perfect with the first project, An Lac was one of the first real estate projects in HCM City to invest in infrastructure for Binh Chanh people.
All the ground soil was sold out at the price of 12 ounces of gold each. The board of directors was happy because the product is sold means that the company would have the opportunity to develop in that direction. "In business, new productcs sold only means survival, so I did not think too far," he said, “later on, I can feel the silent happiness of being a pioneer.”
The dream of a populated residency, a small city in modern and civilized urban space was only a seed planted inside Quang and the co-founders.
In 1996, traveling abroad and escape over the border weren’t much different, Mr. Quang filed a travel application to Canada to learn and get to know what the world was doing so that he can prepare for Vietnam. Later, he made a rule for his management team to travel abroad at least to two countries a year to see how they do real estate.
As far as they go, they realized that a real esate developer did not simply build and sell the house to make as much money as they can, but also needed a bigger vision in planning and developing township, communities, which meant building a living system with complete commercial services, school, shops, parks, gym, swimming pools, tennis courts ...
"At that time, I knew that we wanted to develop a complete living environment and township rather than developing houses and apartment buildings. Those townships must be significant in quality of living and design of the city. They only have to be a real estate ecosystem where houses are only parts of the system which includes parks, green spaces, sports facilities, schools, supermarkets and other services. If one chooses to live here, they do not have to go outside for the services they need", he said.
This decision came with a lot of hardship, investment, and capital as until now, many real estate companies still choose to build a few buildings and sell as fast as possible to optimize profits.
When choosing a sustainable model, Nam Long had to commit to a long-term investment, reserve space for common areas instead of increase the number of apartments and houses, and patiently invest more money which also means more risk.
“Fortunately, there were people willing to spend a little more to buy a home and living environment that the company offered”, he said.
Thanh Loc, Phu Thuan residential area, Tan Thuan Dong residential area, Phuoc Long B residential area, An Thanh - Can Tho ... were gradually developed in the populated residency model.
To the villas like Thao Nguyen Sai Gon, Nam Phu ..., Nam Long made its name with nearly perfect and aesthetic populated residency - ecology. Mr. Quang recalled that he picked up the call from the city’s chief of Architect Le Van Nam. He was standing on the bridge looking down to Nam Long’s villa project and said “It’s beautiful”. The compliment was a big reward for Quang because even the government officers recognized the value of his project. His random compliment was an approval for the serious investment that Quang and his partners put into urban design and planning.
7.7 hectare Thao Nguyen Sai Gon and 28 hectare Nam Phu are two benchmark projects for the real estate market in 2005. He has learned from the Westerners how to build a house and he wanted to build better quality townships in Vietnam.
The overall design of Thao Nguyen Sai Gon was redo four times and took almost a year. Everytime the materials, the landscape and fengshui… were all changed. The board of directors only apprived the proposal when it met the international standards, which were hundred times ahead of Vietnam.
Later, the company invited a Singaporean real estate expert to Vietnam to be project advisor, but he said: “You’ve done it, you don’t need any help from Singapore.”
The value of a professional real estate developer is the ability of capture the market need. Though, it is not about finding a land, building speed, design, strong advertisement, or high turnover… Not the biggest real estate company in Vietnam but Nam Long’s products, from affordable to luxury houses, always have high demand. The company’s townships have suitable prices and stable quality. Little do people know that’s the company’s business philosophy - affordable housing.
"Affordable" is used to describe housing products that price matches with buying ability of the residents in real estate. In other words, residents can buy the best quality house with the money they make. Your products meet the financial ability of the largest population not the smallest. These are products that people can buy without having a debt, or become insolvent, financially stressed and still enjoy the best living quality.
The developers, in order to fit the crowd, would not mark up too high. The pricing formula must be effective enough so that other competitors cannot build cheaper and better houses at the same price.
Affordable housing is an essential product line for real estate developers around the world. If you cannot product the best products at the cheapest price, you cannot be considered as a professional and you are not making enough contribution to the community, people and the market. An affordable house costs USD $650,000 in Sydney, USD $350,000 in Singapore. According to Quang, in Vietnam the estimate price is about USD $25,000 to $75,000.
According to the Nam Long Research and Development Division, only 30% of Vietnamese housing demand was met. The rapid urbanization brought in massive number of immigrants, but most Vietnamese do not even have the first house. This is also a challenge for real estate developers in Vietnam.
Besides the desire to be in top 3 professional real estate developers in Vietnam, Mr. Quang also has a mission to become a developer of affordable housing for the majority of Vietnamese. To him, the goal is not just idealizing his career but also building a foundation for the sustainable growth of his business by "responding to the purchasing power of the people, which means meeting the expectations of the community. A business can only grow well if the market accept its products and is willing to pay for a living environment, not just a small apartment to go in and out."
He accepts that sometimes people do not understand the intangible value of living environment, because many times people are busy comparing prices in square meters. But the world has moved ahead a hundred years and everyone want a high living standard, so he thought one day his effort would be recognized.
The affordable housing was possible thanks to the real estate ecosystem which has been pre-built many years ago. Value chain is a top notch business concept of worldwide corporations. We once had a pair of Adidas shoes, or imported toy "Made in Vietnam" but sold at remarkably high price, which workers only get paid few bucks to make. The reason is that we did not own a closed production chain. That’s why Nam Long aims for a full cycle of product development to create added value for its investment. Nam Long is one of the few companies in Vietnam that can complete a full cycle of real estate development, from a piece of empty land to townships with attached services. In order to put the chain to work, Nam Long had to set up a system of 15 subsidiaries and affiliated companies. Thanks to cost saving from the beginning of the production chain, the company can offer very competitive products to the market.
Mr. Quang said even today, the definition of affordable is not correctly understood, one day, as customers experience more they will understand. Just like it was not because of the trend that Nam Long adopted international standards in product development. Indeed it cost years of tears, sweats and losses and even our own benefits. But one day, if his product is good enough, people will follow him.
Building a good house
He said his happiest moment was when he passed by the residential areas filled with shining lights because all the apartments were occupied. More than 95% of people buy Nam Long’s houses to live, the rest buy to rent out, almost no speculation. Banks are also very fond of giving buyers a loan because the credit will be safe.
Nam Long's current assets worth more than VND7,800 billion, with a land fund of more than 500 hectares in good locations in the South, suitable for the general planning and ensuring sustainable development for the next 10 years.
Nam Long has completed 8 township projects, supplying more than 15,000 products from villas, townhouses, apartments to offices for lease and launched three strategic product lines: Ehome, Flora and Valora. Besides the popular products, the company also has high-end projects such as Nam Phu villas, Thao Nguyen Sai Gon villas, Nam Thong townshouses, Valora Fuji villas, Valora Kikyo ... Nam Long is still developing and finishing large size townships such as Mizuki Park (26 hectares); Phu Huong (17.5 ha), Phuoc Long B (15.9 ha), Waterpoint (Long An) 355 ha. These projects are cooperated with international organizations and are expected to become a highlight in real estate market.
Nam Long is also known for its portfolio of international strategic partners and shareholders. After IFC (Worldbank), Mekong Capital, ASPL, Nam Viet Ltd. (Goldman Sachs)..., the company is supported by foreign strategic partner Ibeworth (Keppel Land Group), PYN (large investment fund in Europe) ... At the project level, Nam Long also has strong cooperation with leading companies such as Hankyu Realty and Nishi Nippon Railroad (Japan).
Mr. Quang recalled the three most important milestones of the corporation throughout 25 years.
First of all is the transition from a private company to a listed company. In 1992, the company was established with most of the asset registered under his name. To grow the business, he invited friends to invest in the company and switched to Joint Stock Company in 2005.
Then he spent another two years convincing the executive board to list the company on the stock market. "Why do we have to be listed while we have been a successful example? What if changes in model involve risk?” They questioned. He told them "When we go to look at other countries' housing models, the listed company that has a broader business environment will go further and create new values." After many meetings, Nam Long became a joint stock company and was listed in 2013 to prepare for the integration.
The second challenge was to find foreign investment. Although from 2005, after the equitization, management has planned to attract the c flows from foreign countries at all cost. Without safe and sustainable financial flows, a real estate company cannot grow steadily. But it was not until 2008 that ASPL and Golman Sachs became strategic shareholders. Nam Long became the first real estate company on the market to raise long-term capital from professional international organizations with about 15 million US dollars.
In the most difficult time of Vietnam’s real estate industry, during 2010-2011 period, when the domestic banks charge a 25% interest rate, Nam Long has crossed the border to find foreign capital. After a lot of effort, in 2013, the company was listed, and in 2014, it successfully raised long-term capital from IFC. Nam Long is the only real estate company invested by IFC to date.
The third milestone was the human revolution. Mr. Quang used to be proud for having the best management team on the market in 2005. In 2008, having to grow the business, he had to bring in new people, putting the company in big challenges. Old team and new team collided due to differences in point of view and value. Eventhough every business would have old-new conflict, Mr. Quang and his partners still persist in strengthening the team for nearly a decade. But the most precious thing, is that despite many turbulent times, seven initial members are still with him till now.
Now he understands that all collisions were luck.
"I encountered with many people, consultants, people from overseas and domestic visits, and my own team. It's a very immense school "he said, adding that "my biggest mentor is the real market and the consultants.”
These mentors had a passion. When Nam Long was founded in 1992, they wrote in the book "vow to be the foundation brick of Vietnamese architecture." After 25 years, the team has hold on to its mission with a specific strategy in the long run and is striving to reach that goal.
Managers and each employee wished that Nam Long could implement the strategy conscientiously and integrate the professional way of doing real estate from the international real estate market. It is a series of continuous efforts: only focus on real estate with full value from the beginning to complete, master the value chain of real estate. The roadmap for sustainable development of Nam Long does not follow the trend but focuses on improving quality of the products that meet the needs and capabilities of the Vietnamese, from affordable to mid-high end products.
Nam Long targets to be among the top 3 developers of affordable housing and top 3 real estate developers in Vietnam. The company also planned to complete 17,000 EHome, Flora, Valora products and three large townships of 10-300 hectares in the next three years.
Once Quang was complimented that Nam Long was a kind real estate developer. The word “kind” sounded simple but it was a priceless recognization for Quang and his partners. In his mind it was the thoughts and actions to develop real valuable products for the community, to make human life better rather than do business .
Mr. Dong, the accountant bought villa, car and sent his children to study abroad. He managed a subsidiary of Nam Long. When receiving 20-year commemoration of the company, he burst into tears: "It was all my life!"
"Everyone who was born in this life need a big motivation and incentive to dedicate his or her life. For me, Nam Long is also a human and needs to make a contribution. And the biggest contribution of a Vietnamese real estate business is to make it easier for Vietnamese to have a home. All my life was dedicated to Nam Long just for that…”