Nam Long’s ‘Number One’ project worth how many trillions?

HCM CITY — Nam Long Investment Corporation (HOSE:NLG) said it is negotiating with international partners for a tie-up for developing the 355ha Waterpoint township in Long An Province.

If the joint venture successfully develops the project’s first phase on 165ha, with the two partners contributing capital in a 50-50 ratio, NLG plans to record half of the value of the land-use rights, equivalent to nearly VNĐ1 trillion, in its books as profit. The other half will be gradually recorded over the next five years.

But more importantly, according to Nguyễn Xuân Quang, chairman of NLG, successfully opening the key Waterpoint project will bring abundant fundingfor it to be developed simultaneously with other large projects such as the 8.5ha Akariand 26haMizuki, shaping the group's business plans for the next five to 10 years as well as accumulating land for future.

Waterpoint, ultra-modern design

Waterpoint is surrounded by the Vàm Cỏ Đông River and has a thumb shape, a symbol of leadership or “Number One” in fengshui.

Waterpoint is approximately the size of the Phú Mỹ Hưng area in HCM City. Nam Long Group has devoted all its efforts to this project, adopting the most modern design and planning standards.

Identifying that the Waterpoint urban area must be of international standard, its zoning plan was chosen by Nam Long fromvarious options offered by foreign partners and regularly updated to suit the tastes of Vietnamese customers.

The project has the most modern planning standards with regard to sustainability and urban development, factoring in solutions to conserve nature and protect the environment.

The water area is untouched and remains unchanged after construction. A 50m wide green corridor along the banks of the VàmCỏĐông River will beconservedby the investor.

This is one of the first urban areas in Việt Nam to use a water treatment and management system provided by a Dutch company. This systemwill treat all the water in the canal network in the urban area before it flows out into the river and vice versa, and at the same time ensure a constant flow of water and steady water level, which will create a cool and fresh breeze in the urban area.

The entire project infrastructure like drainage system and roads are designed to international standards with separate walking and bike lanes all around the project.

In its first phase of 165ha, Waterpoint has a central park of more than 20 hectares, a commercial area of 8 hectares, a university and international schools of 17ha and a large office area.

The facilities here are of urban-area scale, such as the 2.5 hectare Club House area which has a 50-metre Olympic-sized pool, a complex of tennis courts similar in scale to the Lan Anh International Tennis Courts (in HCM City), a wedding centre, a football pitch and more. The venue can be used to organise city-level sporting events in future.

In addition, each housing block, condominium, and compound villa will have their own amenities such as BBQ place, swimming pool, family park, children’s park, and other utilities.

NLG said it has enough funds to develop this project. In June a finacial organisation will make disbursement of VNĐ600 billion through the company’s bond issuance.

Funds raised from the issuance and the sale of other large projects such as Mizukiand Akari will be invested in Waterpoint.

With its ideal geographic location, Waterpoint is a promising project. It is in Long An adjacent to HCM City and attracting strong investment from local and foreign investors in the last two years.

Within a 20 minute drive from the project are Vivo City, Aeon BìnhTân, the HCM City Children’s Hospital, and BếnLức and ThủThừa administration centres of Long An Province.

The target market for this project comprises the 2.6 million people living within a 45-minute motorbike or bus drive from there. The population in the core region of this target market is around 1.3 million.

This kind of gated community is not yet available in this area. So Waterpoint, with its state-of-the-art gated community and superb facilities, will appeal to not only customers buying houses to live in but also those who want to own a second home, and even investors.

Nam Long, when developing the EHome 4 North Sài Gòn residential area in BìnhDương, found that 60 per cent of customers buying houses were people living in BìnhTân District and District 12 of HCM City who wanted to have a good living environment for their families that allowed their children to safely enjoy outdoor activities instead of living in cramped houses in the inner city.

Therefore, Waterpoint, with its modern plan, expects to attract a large number of buyers from HCM City.

Venture to accelerate investment

Many foreign partners are interested in Nam Long’s Waterpoint because of its huge potential, which could ensure a 25-30 per cent profit for the joint venture, an attractive rate of return for foreign capital.

Cushman & Wakefield (C & W), an international real estate consultancy firm, has valued the Waterpoint project at around US$62 per square metre of land. This means the project is already worth VNĐ 5.3 trillion, or two times NLG's current charter capital. The project’s entire 355 hectares were previously valued in the company’s books at VNĐ1.5 trillion.

This was also the price NLG used as a basis for negotiations with foreign partners seeking to contribute capital for the project’s first phase on an area of 165 hectares.

Assuming a discount rate of 10 per cent, the land valuation in the first phase is more than VNĐ2.1 trillion. NLG’s normal modus operandi is for it and its partner to contribute equally to the joint venture, and thus half the land value or more than VNĐ1 trillion will immediately be recorded in the books as profit.

The other half will be gradually accounted during the development of the project from now through 2023 together with dividends when the joint venture sells units in it annually.

The first phase of the project is expected to supply 3,000 terraced houses (low-rise houses), besides high-rise condo buildings.

The project is expected to cost VNĐ6.9 trillion and generate revenue of VNĐ10.7 trillion.

Entering into joint ventures with foreign partners will enable NLG to strengthen its finances to invest faster in the project, better develop infrastructure in its second phase, and continue to acquire lands for urban areas and develop strategic product lines under the Ehome, Flora and Valora brand names and others.

Besides, Waterpoint is a large project with extensive facilities. Nam Long’s foreign partners could greatly help it in developing utilities in the township as well as finding other foreign partners in developing education and banking services and other amenities and services.

Experience shows that joint ventures with foreign partners can borrow from foreign banks at interest rates that are 30 per cent lower than domestic banks’ rates.

Besides, when NLG sets up a joint venture with a Japanese partner, Japanese companies in the field of property management are willing to set up a joint venture with NLG to provide Japanese-standard services in Việt Nam.

"At Waterpoint, there are many functional areas that need to be developed well," Quang said.

Demand for affordable housing remains enormous. Improving economic conditions have also increased people’s demand for relocation to modern, gated urban areas. Thus, NLG’s products are always well absorbed by the market.

By successfully developing Waterpoint, and together with the Akari and Mizuki Park projects, Nam Long can have a stable business plan for the next 10 years with high growth, Quang said.

From Dautuchungkhoan.