KUALA LUMPUR: SP Setia Bhd will form a joint venture this year to build homes in Vietnam’s Ho Chi Minh City, targeting one of the region’s fastest growing economies in the company’s first foreign venture.
SP Setia was negotiating with a government-linked company to build a township in Ho Chi Minh City, executive director Voon Tin Yow said in an interview. The project will be similar to the company’s RM3.5bil, 791-acre Setia Eco Park development.
SP Setia is shifting focus from mass housing to offices and luxury residences after Malaysia’s glut of unsold homes swelled 31% last year.
SP Setia, which set up a representative office in Vietnam a year ago, would “sign very soon” with its partner, Voon said, declining to give details of the project. “We prefer some element of control” in the project, he said.
Construction of SP Setia’s proposed Vietnam project “hopefully” would start next year, said corporate services head Wong Sheue Yann.
At home, the company was “on track” to meet its target for a 22% rise in home sales to RM1.2bil in the 12 months to October, compared with a year earlier period, helped by its focus on higher priced homes, Voon said.
SP Setia boosted land acquisition spending by four-fold to RM216mil in its fiscal year ending Oct 31 to build luxury homes and condominiums in Malaysia, seeking wider profit margins. It sold RM161mil of land to help fund the purchases, Voon said.
The developer wanted earnings from luxury homes and office developments to account for about 10% of group profit, he said.
Building low-volume, high-priced homes was a “new area of growth”, Voon said. “It’s a recent phenomenon.” Still, the luxury home business was “cyclical” and SP Setia would still focus on the mass housing market, Voon said.