Tokyu Corp., developer of Japan’s largest privately built town, expects to start earning a profit as early as 2014 from a 100 billion yen ($1.2 billion) city it’s helping to build in Vietnam.
Tokyu’s venture with Vietnam-based Investment & Industrial Development Corp. will make an operating profit of about 4 billion yen in the fiscal year starting April 2014, Toshiyuki Hoshino, president of the unit, said in an interview in Tokyo on April 25. The company will start selling as many as 1,000 residences that year, he said.
Becamex Tokyu Co., which is in charge of the project, may construct as many as eight tower blocks over the next two years as part of a plan to eventually build 7,500 residences and commercial facilities near Ho Chi Minh City, Hoshino said. Tokyu, based in Tokyo, is returning to overseas property markets after attempts in the 1970s and 1980s to tap demand in North America.
The venture intends to complete the development in Binh Duong New City, 30 kilometers (19 miles) north of Ho Chi Minh City, by 2022, according to Tokyu. Becamex Tokyu, 65 percent owned by the Japanese company and 35 percent by Investment & Industrial Development, was set up with a capital of 8.6 trillion dong ($412 million).
Next Growth Area
“We had to start looking around for the next growth area,” Hoshino said. “The area we chose already has roads and is attracting industries. We hope to draw people from the north of Ho Chi Minh, if we’re successful.”
The venture aims to target the 1.6 million people living in the Binh Duong area and multinational companies that have set up operations there, Hoshino said. It has already held talks with Japanese supermarket chains about opening stores, he said. Tokyu, which also operates trains and buses in Japan, has no plans to build a railway line for the city as it may not able to recover the costs, he said.
The company fell 1.1 percent to 373 yen as of 10:32 a.m. in Tokyo trading today. It has lost 1.6 percent this year, compared with an 11 percent gain in the Nikkei 225 Stock Average.
Tokyu built a new city on the edge of Tokyo in the 1950s that currently has about 600,000 residents over 5,000 hectares, according to its website.