Sunkyung E&C to Build Hotel in Hanoi, Vietnam

Having focused on logistics center construction and development in Korea in the past, Sunkyung E&C turns its attention to Vietnam and challenges hotel development. This development project is being pursued in partnership with Lotte.

According to the construction industry on the 10th, Sunkyung E&C is executing a project to construct a hotel with 4 basement levels and 40 floors above ground in the Tay Ho Tay New Town, located in Hanoi, Vietnam. The site area is 20,036 m², the building area is 7,979 m², and the total floor area is 214,827 m². The project name is the S&D Hanoi Project.

This project is a joint effort between Sunkyung E&C and Lotte. The method involves Sunkyung E&C establishing a 150 billion KRW fund, which then creates a special purpose company (SPC) to pursue the development project. Construction will be handled by Lotte E&C. After the building's completion, Lotte Hotel is scheduled to move in.

The site where Sunkyung E&C is pursuing hotel development is located near West Lake (Ho Tay) on the northwestern outskirts of Hanoi's old downtown. West Lake is Hanoi's largest lake, situated on the transportation axis connecting the old downtown with Noi Bai International Airport. Urban development projects are being conducted around this axis.

In particular, villas near West Lake are famous as an emerging affluent neighborhood, fetching prices in the billions of KRW. Starlake City, where Daewoo E&C pursued a development project, is also near West Lake. A construction industry official explained, "The Vietnamese government sold 13 sites near West Lake, and Sunkyung E&C purchased one of them."

Sunkyung E&C is a construction company established in February 2006 by Chairman Young Bin Lim, which has steadily focused on logistics center construction and development. It drew attention by ranking 74th in this year's construction capability evaluation, rising 48 places compared to the previous year.

Major construction performance records include LogisValley Ansan, SLK, Anseong, Hanaro, Icheon, Deokpyeong, and Gimpo, Coupang Incheon Logistics Center, Sajo Systems Pyeongtaek Logistics Center, BMW Anseong Parts Warehouse, Domino's Pizza Yongin Hub Center, Ottogi Incheon Logistics Center, and SsangYong Motor Suwon Service Center. It also operates its own PC (precast concrete) plant (165,000 m² scale, annual production of 80,000 m³) in Eumseong-gun, Chungcheongbuk-do, supplying PC members while reducing costs.

Recently, Sunkyung E&C has been expanding its domain beyond simple construction into in-house development projects, directly purchasing building land to develop. A representative in-house development project is the Sihwa MTV Logistics Center. Whumad, a subsidiary 100% owned by Sunkyung E&C, took charge of project execution, while Sunkyung E&C handled construction. Ground was broken in November 2016, and construction was completed in March last year. Afterwards, it was sold to CBRE Global Investors Asset Management for 374 billion KRW, securing a profit reaching 160 billion KRW.

Sunkyung E&C is applying this same in-house business model to Vietnam. Projects conducted in Vietnam so far total 4 cases (excluding the S&D Hanoi Project), all of which were warehouse development projects. Among them, LogisValley Bac Ninh and Bac Ninh 2 were sold to the 'Mirae Asset-Naver Asia Growth Fund' jointly established by Mirae Asset Financial Group and Naver. The sale price is 53 billion KRW.

In the industry, it is viewed that Sunkyung E&C is re-investing the sale proceeds from LogisValley Bac Ninh into this hotel development project. This is because Korean companies have recently been experiencing considerable difficulty bringing profits earned locally in Vietnam back to South Korea. The Vietnamese government sets post-completion tax or land compensation amounts higher than local standards, or refuses transfer approvals during the process of converting Vietnamese local currency into South Korean currency to bring into Korea.

A construction industry official said, "Since the sale of LogisValley Bac Ninh, Sunkyung E&C has been searching for many investment targets to re-invest in the Vietnamese market."