Mr. Nguyen Dinh Trung, chairman of Hung Thinh, turned a real estate brokerage company into a project developer in its own way: Build a closed ecosystem, create products suitable for the market.
IN THE MIDDLE OF TRAN QUOC TOAN SMALL STREET (District 3, HCMC), there is a three-storey building with pale yellow frontage. Its architecture follows the style of the 1990s, the building's appearance has nothing more than a small signboard mounted on the narrow entrance that shows it’s the head office of the Hung Thinh Corporation.
Inside, the building does not have an elevator, each narrow space is maximized into a working place for 300 employees. In mid-afternoon, the working atmosphere hustles with the typing sound of computers, many groups of employees find the benches on the side of the building, heads together to exchange work when the meeting rooms are always full.
The somewhat meager rented head office does not properly reflect the position of Hung Thinh Corp, the developer of a rising real estate project. "My business viewpoint is to move forward slowly and steadily, not to develop massively but to rely on the advantages of each industry under the motto: 'I am not more in quantity but better in quality'," Chairman Nguyen Dinh Trung opened in an interview with Forbes Vietnam.
Mr. Nguyen Dinh Trung, Chairman of Hung Thinh.
His working office is simply decorated, an aluminum-and-glass door is open to the offices of his associates and is also the first entrance. The second entrance went around through the narrow hallway on the side of the building with a few chairs and tables, where the leader of Hung Thinh still sat at a table meeting with his associates.
For the past five years, the company has had its own formula to create a rapid resilience through the M&A of frozen real estate projects and then revive such projects, creating suitable products to market. For the past two years, despite of general difficulties, Hung Thinh has had its own way of dealing with the unfavorable real estate market conditions.
Bold body, square face, in a white shirt embroidered with the unique characters N.Đ.T on the sleeve, Chairman of Hung Thinh impressed by his healthy and youthful appearance. He is not a strange face to readers of Forbes Vietnam.
Appearing right from the first issue in the real estate special subject of October 2013, at that time the real estate market hit the bottom, difficulties piled up with brokerage companies, he showed his viewpoint: “It’s said that a person who do business well is to sell what we have but not really what people need. But when the market is difficult, we have to sell what people need and adjust the products as close to the demand as possible.
Seven years later, the chairman of Hung Thinh gave the same message as before: “Looking at the reality of the current market, there are very few products that people with real needs can buy. In order for people with have real needs to have access to housing products, the products must have a reasonable design, a moderate area and lower the cost more."
Practical business philosophy throughout makes a thrust for Hung Thinh Corp. Group takes on a completely different appearance in the second appearance. Previously, Hung Thinh products were present in Ho Chi Minh City, Khanh Hoa, Lam Dong, and Binh Dinh but now they are present in many other localities such as Ba Ria-Vung Tau, Vinh Long, Binh Thuan, Binh Duong, Dong Nai. ...
The Corporation announced that it owns a 4,500-hectare land fund with total assets of more than two billion US dollars and has not stopped: “From now to the end of the year, Hung Thinh also conducts M&A activities, assets are increasing. "," Trung said in a low voice from the Central region.
In early 2021, Hung Thinh will announce the project in Hanoi, taking the first step in the North. Not just a broker, Hung Thinh is now known as a project developer with products ranging from bare land, apartment, condotel, office-tel and shophouse to high-value products such as resort villa, compound villa… Most products are at the prices that are average and easy to buy.
According to his sharing, the Corporation's sales in 2019 reached VND 15,000 billion. In 2020, despite of the difficulties caused by the Covid-19 epidemic, the Corporation's sales in the first three quarters of the year reached over VND 10,000 billion. According to an analysis report of Vietcombank Securities Company (VCBS), from 2016 to mid-2020, Hung Thinh accounted for 4% of the supply of products launched to the market. Accordingly, Hung Thinh ranked behind Vinhomes with 22% of market share, double than other famous project developers in the market.
“Hung Thinh has always owned a closed ecosystem from design, construction and project development to sales. That is an advantage for Hung Thinh to develop faster, take control of the 'game' from the beginning to the end. This helps us a lot in solving the capital problem,” Mr. Trung compared the company with developers in the market.
How has Hung Thinh Corp controlled the game? The heart of the whole corporation today is Hung Thinh Land, the developer of real estate projects. Projects are assumed by Prowind Design Company under the Corporation. Mr. Trung showed that he knew who and where he is: “Well-known investors hire foreign designers. Hung Thinh does it by its own but must always change to improve. We all can make a mistake but we can't get the same error twice.”
Most importantly, the "in-house" design team helps Hung Thinh give detailed plans and designs. Common spaces (elevator, corridor and playground) and technical infrastructure area (backup water and electricity systems, waste collection and treatment area) are rationally arranged to help the company increase about 6% on average of the floor area offered for sale.
This means that if developers outsource the design to create 100m² of apartment floor, Hung Thinh can raise it to 106m². In addition to increasing sales area, it’s estimated that Hung Thinh reduces about 5% of construction material costs per unit area.
If Hung Thinh Land is the heart in the ecosystem, Hung Thinh Incons, the construction company is as arms. Listed on HoSE from the end of 2018, Hung Thinh Incons achieved revenue of VND 3,680 billion in 2019. Using the "in-house" construction team helps Hung Thinh Land's projects save about 4–5% of the cost. Moreover, the complete initiative in construction brings financial autonomy that few people really know from the outside.
With the regulations on the current condominium projects, when the foundation and the tunnel are completed, the investor will collect 30% of the value of the pre-sale apartment. The payment progress of the following installments depends on the work progress. Owning its own construction company, with projects close to the milestone of collecting the installments, Hung Thinh increased the number of human forces to accelerate the construction progress. This initiative creates financial initiative, a secret weapon of Hung Thinh in M&A activities.
STEMMING FROM BROKERAGE, Hung Thinh distributes primary products to the market through PropertyX, saving additional 3–4% costs. This member company has 1,300 salespeople. PropertyX along with Dat Xanh and Cenland share the leading position in the real estate brokerage market share. “Hung Thinh broker only sells the company's primary products, not offer the outside. Only distributing the company's products can nourish the Corporation,” Mr. Trung said.
In summary, for 18 years of operation, Hung Thinh has distributed more than 50,000 products, of which about 60% were "in-house" products when Hung Thinh played the role of project developer or investment cooperation. From 2014 to now, Hung Thinh has handed over about 18,000 products in the role of an investor. If Hung Thinh Incons is the first arm of Hung Thinh, PropertyX is like the second arm.
In addition to the sales function, PropertyX is like a thermometer to measure the hot and cold state of the market, feedbacks so that the center map out the following business plan or adjust sales, promotions and payments ...
Hung Thinh Ecosystem includes a building management company, an architectural design company, a furniture company, a greenery company. Owning a furniture company, completing the project helps Hung Thinh save more 1% of costs. Each building handed over to buyers of Hung Thinh has its own management department. In addition to the stable cash flow from service management fees, this unit is like an antenna that receives feedback signals: whether the apartment is designed properly or not, which position the water and electricity infrastructure is often malfunctioned, how the operation process is.
With the "in-house" design team that has been continuously improved, the original apartment buildings have a square and lumpish look, then their architecture has become more elegant such as Saigon Mia, Sky Center... It’s estimated that the ecosystem helps Hung Thinh saves approximately 20% of the cost compared to the same product in the market. This difference, on the one hand, helps the product have a competitive price, on the other hand helps the company have flexible space in selling.
Project sells slowly? Increase your budget for advertising. Market strength is weak? Apply direct discount on products. Buyers have difficulty in payment because of Covid-19 outbreak? Apply discount to the customers who pay on schedule. During the Covid-19 pandemic, Hung Thinh introduced a direct discount of VND five million for each payment of VND 100 million.
Mr. Trung said: “Someone says it’s a trick, but for Hung Thinh it is from heart to heart. Everyone shares the hard time in the epidemic, we take a step back, reduce profits for customers. "
“Hung Thinh brings many products to the market and most of them are in the average segment. They are one of the project developers who master the market, know where the need is and focus on that segment,” Mr. Su Ngoc Khuong said, senior director of Savills Vietnam.
According to his associates, Mr. Trung is a person with flair business mind. At work, he has strength in marketing and sales, not going deep into details when already decentralizing and assigning tasks to associates. As a realistic and busy type of person, Mr. Trung does not know how to play golf because he "regrets" the time spent twice a week for this "noble" sport. His favorite sport is tennis, playing with a group of business friends at a nearby yard in District 10.
Also like real estate enterprises in Ho Chi Minh City, Hung Thinh Corp faced difficulties in 2018 when the competent authorities reviewed legal procedures, the licensing of new projects was delayed. Having experience in project development in the province, Hung Thinh is one of the earliest companies to develop projects locally, a lifeline helping many real estate companies to survive today.
The extreme storm was not over, in 2020, real estate companies suffered from a punch called Covid-19 epidemic. Following on the market, Hung Thinh also had a flexible way of turning the state. When the epidemic broke out, Hung Thinh was developing Ho Tram Complex project, 11.5-hectare resort tourist apartment project with 4,586 products in Xuyen Moc (Ba Ria - Vung Tau).
When health concern was put on the top, the project marketing message hits this concern: “The project blends with nature and landscape of the sea”, “the location is close to the sea, so most apartments have a sea view without any obstruction, an expansive and well-ventilated design to welcome sunlight and wind.”
In August 2020, Hung Thinh offered New Galaxy project in Binh Duong, a six-block apartment project with smart home technology. Hung Thinh aimed to be investors and parents with well-off economic condition in the province who could buy apartments for new students entering the school. The opening ceremony was at the right time of the school year. “Hung Thinh is a person of the market, the market will decide everything. Hung Thinh goes with the market, we will follow the change of market demand” Trung said. As a result, our products were sold out upon offering for sale.
MR TRUNG WAS BORN IN 1972 IN THAI BINH but grew up in Binh Dinh in a family with four siblings. He went through a variety of jobs before opening a real estate brokerage agency in 2002 in District 10, initially specialized in bare land brokerage. Witnessing the real estate trend in Trung Son area from VND four million/ m² to VND 6–7 million, then 8–10 million for only a few months, but his business gained a lot of profits but almost went bankrupt when the market plunged.
He contemplated: “Through each real estate trend, there were a lot of successful people but also many downsides. Many people mortgaged their house to participate in the speculation and then fell apart." The lesson that he almost broke became a lodestar to build Hung Thinh later: make products associated with real needs and try to limit the creation of speculation state, exaggerating prices.
The first project Hung Thinh participated as an investor was Thien Nam Apartment (District 10, Ho Chi Minh City) acquired from Temexim in 2009 when “the size of the company had VND 100 billion but the money was not in Company but in deposit and escrow brokerage." The first project to creat a momentum for the company later forms a closed ecosystem.
Once from Cam Ranh airport passing Bai Dai (Khanh Hoa), Mr. Trung saw that at one side adjacent to the sea, resort tourism projects were built, on the other side of Nguyen Tat Thanh street, a beautiful strip of land has not been invested yet. He thought tourists coming to the resort will have need to experience the local culture, hotels also need to have a workforce in place and residential projects should be invested.
In 2012, the Golden Bay project with 2,362 land lots in the northern Cam Ranh peninsula was launched to the market and quickly welcomed. Not long after that, the residential area was launched to bring excitement to that area. “Real estate products must have some clear elements to create real and long-term value, we can’t go to a rubber garden to build an urban area and call people to come to stay. From the role of a project developer, it is still possible to do but it’s required to create the necessary product before selling to the buyers,” he said.
According to Hung Thinh, when developing projects in localities, the company always researches the characteristics of each region, creating products so that about 60% - 70% of projects are aimed to buyers with real needs. Hung Thinh found a resilience at a time when the real estate market went through the darkest days.
In 2013–2014 period, the liquidity in the real estate market dropped to the lowest level, many projects due to financial exhaustion were no longer able to deploy. It was then that Hung Thinh cooperated with investors who were having difficulties in bringing the 8X apartment line to the market aimed to those who were born after 1980, had been working for 5–10 years with a certain financial accumulation.
To clear the frozen project, it’s needed to have a four-party cooperation, apart from Hung Thinh and the investor, there are also two banks: one lends to Hung Thinh for the project implementation, the other is accepting the mortgage of the project. With limited financial resources, insignificant collateral, Hung Thinh is still supported by banks thanks to its sales ability and a feasible plan to revive the projects.
Investors were "clinically dead", has a partner to come to relay, clear the deadlock, does not set strict conditions. As a result, the projects were revived by Hung Thinh under the same formula: the "in-house" design team modified the design so that the area of the apartment was about 50 m², push the selling price down to VND one billion, in accordance with the market demand, brokerage staff promoted the sales.
As a result, the apartments of 8X Dam Sen, 8X Thai An, 8X Plus ... were sold out right at the time of difficult market. In the following period of 2015–2017, the company performed many M&A activities, even 14 deals in a year. Hung Thinh limits the speculation by allowing each individual buy two products in one project. "Hung Thinh does not want one person to buy many products, the policy is to split the payment package so that more people can access," Trung said.
According to Trung, what he does not want to see is that homebuyers with real needs pay higher prices than investors. Regarding the cash flow, Mr. Trung revealed: "Hung Thinh has a reputable transaction history, so it is convenient to borrow money." However, not all M&A deals are developed smoothly by the company. There was a project in Ho Chi Minh City that was invested VND 600 billion for M&A by the company but it had not been implemented for the past three years due to legal problems.
“Mr. Trung is smart and very sensitive about market changes, including in the technology sector,” Dr. Vo Van Khang said, vice president of the Vietnam Information Security Association (VNISA). Implementing the proptech project (real estate technology) development invested by Hung Thinh, during the first talks, Mr. Khang was attracted to Hung Thinh's ambition to apply technology to change the real estate industry so he accepted to develop. "It was not three months that I understood that Mr. Trung's idea was completely different, much bigger than I thought firstly," Mr. Khang said.
Not only limited to traditional business fields, Hung Thinh invested USD 15 million to develop a proptech project and the investment amount has not been not all. It is expected that this platform will be announced at the beginning of the following year in the goal of information transparency, reducing transaction costs and shortening transaction time for market participants.
Real estate businesses are still facing difficulties, but Mr. Trung is still optimistic: “In terms of strategy, Hung Thinh takes real estate as the core, real estate technology development is a great investment. Resort products are still investing. The epidemic will be over sooner or later, the life is back to normal."
(*) Print by Forbes Vietnam, Issue No. 90, November 2020