Ryder said the fund's money came from core group of institutional investors "who remain very confident in our ability to make good returns".

The raising is an evidence for a recent report by KPMG and Asian Public Real Estate Association, which stated that credit fallouts elsewhere may well act as a catalyst for further realty investment in Asia-Pacific.

Ryder said although Vietnam's real estate market had hardly been hit by the tightened credit flows and banks working to fight inflation, "the fundamental demand for good residential products is strong."

He added that despite increased construction costs by 20 to 30% over the first half of the year, real estate investment in Vietnam still provided good returns.

Land and residential prices in Hanoi and HCM City have plummeted by 30 to 60% since the beginning of the year. Those projects, which have started sales over the last couple of months are finding it more difficult to sell as the credit crunch is preventing speculation. Thai Nguyen Nguyen, associate director of CB Richard Ellis said, previously the market had seen 8P-90% of sales to speculators. With limited credit, high interest rates up to 21%, decreased potential of capital gains as a result of decreased selling prices, speculators have left the market for now.

However, Thai said some projects recently launched in HCM City were still selling well because they have affordable asking prices of US$800 to US$1,000 per square metre with apartment value ranging from US$40,000 to US$80,000.

Ryder said although the fundamental demand was obviously impacted by the tightened credit flows and worries about currency devaluation "we think this is relatively short-term, six, 12 or 18 months max."

He said many realty projects, even foreign-invested ones, across the country were stopping because of poor capitalisation and Indochina Capital was in good position to take advantage of the market, which now had less competition. "We are taking a very patient approach but I do not want to say we are taking wait and see approach. We are very dynamic, very aggressive," said Ryder.

Indochina Capital raised US$300 million in the first two funds, which have fully invested in a number of projects, including Indochina Plaza in Hanoi, Park City and River Garden in the second city and Indochina Riverside Towers in the central coast.

(Source: Vietnam Investment Reviews)