Foreign investors to buy out more Vietnamese property projects: analysts

By Anh Tu   October 16, 2023 | 12:41 am PT
Foreign investors to buy out more Vietnamese property projects: analysts
The under-construction Nam Hoi An resort project (Hoiana) in the central Quang Nam Province. Photo courtesy of Ricons
Foreign investors will sharply increase their mergers and acquisitions in the real estate sector starting at the end of this year, analysts have forecast.

Singapore’s Keppel Land announced in July it would buy a 65% stake for VND1 trillion (US$41.7 million) in a local company that is expected to open a shopping mall in Hanoi in 2025.

Two months earlier it had bought two housing projects from real estate firm Khang Dien in Thu Duc City, Ho Chi Minh City, for VND3 trillion.

Malaysia’s Gamuda invested VND7.3 trillion to buy a 3.7-hectare project from Tam Luc Real Estate Joint Stock Company.

The project in Thu Duc City, which will have six towers with nearly 2,000 apartments, earlier this year overcame legal problems it had been facing.

Tourism and resort real estate has also seen some M&A deals. The under construction Nam Hoi An resort project (Hoiana) in the central Quang Nam Province was acquired by Hong Kong billionaire Henry Cheng. The project's total investment reaches $4 billion.

In mid-2023 two hotels in Ho Chi Minh City’s District 7, the three-star Ibis Saigon South and four-star Capri, also changed hands.

Real estate consultancy JLL said: "The recent large M&A deals partly reflect investors’ confidence in the Vietnamese economy in general, but especially the real estate market."

JLL cited statistics from Real Capital Analytics, which analyzes global real estate investment and transactions data, as saying the total value of M&A deals in Vietnam last year was $1.5 billion, the highest since 2018.

The M&A would grow from the end of this year since many developers have to keep selling assets to repay debts, some experts have suggested.

Tran Van Binh, vice president of the Vietnam Association of Realtors (VARS), said he has noticed more M&A activity since August in the property industry.

According to a VARS report, the investors are mostly from South Korea, Japan, Singapore, Hong Kong, Malaysia, and Thailand besides a few local players.

Investor interest was high throughout the first half of this year, and has gradually increased since.

As of the end of the second quarter many possible M&A deals were in the early stages, with investors searching and studying and not yet beginning negotiations or closing transactions.

Phan Xuan Can, chairman of Sohovietnam, a company with more than 10 years of experience in M&A consulting, said deals with foreign investors usually take six months to a year.

M&A deals are rarely done faster since foreign firms are very thorough in their due diligence, he explained.

Major foreign investors are extremely interested in the Vietnamese housing sector since they believe it has great potential due to the huge demand.

They prioritize M&A deals in Hanoi and Ho Chi Minh City, their neighboring localities such as Bac Ninh, Bac Giang, Hung Yen, and Hai Duong in the North, and Binh Duong, Dong Nai and Long An in the South because they are close to airports and have many industrial parks, he said.

They also look for projects in economic centers such as the northern Hai Phong City and Quang Ninh Province, tourist hubs like Da Nang and Hoi An cities, Phu Quoc Island and Nha Trang.

The real estate market would generally look up soon amid lowered bank interest rates, better investor sentiment and liquidity, experts predicted.

JLL forecast there are more successful transactions in the coming time in the context that many Vietnamese real estate developers are still facing financial difficulties.

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