Experts predict that M&A deals by foreign investors in the real estate sector will increase sharply at the end of this year and next year.
Since the beginning of the year, foreign real estate giants have made many acquisitions and contributed capital to projects in Vietnam. In July, Keppel Land announced that it would spend more than VND1,000 billion to buy 65% of shares in a company that owns a shopping mall in Hanoi, expected to be operational from 2025. Two months earlier, this Singaporean giant bought capital in two housing projects of Khang Dien in Thu Duc City for more than VND3,000 billion.
Gamuda also spent nearly VND7,300 billion to buy a 3.7-hectare project in An Phu Ward, Thu Duc City from Tam Luc Real Estate Joint Stock Company. This project was approved for investment in 2021, with a scale of 6 towers with nearly 2,000 apartments and legal problems were resolved since the beginning of this year. Currently, the outer wall of the project has a brand sign of a Malaysian enterprise.
The tourism and resort sector also saw some high-profile deals, such as the Nam Hoi An (Hoiana) resort project with a total investment of about 4 billion USD, which fell into the hands of the Cheng family, the third richest in Hong Kong.
In mid-year, two hotels in Ho Chi Minh City, including the 3-star Ibis Saigon South and the 4-star Capri by Frasers, both located in District 7, also successfully changed owners.
A completed part of the Hoiana South Resort project. Photo: Ricons
JLL assessed that despite the downturn in the real estate market, Vietnam continues to attract the attention of foreign businesses and investment funds. "Recent major M&A deals have partly reflected investors' confidence in the Vietnamese economy in general and the real estate market in particular," the unit said.
At the end of August, JLL cited statistics from Real Capital Analytics - an organization specializing in data analysis for real estate investment and transactions globally - showing that the total value of M&A deals officially announced in 2022 in Vietnam was about 1.5 billion USD - the highest level since 2018. In the first 6 months of 2023, the value of these deals reached more than 500 million USD, an increase of more than 40% compared to the same period before the pandemic in 2019.
The domestic real estate M&A wave continues to be forecasted by some experts and organizations to be stronger from the end of this year in the context that many real estate businesses continue to have to sell assets and projects to pay off debts. Mr. Tran Van Binh, Vice President of the Vietnam Association of Realtors (VARS), said that he has noticed a more bustling M&A market for projects since August.
According to VARS’s report, investors participating in M&A mostly come from countries such as Korea, Japan, Singapore, Hong Kong, Malaysia, and Thailand. Only a few Vietnamese enterprises have enough potential to participate in this game. Investor interest was maintained throughout the first half of the year and gradually increased towards the end of the year. However, by the end of the second quarter, many M&A deals were still in the early stages (searching and surveying), not yet reaching the negotiation and closing stage.
Mr. Phan Xuan Can, Chairman of the Board of Directors of Sohovietnam - a company with more than ten years of experience in the field of project M&A consulting, said that the transaction time with foreign investors usually lasts from 6 months to 1 year. "Very few M&A deals can be completed in 3 months because the survey, appraisal and investment decision process of foreign enterprises is very strict," Mr. Can said.
According to this expert, with strong financial capacity, foreign investors are still very interested in domestic real estate projects because many units believe that the Vietnamese market still has potential when developing after many countries 10-15 years, the demand for housing of the people is still very large.
Foreign enterprises currently prioritize M&A in the markets of Hanoi and Ho Chi Minh City. Next are the provinces and cities neighboring these two large cities such as Bac Ninh, Bac Giang, Hung Yen, Hai Duong in the North. In the South are Binh Duong, Dong Nai, Long An because they are close to the airport and have many industrial parks. In addition, according to Mr. Can, foreign investors also look for projects in economic centers such as Hai Phong, Quang Ninh or tourist centers such as Da Nang, Hoi An, Phu Quoc, Nha Trang.
However, Mr. Can said that foreign investors often want to buy projects that already have legal documents or have the ability to complete them completely. At the same time, they are also interested in site clearance. Therefore, foreign enterprises often require the seller to complete all legal documents and hand over the clean site.
Therefore, the Chairman of Sohovietnam believes that real estate investors may not be forced to pay higher prices and can still negotiate according to market prices because the number of projects with available legal documents is very small. Currently, the projects that need to be sold and find more businesses to cooperate with on the market are mostly in the tourism and resort sectors.
Forecasting from the end of the year, many experts believe that the real estate market will be more positive with lower interest rates, better investor sentiment, and market liquidity starting to warm up similar to the situation at the end of 2013. This is also the basis for predicting that real estate M&A activities will be more vibrant next year, both in terms of quantity and value of transactions going up.
Similarly, JLL also expects to record more successful transactions in the coming time in the context of many Vietnamese investors still facing financial difficulties. This unit believes that in the period of 2014-2018, most high-quality assets were in the hands of Vietnamese investors thanks to their ability to develop land funds, implement projects and sell well. However, with the strong changes in the current market, JLL said that domestic enterprises are forced to restructure their products and investment portfolios. Therefore, Vietnamese investors are also more open to cooperation opportunities with foreign enterprises. At the same time, foreign investors also have more potential options in Vietnam.
Vnexpress.net
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