City hotel off-loading reaches fever pitch

Eric Solberg - Chairman and CEO EXS Capital

Regarding assets offered for sale, we expect foreign institutional investors will evaluate these opportunities case by case. Across the region, including in Vietnam, working with a reputable local partner with high standards of corporate governance and integrity, delivering good products that can benefit both the local society and the investors, is the key driver for success.

For groups that can work professionally well with both international investors and local partners, the current distress represents a very interesting opportunity for long-term investment.

We expect mergers and acquisitions in real estate will continue to grow over time. This is supported by the foreign investment data increasing on-year, of which real estate ranked second. While there may be headwinds in 2023 from the global economy, we expect the fundamentals of Vietnam to remain resilient, thus continuing to support the real estate sector.

Recent years have proved challenging for international investors in terms of Vietnamese real estate regulations, especially in terms of issuance of land use right certificates, construction permits, and fire permit approvals. We hope the authorities’ renewed promotion of transparency and stability in the real estate sector will enhance the confidence of investors.

Neil MacGregor - Managing director Savills Vietnam

Over the last five years in Vietnam, we saw very limited real deals where we can match a willing seller with a willing buyer, but what we are seeing today is that they are a lot more keen, especially due to sellers who may have overextended their debt.

They may have had multiple projects, which is too much to handle in the current environment. Or maybe they built a project that is not suited to the market post-pandemic and needs repositioning, so those owners are looking for fresh capital.

That is what we can provide, whether that is foreign capital in the form of debt or equity, or a combination of the two.

It might come from family offices who are looking for investment opportunities in Vietnam or high-net-worth groups based in Hong Kong or Singapore, who may have capital that they are looking to invest. So, we are targeting those types of investors.

We’re also seeing debt funds that specialise in acquiring debt from other debts, debt providers, refinancing, and combining equity and debt together to offer capital solutions to property owners. So, there’s a various combination of new capital entering the market.

We expect over the next 1-2 years to see a growing number of deals completed, particularly in resort locations and potentially in city locations.

Duc Nguyen - Senior vice president Lodgis Hospitality Holdings

I think the underlying performance of hotels has been good in Vietnam. So, that alone is very interesting from an investment perspective. But right now is a window of opportunity where you might see more interesting deals out there.

During this time, many investors, like family offices and funds with long-term investment horizons, have been interested in acquiring assets – not just in the hospitality industry, but also in other real estate sectors. So, the interest is certainly there, and I think we have not yet seen a systemic set of circumstances that leads to the widespread availability of distressed assets.

We’ve seen things transacted for a good value due to the unique circumstances of that particular deal, which is very similar to what has happened in previous downturns or slow periods of the real estate market in Vietnam.

Peter Mach - Managing partner Tanzanite International

For a long time, Vietnam has been a very difficult place to do deals and it is only during times like this when you have a credit squeeze that there are opportunities to buy good assets at fair valuations. During good times and with good luck, you have a chance. So for the time being, you can actually go fishing and hopefully find some good assets to buy for your portfolio. I don’t believe they are distressed valuations, you might get 10 to 15 per cent off and that’s about it.

Valuations are coming down and is a reflection of what we have seen in the last eight years of cheap money going around the world, when we saw cap rates being compressed from high single digits to 5-6 per cent. A little bit of a reversal of that, with the higher interest rate environment, is just a natural outcome.