M&A consistent in real estate sector

M&A consistent in real estate sector, illustration photo

According to experts, Vietnam is now one of the most attractive foreign investment destinations, with statistics showing that the real estate sector is one of the five largest recipients of foreign capital. Merger and acquisition (M&A) transactions in the real estate market mostly focus on residential property, offices for lease, retail, hotels, and industrial zones.

Domestic investors are expanding investment portfolios with land plots that can be developed in co-operation with international developers into large-scale projects.

According to Nguyen Huu Quang, deputy general director of Netland, among the five largest investors in the Vietnamese real estate sector including South Korea, Japan, Singapore, China, and Hong Kong, Japan stands out with its large number of investors and high capital disbursed.

“Japanese investors are looking for projects where they can co-operate with domestic investors, especially mid-end residential projects,” Quang said.

According to him, in 2019, Netland will increase its co-operation with Japanese partner Sanei to acquire land plots through M&A and develop second home properties, high-end apartments, and urban development areas in Hanoi, Ho Chi Minh City, and other locations.

Sanei has bought 20 per cent of the stakes from Netland to co-develop a project in the south-central city of Nha Trang, which provides more than 1,500 high-end apartment units to the market.

“We have opened a representative office in Japan and see that Japanese investors are now very interested in hospitality projects,” he added.

Quang added that apart from South Korean and Japanese investors, Hong Kong is also an emerging buyer for real estate projects. Investors there are also very interested in hospitality.

According to Peter Ryder, CEO of leading real estate firm Indochina Capital, major international developers in Vietnam hail from Singapore, Hong Kong, China, Singapore, Indonesia, Malaysia, and especially Japan. He has also seen increasing interest from the Middle East.

Meanwhile Pham Lam, CEO of property consulting firm DKRA, said that M&A in the real estate market will accelerate in the rest of 2019 as buyers actively look for land for incoming projects, while many landowners are also seeking new partners with the government tightening loans for the real estate sector.

“2019 will be a high time for investors who are holding cash capital because they can easily acquire projects from others. This is a great opportunity for project buyers as well,” Lam said.

He added that the price of property products in Vietnam has been on the rise and this is expected to continue in the next five to 10 years.

“Foreign developers and investors are looking for companies with a large land bank or projects which are not too far from the central city areas to acquire or co-develop,” Lam said.

The most outstanding recent M&A transaction was the acquisition of a 70 per cent stake in Dong Nai Waterfront City by Nam Long Group. The stake was purchased from Portsville Pte., Ltd., a subsidiary of Singapore’s Keppel Corporation, for VND2.3 trillion ($100 million).

According to Khanh Nguyen, senior director of capital markets under property consulting firm JLL Vietnam, foreign investors will continue showing a keen interest in the Vietnamese real estate market.

“2019 is a reform year for the market with more regulations and reconciliation taking place. The prolonged approval process may impact new developments in 2019. Therefore, looking for clean and clear projects that are ready for development will be a challenge for investors in the upcoming year,” Khanh said. “However, we believe that reforms would help improve transparency, making the Vietnamese real estate market even more attractive to overseas investors.”