M&As saw new highlights in the first half of the year

July 24, 2018 | 08:00
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Vietnam has become an attractive destination for many foreign investors, largely due to the country’s friendly policies encouraging foreign direct investment, its political stability, and its strong economy.
mas saw new highlights in the first half of the year
Source: Real Capital Analytics

Foreign direct investment (FDI) disbursement rose by 8.4 per cent on-year to reach $8.37 billion in the first six months of 2018, according to the Ministry of Planning and Investment’s Foreign Investment Agency statistics.

In the first half of 2018, the Vietnamese real estate market continued to show irresistible appeal to foreign investors and continued to witness high-value merger and acquisition (M&A) transactions in a variety of sectors such as residential, commercial, and industrial.

Foreign investors come from many different countries such as Japan, South Korea, and Singapore, with an increasing number of groups coming from mainland China.

JLL observes that there are an increasing number of local investors who are actively seeking real estate deals alongside foreign investors.

2018 started off with the acquisition of the Sun Wah office tower project by Nomura Real Estate Development. In this case, Nomura acquired a 24-per-cent stake in the Grade A office building located in a prime location of District 1 in Ho Chi Minh City. This transaction has shown Nomura’s strong interest in the Vietnamese market and its long-term commitment to the country.

The residential sector continued to be upbeat, with five major M&A transactions occurring within the first six months of the year. A range of foreign investors joined in M&A deals of residential projects. Among them are CapitaLand, Frasers Property, and Keppel Land.

Malaysia’s Berjaya Land Bhd divested its entire 32.5 per cent of capital contribution in Berjaya Vietnam Financial Centre Ltd. to Vinhomes JSC and Can Gio Tourist City Corporation for a cash consideration of VND884.9 billion ($38.4 million).

In addition, Vingroup and its affiliates acquired Berjaya Vietnam International University Town One Member LLC and injected a cash sum of VND11.9 trillion ($518 million) as capital contributions into this project in December 2017.

Investment deals in the first half of 2018 were diversified with a good variety of asset and property types transacted. When looking at the market as a whole, we expect continued growth throughout most asset types.

Hospitality has been interesting over the past year, with new funds with foreign capital now specifically targeting this sector.

We expect that this trend will continue in this sector as well as in other growing sectors such as industrial and alternatives like education.

The affordable housing market is another key growth sector, now drawing specialist capital sources which identify value in the underlying fundamentals, including the growing middle class.

We expect foreign investors to continue showing their keen interest and strong commitment to the Vietnamese real estate market, and the market itself to keep growing.

Both current and incoming foreign investors are actively hunting for “clean” and “clear” projects that can meet their required returns and conditions.

Due to the strong focus on Vietnam by regional investors, we expect M&A activities to reach new record levels in 2018.

By Khanh Nguyen Associate director of Capital Markets, JLL Vietnam

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