Property sector shuffles the deck

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Vincom recently handed over a 10 per cent stake (VND30 billion or $1.45 million) in a Viettronics Property Company Limited’s property project to Sinh Thai Investment and Development Joint Stock Company.

The project involves building a housing, office and trade centre complex over 13,000 square metres in Hanoi’s Dong Da street with estimated investment exceeding VND3.2 trillion ($154.5 million). After the transfer, Vicom’s stake in the project shed to 74 per cent from 84 per cent.

In late June 2011, Vincom finalised a transfer of 56 per cent in another housing, services, trade centre and office complex in Hanoi’s Thanh Xuan district to Sun Group.

The firm earlier pumped over VND128 billion into buying Sun Group’s shares distributed through additional issuances to own a greater stake in the project.

Archi Group, a famous name in tourism property, acquired 67 per cent of stake in Sudito and bought out Kim Boi Investment and Tourism Joint Stock Company.

In early 2011 telecom giant FPT reportedly sold a stake in a FPT building in Hanoi’s Lang Ha street to another firm.

In the southern market, local leading steel maker Hoa Sen Group approved in principle on selling Hoa Sen Phuoc Long and Hoa Sen Riverside apartment buildings in Ho Chi Minh City’s District 9, transferring land use rights in District 2 and selling 45 per cent stake in Hoa Sen-Gemadept international port project.

In second quarter of 2011, CapitaValue Homes under CapitaLand Group injected VND121 billion to acquire Quoc Cuong Saigon’s 65 per cent stake to have the right to use Quoc Cuong Saigon’s 9,000sqm area in Ho Chi Minh City’s Binh Chanh district to build 800 apartments.

The firm also got share in three other Vietnam-based property projects, including most property projects of Khang An Company in Ho Chi Minh City’s District 2.

The merger and acquisition trend had increased amid economic uncertainties, said former Minister of Natural Resources and Environment Dang Hung Vo.

“Mergers and acquisitions can benefit both sides and is a viable way-out for property developers not wishing to go bankruptcy,” said Vo.

Reality shows that deals often took place at property projects in their initial stage of development. These cases mostly involve transfer of controlling shares in the projects.

“Unveiled cases are just in formality while underground negotiations are bustling. Buyers often buy stakes in projects with capital-strapped developers as they assume the land value might bring them marginal future profits,” said Coldwell Banker Vietnam general director Edward Chi.