Real estate deals boom via high-profile names

Trang Le, country head, JLL Vietnam

Unlike the previous period when the market faced difficulties due to administrative barriers, this year has seen the resolution of many legal bottlenecks along with greater clarity in planning, creating conditions for increased supply and promoting cooperation among industry players.

Amid tight financial conditions, businesses have turned to M&A strategies as a key solution to maintain growth momentum, while many corporations, after restructuring, have actively expanded their real estate portfolios through mergers and acquisitions. Typical examples are domestic companies such as Novaland Group and Phat Dat Group, which are actively participating in the M&A market.

The real estate sector has absorbed $2.75 billion in foreign direct investment (FDI), equivalent to nearly one-fifth of total FDI capital, with actual disbursements reaching $1.5 billion in the past 10 months, according to data from the National Statistics Office under the Ministry of Finance.

Investment capital has focused significantly on projects with high legal transparency, especially commercial land funds that have been approved for planning, have land use rights documents, and have a clear construction completion roadmap.

The market also shows clear stratification among investor groups. Local investors lead in transaction frequency with small and medium-sized deals, while foreign partners focus on large-scale deals, especially in the high-end residential segment, integrated urban development, and strategic industrial real estate.

According to JLL’s observations of M&A deals with publicly available information in the first 11 months, the cumulative transaction volume reached approximately $2.4 billion. However, if we include unannounced transactions that JLL has observed and recorded, the estimated transaction volume is significantly higher. Notably, the residential real estate sector leads the way, accounting for over 70 per cent of total M&A transaction volume.

Other segments such as commercial and resort real estate account for approximately 17.7 and 5.3 per cent, respectively. The data centre sector also emerged as one of the potential niche markets, accounting for 3.3 per cent of M&A transaction volume.

This significant gap reflects strong demand for land from investors. This trend of land banking is particularly important as the supply of clean land becomes increasingly limited and legal procedures are tightened towards greater transparency.

The policy allowing agreements on non-residential land use rights for commercial housing development from April 2025 has opened up great opportunities for converting industrial and agricultural land. This will strongly promote M&A deals in the housing segment, which is experiencing a prolonged supply shortage and high absorption rates.

The office segment shows clear differentiation. Ho Chi Minh City is experiencing a severe supply shortage with high occupancy rates and strong rental growth, while Hanoi is seeing a strong wave of foreign investment from international investors. For the hotel sector, the expected investment yield is estimated at 8-9 per cent this year, with total M&A transaction volume estimated at $125 million.

Industrial and logistics real estate continues to attract attention. The cumulative M&A transaction volume of the industrial real estate segment in the first 11 months of the year reached approximately $74 million. Instead of just leasing land to build themselves, investors now increasingly prefer the model of acquiring existing industrial parks with infrastructure and then expanding them in new phases. This approach saves implementation time, ensures infrastructure quality, and minimises legal risks.

The emergence of diverse investment products such as industrial land funds, ready-built factories, and specialised segments like cold storage and data centres is creating abundant M&A opportunities.

Legal policy reforms have emerged as a decisive factor, particularly those allowing investors to flexibly convert non-agricultural land into commercial housing projects.

The need for corporate restructuring plays a crucial role. Many domestic companies face liquidity challenges and accumulate bad debts from the hot growth phase of 2020-2022, forcing them to seek M&A solutions to reorganise their finances and complete project legalities.

Stable monetary policy with an average lending rate of 7-9 per cent, lower than in recent years, has created a favourable environment for capital access. This preferential interest rate not only helps balance competitiveness between domestic and international investors but also encourages long-term capital inflows into the market.

JLL recommends that Vietnamese businesses focus on improving four key factors: ensure the complete legal compliance of the asset, particularly land use rights documents and related permits; conduct professional valuations according to international standards and updating them regularly; maintain flexibility in the transaction structure, as businesses need to be ready to consider various forms of cooperation; and build a transparent financial system with internationally audited reports and clear corporate governance.

Companies should invest in standardising their financial reporting systems and establish rigorous internal governance processes to ensure success in M&A deals.