Tuesday, 19 Feb 2019

Foreign investors capitalize M&A to enter Vietnam’s real estate

Updated at Friday, 29 Jun 2018, 08:24
The Hanoitimes - Merger and acquisition (M&A) in Vietnam’s real estate sector has surged strongly as foreign investors have optimized the channel to exploit the potential market.
Deals heat up realty market
Singapore's sovereign wealth fund GIC recently agreed to buy Vinhomes shares and extend the company a debt-like instrument in a US$1.3 billion deal. 
Nam Long Group also announced to cooperate with Hankyu Hanshin Properties Corp and Nishi Nippon Railroad to build the Akari City township project in Binh Tan district of Ho Chi Minh City.

Singapore's sovereign wealth fund GIC recently agreed to buy Vinhomes shares
Singapore's sovereign wealth fund GIC recently agreed to buy Vinhomes shares
The two Japanese investors and Nam Long group will have 50/50 joint contribution of the total investment of about VND7.676 trillion (US$341 million). This will be one of Nam Long’s key projects in the next three to five years.
South Korea’s Daewon Thu Duc House recently also established a joint venture with Vietnam Manufacturing and Export Processing Company to develop a US$115-million office complex and trading center, along with high-rise apartment buildings, townhouses, a supermarket, and other facilities, in Ha Dong district of Hanoi. The joint venture has charter capital of US$23 million, of which Daewon Thu Duc House takes a 49% stake.
Meanwhile, Singapore-based Frasers Property Ltd also announced that it was in the process of acquiring 75% of the issued share capital of Phu An Khang Real Estate JSC, equivalent to 24 million ordinary shares and US$18 million.
Besides, CapitaLand acquired a plot of land in the West Lake District of Hanoi for US$30.2 million while Nomura Real Estate purchased 24% of Sun Wah Tower and Thailand's Strategic Hospitality REIT bought two projects in Ho Chi Minh City. 
Another bumper year projected
Foreign investors registered to pour US$20.33 billion in Vietnam in the first half this year, of which real estate ranked the second most heavily invested, with US$5.54 billion, according to the Foreign Investment Agency under the Ministry of Planning and Investment.
According to experts, foreign investors see Vietnam’s real estate as a destination for their long-term investment, at least five years.
The real estate and investment management firm Jones Lang LaSalle (JLL) estimated that Vietnam’s real estate sector saw M&A to reach a total of US$200 million in the first quarter this year and the number is forecast to continue rising significantly in the coming quarters.
Stephen Wyatt, country manager of JLL Vietnam, commented that Vietnam continues to attract significant interest from foreign investors in all sectors of the property market, and that the biggest challenge for the firm is finding quality opportunities.
“We have seen from five to 10 foreign investors a week, and whilst the economy continues at this pace, we expect to see another bumper year for foreign investment in Vietnam in 2018,” said Wyatt, adding that the legal system continues to improve which provides more confidence to investors looking to gain a foothold in this exciting market.
“As Vietnam is an emerging market, there are a number of opportunities that can offer investors high returns not seen in other more mature markets," he said.
Su Ngoc Khuong, investment director at property services firm Savills Vietnam, said the real estate market in Vietnam is very attractive to foreign investors, not only in terms of profitability but also in terms of economic growth, government policies for foreigners in terms of owning houses in Vietnam and incentives for foreign investors.
With many favorable conditions, Dang Xuan Minh, general director of AVM Vietnam & Vietnam M&A Forum, forecast that M&A deals in the real estate sector this year will be equal that of last year (US$2 billion), or even higher.
Minh Tam
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