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Jul 27, 2022 / 14:16

Private equity funds seek Vietnam’s real estate M&A deals

Office, industrial, and project development land account for 39%, 35%, and 26% of the total invested capital in Vietnam, respectively, in the first six months of 2022.

Private equity investors are constantly looking for active properties, including industrial and office segments in Vietnam, especially when legal procedures relating to an investment – one of the main barriers, are gradually completed.

 Hanoi is one of the locations which have attractive projects for private equity funds. Photo: Cushman & Wakefield

Trang Bui, Country Head of Cushman & Wakefield, said the Vietnam real estate market has been attracting great attention from foreign investors, especially for profitable projects. The growth of private equity funds has also supplied a large source of investment for mergers and acquisitions (M&A) transactions.

"These investors are constantly looking for active properties or looking to enter into joint ventures with reputable partners,” Trang said.

While the region’s more developed economies are facing a slow-down, Vietnam’s GDP reached a new height in 11 years, hitting 7.72% in the second quarter of this year. The country saw a record US$10.06 billion in foreign direct investment distributed in Vietnam for the first half of the year, marking the highest growth in five years. 

Real estate ranked second among the most invested sectors, accounting for 26% of total inflows. Investors from Singapore, South Korea, Denmark, China, and Japan were the leaders in the amount invested in Vietnam.

Contradictions between provisions in the legal system on investment are eliminated, as issues relating to the property market like investment activities, and legal procedures relating to the legal system are gradually completed. This will also remove the existing hurdles for M&A activities this year. 

Recently, the Central Executive Committee issued Resolution 18 of the Central Committee with important new guiding points on the requirement to increase marketability, transparency, and efficiency in state management of land. Once institutionalized and practically implemented, it is expected to bring great multi-faceted impacts to Vietnam’s real estate market in the coming time.

Trang underlined that for domestic investors, the purchase of land for project development is of higher priority. Every sector of the property market is gaining attention from investors. 

Office market

The office M&A market heated up with the acquisition of Capital Place, by Viva Land from CapitaLand Development. The property is a grade-A office building located in the center of Hanoi, with a price of US$550 million. This high-end property features a pair of twin 37-story towers and is the headquarters of many multinational companies in Hanoi.

Previously, Viva Land completed an acquisition for the Saigon One Tower and changed its name to IFC One Saigon. The project is located in the heart of District 1 in Ho Chi Minh City and is set to become an integrated office, apartments, and shopping mall property with a total floor area of 124.100 sqm.

The housing market also witnessed a series of “blockbuster” deals this year. 

Novaland Group acquired the Kenton Node project from Tai Nguyen Construction Production Trading Co., Ltd. This is a luxury apartment project in Phuoc Kien, Nha Be District. Post-acquisition, the project will be known as Grand Sentosa and supply the South market with a total of 1,640 luxury apartments.

Another notable deal is Masterise Home acquiring the Saigon Binh An project, which from now will be known as The Global City. With an area of 117 ha, the project is within proximity to the Saigon Sports City complex and Long Thanh - Dau Giay highway.

Recently, the global private equity firm Warburg Pincus announced a US$250 million investment into Novaland, to increase land funds and develop existing projects in strategic locations, taking advantage of the gradually improving infrastructure in the South. Two other private investment funds VinaCapital and Dragon Capital also announced the investment of US$103 million in Hung Thinh Land Joint Stock Company.

Residential and industrial sectors - the most attractive sectors for investors

Trang believed that residential and industrial will be the most attractive sectors for investors and developers from Ho Chi Minh City, Hanoi, and neighboring provinces.

The hottest sector remains to be industrial, with 35% of total invested capital and many notable deals. 

The year started with a bang as the Vietnamese property market, on January 21, saw an announcement from GLP to establish GLP Vietnam Development Partners I with an investment total of US$1.1 billion, with six development sites with a total land area of close to 900.000 sqm. GLP is a leading global investment manager and business builder in logistics, data infrastructure, and renewable energy. 

In February, BW Industrial Development Joint Stock Company, Vietnam’s leading new industrial and new real estate developer co-founded by Warburg Pincus and Becamex IDC, announced the acquisition of approximately 74,000 sqm of land in Bac Tien Phong Industrial Park in Quang Ninh Province, developed by DEEP C.

CapitaLand Development also announced the signing of a memorandum of understanding with the People’s Committee of Bac Giang Province. The two will partner for the development of an urban-industrial-logistics project with a total area of ​​more than 400 hectares across the province, with an investment commitment of US$1 billion.

The recent notable deals also included Boustead Projects Co., Ltd. acquiring a 49% stake in KTG & Boustead Logistics Industry JSC in Yen Phong Industrial Park in Bac Ninh Province for US$6.9 million.                                                                                                                         

Apart from traditional real estate transactions, in June, Hong Kong-based private investment firm Gaw Capital Partners announced an investment into a Tier 3 Data Center project, with an area of ​​6,056 sqm located in the Saigon Hi-Tech Park, District 3, Ho Chi Minh City.