According to a report on Vietnam M&A market, period 2017-2018 by MAF’s research group, real estate M&A ranked second, accounting for 27 per cent of the $10.2-billion M&A deals last year.
In 2017, real estate stood in the top five FDI attraction sectors and South Korea topped countries and territories investing in Vietnam, followed by Japan, Singapore, China and Hong Kong.
The acquisition to form a joint venture is made mainly among foreign investors. With strong financial capability and experiences, real estate foreign investors will cooperate with local corporations.
The acquisitions of and investments in the real estate focus on various segments, including housing, offices, retail, hotel and industrial park.
Foreign investment funds and real estate involved in M&A of real estate projects can be mentioned such as Warburg Pincus, Mapletree, Keppel Land, Frasers Centrepoint, Hong Kong Land, Lotte E&C.
Domestic project developers as Novaland and Hung Thinh have been constantly expanding and looking for land with prime positions. Some real estate investors like Vinhomes, Bitexco, Son Kim have attracted FDI influx to develop their projects.
Some typical real estate deals in 2017 – 2018 include GIC’s $1.3-billion investment in Vinhomes, a member of Vingroup, through acquisition of Vinhomes’ shares and offering of a debt instrument (like loans) to Vinhomes to execute projects.
Another notable example is the US private fund, Warburg Pincus in cooperation with Becamex IDC to establish a $200- million joint venture which develops the logistics chain and industrial real estate in Vietnam.
The report on Vietnam M&A market, period 2017-2018 showed that the main reason for bustling M&A activities in the real estate sector is that it takes a long time to complete procedures of a real estate project, which usually lasts from three to ten years and land lots with prime positions have become hardly available or owned by domestic investors.
The demand is rising while supply is limited, the fees of real estate transfer transactions in Vietnam are getting higher and higher with valuations of 30-50 per cent higher than those a few years ago.
In this regard, representatives of Savills Vietnam stated that Vietnam’s real estate market has chalked out bustling M&A trend in recent years with many successful deals. South Korean and Japanese investors are very interested in Vietnam's M&A market in all aspects of real estate such as housing, industrial real estate and resort. In the future, this trend will continue to grow strongly.
On the business side, Huong Nguyen, General Director of Dai Phuc Land Real Estate JSC, said that the legality of the project is the first thing which domestic and foreign investors take into consideration when they are called for investment. In addition, prolonged project investment procedures also concern investors.
"Therefore, relevant ministries and departments should facilitate the project procedures to enterprises and investors in order to further promote the real estate M&A market," stated Huong.