Real estate M&A booms in 2H24

According to the most recent analysis, MBS Research predicts that M&A operations in real estate projects will be a significant element of the real estate market in 2024, particularly since many real estate firms' financial health remains poor and they have yet to secure finance.

Continued Vigor

Recently, the real estate industry has seen a succession of deals in which international investors have teamed with domestic corporations to undertake projects through mergers and acquisitions. A significant example is the One World project in Binh Duong, where Kim Oanh Group has collaborated with renowned businesses such as Sumitomo Forestry, Kumagai Gumi, and NTT Urban Development to deploy with a total expenditure of more than $1 billion USD.

In mid-December 2023, the People's Committee of Binh Duong province authorized Becamex IDC to transfer the Tan Thanh Binh Duong Urban-Residential Complex project to Sycamore, a CapitaLand subsidiary, for a total project investment of about 13.645 trillion VND.

According to market research company JLL Vietnam, due to ongoing financial challenges, Vietnamese real estate enterprises are being compelled to reorganize both their goods and investment portfolios. Experts believe this will serve as a stimulus for attracting money from financially strong domestic enterprises and overseas investors.

Ms. Trang Bui, General Director of Cushman & Wakefield, remarked that international investors are now putting money into real estate projects through share purchases. This is a good chance for foreign investors who have adequate finances and are ready to begin acquiring, buying, or investing in capital-intensive enterprises.

Brighter Market in the Second Half of the Year

With trust in Vietnam's stable investment environment in general, and the real estate industry in particular, international investors see Vietnam as an appealing business site with favorable policies, strong development potential, and suitability for long-term investment goals. This makes the Vietnamese real estate M&A market even more noteworthy.

Between 2024 and 2026, a significant quantity of cash from international investors is likely to come into the Vietnamese real estate market, as well as several transactions that are presently being negotiated. The Land Law, which is set to go into effect soon, is anticipated to minimize the time it takes to complete legal procedures for project execution and increase market supply.

Beyond traditional foreign investment, according to MBS Research's analytical team, the market will receive further recovery impetus from remittance investment flows as a result of important new Land Law 2024 provisions, such as increasing Vietnamese land use rights abroad.

“The changes in legal regulations create great potential for the market through direct investment from overseas Vietnamese. In the past, Vietnamese abroad who wanted to invest back in Vietnam had to go through relatives, leading to some unnecessary disputes. The new law will address this issue, facilitating investment and reducing the potential for risks between parties during the investment process,” said Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam.

The Federal Reserve's (FED) interest rate policy also helps to sustain this market. As a result, the Fed is expected to begin decreasing interest rates by the end of this year. If realized, this will be a positive signal for the Vietnamese M&A market, particularly in the real estate industry, since lower capital costs in the United States will encourage investment in attractive growing economies such as Vietnam.