Real estate market attracts foreign capital via M&As

A wave of foreign businesses are coming to learn about potential real estate projects in Vietnam to carry out mergers and acquisitions (M&As), reported Dau tu (Vietnam Investment Review) newspaper.

Gamuda, a Malaysia-based property group, recently announced that its subsidiary Gamuda Land has reached an agreement to purchase the entire shares worth over 7.2 trillion VND (nearly 303 million USD) of three individuals at the Tam Luc Real Estate Corporation and also directly own the Tam Luc high-rise housing complex in Ho Chi Minh City. The housing project, including trade and service facilities, has a total investment of nearly 4 trillion VND.

The firm said the deal gave it a rare opportunity to increase the land under its ownership at a prime location in the country's biggest hub in the south and supply more high-quality apartments with minimised risks relevant to planning and legal issues for the market.

When the real estate market faces a tough period with prolonged investment and legal procedures, declined liquidity, and tightened borrowing conditions, enterprises have to consider selling part or all of their projects to foreign partners. This measure could help them gain money to repay debts, avoid bankruptcy, and finance other projects, according to Dau tu.

Keppel, a Singaporean business, has also boosted M&As in the recent past. A notable deal is the signing of binding agreements by Keppel Consortium (comprising Keppel and Keppel Vietnam Fund) to buy 49% of the Khang Dien company’s shares at two adjacent residential projects in Thu Duc city of HCM City. This transaction helped Khang Dien earn 3.18 trillion VND.

In early March, CapitaLand Group of Singapore also negotiated to purchase part of Ocean Park 3 Project of Vinhomes JSC in Hanoi or another project in the north of Hai Phong city at a cost of some 1.5 billion USD. This is considered one of the biggest real estate deals in Southeast Asia in recent years.

Foreign investors have also bought large volumes of shares at other local property firms such as Novaland and Hung Thinh Land. This is viewed as a way for foreign enterprises to further engage in the real estate market of Vietnam.

The deals that had survey and exploration steps finished in the second quarter of 2023 will be negotiated in Q3, and the market may witness the first successful M&As, involving mainly small projects, in Q4. Negotiations on medium- and big-sized deals will continue until the end of Q4 or even Q2 of 2024, said the Vietnam Association of Realtors.

Trang Bui, General Manager of Cushman & Wakefield Vietnam, said though foreign investors are highly interested in real estate projects in the country, they are still facing numerous difficulties to own an asset in this market.

Most investors want to form joint ventures and conduct M&As rather than pure transactions. Therefore, investment capital is always ready to be poured into the real estate market, but it is a challenge to seek potential projects, she opined.

However, she is still highly optimistic about the prospects of Vietnam’s real estate market since the country’s fundamentals are all geared towards growth in the property sector./.