Analysts predict increased acquisition of Vietnamese property projects by foreign investors
Analysts predict a significant rise in mergers and acquisitions by foreign investors in Vietnam’s real estate sector, starting from the end of this year. In July, Singapore’s Keppel Land announced its acquisition of a 65% stake in a local company for VND1 trillion (US$41.7 million), with plans to open a shopping mall in Hanoi by 2025.
Prior to that, Keppel Land had purchased two housing projects in Thu Duc City, Ho Chi Minh City, for VND3 trillion. Malaysia’s Gamuda also invested VND7.3 trillion in a 3.7-hectare project from Tam Luc Real Estate Joint Stock Company in Thu Duc City. This project, consisting of six towers with nearly 2,000 apartments, overcame legal obstacles earlier this year. Mergers and acquisitions have also been observed in the tourism and resort real estate sector. Hong Kong billionaire Henry Cheng acquired the under-construction Nam Hoi An resort project (Hoiana) in Quang Nam Province, with a total investment of $4 billion. Additionally, two hotels in Ho Chi Minh City’s District 7, Ibis Saigon South and Capri, changed ownership in mid-2023.
Real estate consultancy JLL stated that these recent large-scale mergers and acquisitions reflect investors’ confidence in the Vietnamese economy, especially in the real estate market. According to Real Capital Analytics, the total value of M&A deals in Vietnam reached $1.5 billion last year, the highest since 2018. Experts suggest that M&A activity will increase from the end of this year as many developers need to sell assets to repay debts. Tran Van Binh, vice president of the Vietnam Association of Realtors (VARS), noted an increase in M&A activity since August in the property industry. The majority of investors are from South Korea, Japan, Singapore, Hong Kong, Malaysia, and Thailand, with a few local players.
Interest from foreign investors has been high throughout the first half of this year and is expected to continue growing. Many potential M&A deals are currently in the early stages, with investors conducting research and analysis before initiating negotiations or closing transactions. Phan Xuan Can, chairman of Sohovietnam, a company specializing in M&A consulting, explained that deals with foreign investors typically take six months to a year due to meticulous due diligence. Major foreign investors are particularly interested in Vietnam’s housing sector due to its significant growth potential and high demand. They prioritize M&A deals in Hanoi and Ho Chi Minh City, as well as neighboring localities such as Bac Ninh, Bac Giang, Hung Yen, and Hai Duong in the North, and Binh Duong, Dong Nai, and Long An in the South, as these areas are close to airports and have many industrial parks. Economic centers like Hai Phong City and Quang Ninh Province, as well as tourist destinations like Da Nang, Hoi An, Phu Quoc Island, and Nha Trang, are also attractive for investment.
Experts predict that the real estate market will improve soon, driven by lower bank interest rates, improved investor sentiment, and increased liquidity. JLL forecasts more successful transactions in the coming period, considering that many Vietnamese real estate developers are still facing financial difficulties.