Real Estate M&A Market Gains Momentum

The real estate sector is experiencing a resurgence in mergers and acquisitions, marked by several substantial deals this year and a record-high average transaction value. Dang Van Thanh, Chairman of the conglomerate TTC Group, highlighted M&A as a primary focus for his company during a recent conference. TTC Hospitality, the group’s hotel and resort subsidiary, has expanded its portfolio with acquisitions of three- to five-star hotels across Vietnam, including the recent addition of the Imperial Hotel in Hue, bringing the total to 20 properties.

In the housing segment, Malaysian property developer Gamuda Land has been actively engaged in M&A deals over the past two years, acquiring local property developer Tam Luc for $316 million and taking over a significant 3.77-hectare project in Ho Chi Minh City. Angus Liew, Chairman of Gamuda Land Vietnam, expressed the company’s smooth execution of M&A plans over the past two years and the intention to explore new deals, emphasizing the appeal of the Vietnamese market to property developers.

A report by KPMG indicates that real estate ranks second in year-to-date transaction value in Vietnam’s M&A market. The sector contributed 17% and 16% to the country’s M&A market value in 2021 and 2022, respectively. Among the top five M&A deals, two involve real estate, with ESR acquiring $450 million worth of BW Industrial’s shares as a notable example.

The average value of M&A deals in the first 10 months of this year reached a record high of $166 million, more than triple the figures in 2019 and 2022. Key factors driving Vietnam’s real estate M&A market include the growth of the industrial real estate industry, fueled by the global supply chain shifting manufacturing to Vietnam. The sector is expected to witness continued development and more M&A deals in the short term.

Record-low bank deposit rates are also prompting investors to explore alternative options like real estate. Experts anticipate that Vietnam’s real estate M&A market will remain vibrant, with predictions of increased activity in 2024. Despite the positive outlook, challenges such as time-consuming legal processes, pricing issues, and weaknesses in the sell-side’s accounting systems need resolution for sustained growth. Cooperation between the buy-side and sell-side is deemed essential to manage and uphold the quality of projects after transactions, especially as the quantity and value of M&A deals continue to rise.

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