Real estate project acquisition is bustling again

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Real estate project acquisition is bustling again

Market news

18/10/2024

The first 9 months of the year recorded more than a dozen real estate project mergers and acquisitions with transaction values ranging from several million to hundreds of millions of USD.

Since the beginning of the year, about 11 real estate mergers and acquisitions (M&A) deals have been successfully transacted. Of these, the total value of 9 out of 11 deals reached more than 1.8 billion USD, focusing on the housing, industrial real estate and logistics segments.

In early October, Keppel Land (Singapore) announced that it would sell 70% of its capital in Saigon Sports City Company Limited, the unit holding the right to develop a 64-hectare project in Ho Chi Minh City - one of the largest economic locomotive complexes. The buyers are two Vietnamese enterprises (HTV Dai Phuoc Company Limited and Vinobly Real Estate Investment), the expected value of the deal is over 7,400 billion VND.

Two months ago, KIDO Group also completed the purchase of 75% of shares in Hung Vuong Joint Stock Company, the unit managing and operating Hung Vuong Plaza shopping mall.

In the housing segment, in June, Kim Oanh Group cooperated with 3 Japanese partners to jointly implement the One World urban area project of nearly 50 hectares, with an investment capital of more than 1 billion USD. Of which, 3 Japanese companies hold 49% of the project's investment capital, while Kim Oanh Group holds 51% of the shares.

In the resort and hotel real estate segment, in August, Hoan Sinh Gia Lai Investment Company Limited completed the transfer of a hotel in Pleiku to Muong Thanh Group. This was once a hotel owned by Mr. Doan Nguyen Duc's Hoang Anh Gia Lai Company. This hotel is located in the center of Pleiku City, operating since the end of 2005. The value of this transaction has not been disclosed.

Previously, at the beginning of the year, Van Phu Invest Joint Stock Company also transferred all capital at Hung Son Company to Hung Phu Real Estate Investment Company Limited, worth nearly 1 million USD. Hung Son Company is the investor of the Vlasta - Sam Son Urban and Resort Complex project with a scale of more than 25 hectares, located in Sam Son City, Thanh Hoa.

The Vietnam Association of Realtors (VARS) assessed that the trend of changing strategies from buying outright and selling in parts to "contributing rice to cook rice together" is flourishing. "The average value of successful transactions in the first 9 months reached the highest level in the past 6 years and doubled last year," said VARS.

Bất động sản khu Đông TP HCM. Ảnh: Quỳnh Trần

Real estate in the East of Ho Chi Minh City. Photo: Quynh Tran

Mr. David Jackson, General Director of Avison Young Vietnam, said that in the context of the real estate market gradually recovering, investors and real estate developers all want to gain momentum to enter the next 10-year development cycle. Therefore, they are actively planning to expand investment and increase their market share in Vietnam.

He said that in the past, investors were only interested in and required projects to complete legal procedures and have construction permits. Currently, when three new laws related to real estate (Land Law 2024, Housing and Real Estate Business 2023) gradually remove legal issues, they tend to reduce expectations and "loosen" requirements, mainly focusing on 1/500 planning, investor reputation and project potential.

According to experts, depending on the capacity and performance of the project, investors tend to "reserve" (not or do not want to sell) or are willing to negotiate and seek cooperation opportunities through M&A. The buyers are still the group of investors in the North Asia region, who are familiar with the Vietnamese market, such as Singapore, Korea, Hong Kong, Taiwan, and Japan.

According to MB Securities Company (MBS), the financial health of some real estate businesses is still weak and they have not accessed capital, while project development costs are increasing. Therefore, selling projects to investors with financial potential and capacity will help them maintain operations. This unit believes that M&A of real estate projects is an important part of the market in the second half of this year.

In the coming time, experts predict that the demand for mergers and acquisitions will still focus on the housing, industrial real estate and logistics segments. This activity will be more vibrant with the support of the legal corridor and the momentum from large infrastructure projects (such as the North-South Expressway, Long Thanh Airport) and new industrial parks.

Real estate services firm Cushman & Wakefield said that the period 2024-2026 may record a large amount of capital from foreign investors pouring into the real estate market. The investment goal is still to find clean, good quality land with complete legal documents and development potential. However, administrative procedures, legality and land scarcity are still major barriers for foreign investors when coming to Vietnam.

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