Sharp rise in M&As for property-related projects
Sharp rise in M&As for property-related projects
Having bounced back in the first half of 2014, mergers and acquisitions (M&A) in Viet Nam's real estate markets could show more recovery in terms of transactions and capital volume.
According to Savills Viet Nam, statistics from the Ministry of Planning and Investment indicated that the country attracted US$5.7 billion in disbursed Foreign Direct Investment (FDI) in the first half of the year, showing a 1 per cent increase year-on-year. The FDI which poured into the property sector accounted for approximately 10 per cent of the total, mainly through M&A activities.
In January, Hong Kong-based Tung Shing Group acquired a 53 per cent shareholding in the Movenpick Saigon Hotel. Meanwhile, Lotte Mart – Korea's leading retailer – has expanded its operations by acquiring Pico Plaza.
The Sun Wah Viet Nam Real Estate Company has made a commitment towards the Bay Water project which was owned by domestic enterprises, according to the HCM City Department of Planning and Investment.
In Khanh Hoa province, an Israeli investor has committed US$300 million to the Bai Rong Resort and renamed it Alma Resort.
Domestic M&A transactions have also caught the attention of the local market.
In May, Hoang Anh Gia Lai announced the divestment of their Dong Nam Project in Ho Chi Minh City to Him Lam Corporation. Other major residential-focused deals include PPI's sale of the Water Garden project to Dat Xanh (Green Land) Group and the acquisition of a 95 per cent interest in the Sky Park Residence by Thanh Hoa Construction Corporation.
The revival of the property market and the liquidity improvement can be seen as a result of the government's efforts to stimulate the market. In addition, some property developers have been eager to sell their projects to ease the financial burden, while other enterprises with strong financial resources desire to acquire such projects to take advantage of the improving market.
Several M&A deals have been closed consequently. The gradual completion of infrastructure and road connectivity in major metropolitan areas and satellite cities has also made the property sector more attractive.
Future outlook
M&A activities in Viet Nam's real estate sector are expected to continue surging, given the perception that the country remains one of the most promising growth markets. The Trans Pacific Partnership Agreement should be signed soon and will support the growth of the national economy and increase FDI flows into Viet Nam.
The New Land Law, effective from 1 July 2014, allows foreign invested enterprises to be allocated land for investing in residential housing projects for sale. This regulation amendment is expected to ensure transparency and offer equal opportunities for local and foreign investors, making the Viet Nam real estate market more attractive.
Su Ngoc Khuong, Associate Director of Investment, Savills Viet Nam said, "The market continues to see residential development projects changing hands, including not only the apartment sector but also the landed property sector and township projects."
He said that investors also have a strong appetite for operating assets with stable yields and lower risks.
According to him, within the hospitality sector, the rapidly growing tourist numbers, both domestic and international, is the rationale for investment in city centre hotels as well as resorts in beach locations. This is further supported by the rapid growth in the number of direct international flights to multiple Vietnamese provincial airports,
"Interest from Japanese and Korean investors, who have accounted for the majority of M&A activities in the last two years, is expected to stay strong. Besides, there is growing demand from Singaporean and Taiwanese groups for both residential and commercial office buildings," he said.
There would be continued activity in these sectors over the coming months and into 2015, he believed.
bizhub
