Real estate M&A bustling
Real estate M&A bustling
The real estate market has seen merger and acquisition (M&A) activity active over the past six months with some large projects changing hands while the market has turned more transparent.
One of most notable transactions is the transfer of Vincom Center A in downtown HCMC. Vingroup Company, owner of the commercial center-hotel complex, has sold the project to Vietnam Infrastructure and Property Development Group Corporation (VIPD) at nearly VND10 trillion.
In May, the U.S.-based investment fund Warburg Pincus negotiated with Vingroup to acquire a 20% stake of Vincom Retail, a member of Vingroup, at around US$200 million.
Meanwhile, Japan Asia Land has transferred Center Point high-rise office building in Phu Nhuan District to Singapore-based Mapletree Vietnam Company but details of the deal have yet to be revealed. Two years ago, the Japanese investment fund spent around US$58 million on acquiring this building.
Marc Townsend, managing director of CBRE Vietnam, said that project investment tendency has been changing.
Five years ago, foreign capital ran into the local real estate market via investment funds. They were seeking to tap the potential Vietnam market and stealthily decided to make investments through these funds.
However, foreign investors now have had tendency to make direct investments in projects, focusing on high-rise office buildings.
Unlike previous years, real estate companies are offering project sales and seeking partners publicly, Townsend said.
For example, owner of the Saigon Link project is calling for investors to invest in the 2,500-square-meter land lot in Phu Nhuan District. Pacific Property and Infrastructure Development and Investment Company is also seeking partners for the Saigon Water Garden complex and PPI Tower in Binh Chanh and Thu Duc districts.
Chris Brown, managing director of Cushman &Wakefield Vietnam Company, said that investors from Asia, the Middle East and Russia are still interested in the realty market in Vietnam.
However, these investors focus on main markets such as Hanoi, HCMC, active projects and land lots at prime sties.
According to a market survey of StoxPlus, 2012 saw 35 real estate M&A deals involving projects with legal procedures completed or under construction, of which, only six projects were transferred to foreign investors and 29 others changed hands among local investors with the total value of around US$400 million.
Statistics of the Ministry of Planning and Investment shows that real estate sector ranked second among areas most lucrative to foreign investors in the first half of this year with total capital of nearly US$420 million, or 4% of the total capital of US$9.3 billion.
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