M&A continues to dominate real estate market
M&A continues to dominate real estate market
The recovery of the property market along with many open policies and incentives have created favourable conditions for real estate corporations with strong financial resources.
Novaland, for example, a well-known investor, has been involved in many merger & acquisition (M&A) deals in the real estate market in recent years.
Within only three years, the corporation bought 25 projects, most of which were mid-tier and luxury apartments with prices ranging from VND28 million – 50 million (US$1,300 – 2,300) per square metre.
The projects prime locations have allowed Novaland to sell their products quickly.
Like Novaland, other groups like FLC, Vingroup, Him Lam, Dat Xanh and Hung Thinh Corporation have been involved in M&A deals.
FLC has a development strategy under which it directly invests in projects and also buys projects that have already been implemented.
Since 2013, FLC has spent hundreds of billion dong (tens of millions of US dollars) to buy projects in Ha Noi.
Meanwhile, after spending over VND10 trillion ($450 million) for M&A deals in 2014, Vingroup continued to look for projects in prime locations in big cities like Ha Noi, HCM City and Da Nang..
Besides big corporations, the market has also seen the recovery of many real estate companies thanks to their restructuring, especially for M&A purchases.
VID emerged as a new name in the real estate market by buying many projects.
Foreign investors have also been involved in M&A deals, as the Creed Group spent $200 million for stocks of An Gia Investment.
Warburg Pincus poured more than $100 million into Vingroups Vincom Retail and increased its investment up to $300 million in order to develop the biggest trade centre and shopping mall in Viet Nam.
The 2014-2015 period was considered a breakthrough for M&A activity in the real estate market.
The real estate market had been frozen for years, and as a result, many investors faced a financial crisis and had to sell many of their products.
This allowed corporations with strong financial resources to take advantage of the market, spend less money and earn high profits.
Despite this, many property projects still face financial difficulties.
"In HCM City right now, there are 40 -50 projects under construction but up to 700 others are at a standstill. Therefore, in the time ahead, M&A will be the most important strategy," Nguyen Van Duc, deputy general director of Dat Lanh Real Estate Company, was quoted as saying in the Thoi bao Kinh te Sai Gin (Si Gin Times) newspaper.
"This year will be a boom time for M&A and more foreign investors coming to the field as Viet Nam is considered a promising market," Stephen Wyatt, general director of JLL Viet Nam, said.
