FOREIGN FUNDS FLOW INTO REAL ESTATE MARKET

Mergers and acquisitions (M&A) in the real estate sector have been very active in the past few years, despite positive macroeconomic impacts. According to real estate specialists, M&As will be still very vigorous in the coming time.

According to Savills Vietnam Co., Ltd, foreign investors are very interested in the property market in Vietnam. They will join the Vietnamese market mainly via M&As because this is the quickest and safest way to enter into this potential market. The Vietnamese market is expected to see a boom in M&A deals in 2017. In addition to traditional capital flows from Japanese investors, moves from South Korean, Singaporean and Hong Kong (China) investors are also exciting. Most recently, Keppel Land Co., Ltd., an enterprise that has gained a well-established foothold in the Vietnam property market with a wide range of real estate projects in Hanoi, Ho Chi Minh City, Dong Nai and Vung Tau, completed the full acquisition of about 16 per cent of stake in the Saigon Centre high-grade office and trade centre in Ho Chi Minh City from Southern Waterways Corporation (Sowatco). Japanese investors also demonstrated their financial strengths in M&As by taking over a number of important projects in Hanoi and Ho Chi Minh City.

Mr Masataka Sam Yoshida, Senior Managing Director of Recof Group - a Tokyo-based M&A consultancy, said that Japanese property investors were previously uninterested in the Vietnamese market but some have recently accepted risks to study and invest in this market. For example, Kajima, one of four largest investors and one of biggest overseas property developers of Japan, joined hands with Indochina Capital, an investor with many big property projects in Vietnam, to set up an US$1 billion equal investment joint venture in 10 years. At first, the venture will focus on residential, hotel and resort projects in major economic centres in Vietnam such as Hanoi, Ho Chi Minh City and Da Nang.

Mitsubishi, a world-renowned conglomerate of energy, metals, chemicals, machinery, food, finance and environment, also entered the Vietnamese real estate market by forming a joint venture cooperation with Bitexco Corporation to develop housing projects worth hundreds of millions of US dollars.

Mr Su Ngoc Khuong, Investment Director of Savills Vietnam, said the Vietnamese property market has generally witnessed a relatively successful period since 2015. In particular, Savills has successfully advised two big deals in Ho Chi Minh City in 2016. Meanwhile, domestic investors such as Vingroup, Sun Group, Van Thinh Phat and Novaland are showing their superior strengths against domestic peers by continuously buying up potential projects or land to develop professional products as good as foreign investors.

Mr Stephen Wyatt, General Director of Jones Lang Lasalle (JLL) Vietnam, said, property M&A developments will be more diverse and unpredictable in 2017. The greater interest of global investors may result in new M&A records on this market. Billions of US dollars is ready to flow into the property market of Vietnam in all segments but mid-market and affordable apartment, office, hotel and industrial park properties draw greater interests, he noted. Meanwhile, experienced market observers believe that M&A is a key to increase the liquidity of the property market and save money and time for investors.

Source: VCCI