Vietnam’s real estate sector saw mergers and acquisitions (M&A) reach a total of $200 million in the first quarter this year, according to estimates by real estate and investment management firm JLL.
“This year is expected to be another record year for M&A in the country,” said Trang Le, Manager, Research & Consulting at JLL Vietnam.
A recent regulation by State Bank of Vietnam (SBV) asking credit institutions to limit their lending to the real estate and construction sectors to better control bad debts and maintain credit growth has made real estate investors seek other capital sources, she noted.
Some of the prominent deals in the first quarter were CapitaLand acquiring a plot of land in the West Lake District of Hanoi for $30.2 million, Nomura Real Estate purchasing 24 per cent of Sun Wah Tower and Thailand’s Strategic Hospitality REIT buying two projects in Ho Chi Minh city.
“Foreign investors see Vietnam as a destination for their long-term investment, at least five years. Instead of existing projects, they are more interested in real estate to be formed in the future,” Trang said.
Last year, Vietnam’s real estate sector saw M&A touch a total of $1.5 billion. Some of the prominent deals last year were a joint venture between Hongkong Land (HKL) and Ho Chi Minh Infrastructure Investment JSC (CII), a $40-million acquisition of 1.45-hectare site District 4 by CapitaLand, and VinaLand divesting its entire stake in the Vina Square Project for about $41.2 million.
There is also greater interest among private equity funds to tap the market. The year 2017 saw the establishment of a joint venture between Warburg Pincus and Becamex IDC Corporation to develop international standard logistics warehouses in the country.
“The legal system continues to improve which provides more confidence to investors looking to gain a foothold in this exciting market. As Vietnam is an emerging market, there are a number of opportunities that can offer investors high returns not seen in other more mature markets,” Stephen Wyatt, JLL’s Country Head for Vietnam, had told this portal earlier.
- By Quynh Nguyen, Deal Street Asia