According to industry insiders, foreign investors were once the buyers in M&A deals five years ago, but in many deals made recently, the buyers have been Vietnamese.
Novaland, a big player, has made 25 M&As with total value of up to tens of trillions of dong. In the first half of 2017 alone, Novaland took over Harbor City project and bought Gia Duc Real Estate in a plan to take over the entire The Sunrise Bay project.
Dat Xanh group has also bought many land plots to develop projects which include Opal Garden and Opal Skyview. Vietnam’s An Gia Group, joining forces with Japanese Creed Group, has completed the purchase of seven blocks of Lacasa residential quarter in a deal worth VND910 billion.
Novaland’s The Sunrise Bay urban residential project.
Hoai An from CBRE Vietnam commented that the presence of foreign investors in M&A deals shows the great potential of the Vietnamese real estate market.
Meanwhile, the participation of Vietnamese investors in the race to take over real estate projects shows the strong rise of domestic resources. The market has entered a new period with fierce competition.
Analysts said that Vietnamese conglomerates have an advantage because they have deep knowledge about the market and business environment, understand customers well and have the ability to approach land funds.
Nguyen Minh Phong, an economist, pointed out that foreign investors in M&A deals face some limitations set by the Real Estate Business Law and Housing Law which stipulate that foreign investors are not allowed to buy entire projects.
According to the latest report from Jones Lang LaSalle (JLL), Vietnam’s real estate market continued to see many M&A activities in the third quarter of 2017, with a number of transactions in the commercial and residential sectors.
The JLL report also anticipated that subsequent quarters would continue to see strong demand from a wide range of investors seeking to make the cut in Vietnam’s real estate market, with a particular focus from groups in Japan, South Korea, Singapore, Hong Kong, and mainland China.
With fierce competition and limited supply of good quality stock, it will be keeping an eye on further real estate M&A transactions as investors seek ways to deploy capital quickly and efficiently.
According to JLL, Vietnam has become an attractive destination for many foreign investors, largely due to the country’s friendly policies encouraging foreign direct investment (FDI), its political stability, and its strong economy.
The level of FDI has continued to grow year-on-year due to Vietnam’s strong fundamentals, with newly-registered FDI at $33.09 billion in the eleven month of the year, representing a rise of 82.8 per cent. Vietnam remains one of the most favorable destinations for foreign investment in Southeast Asia.
Due to the strong focus on Vietnam from regional investors, JLL expects M&A activities to reach record levels in 2017 and 2018.
The country’s real estate market continues to have irresistible appeal to foreign investors, mostly through M&As. Joint ventures have also become popular, with foreign developers possessing strong financial capacity and a solid track record joining forces with local developers that own land and have strong connections with the local community.