Property M&A trend higher in 2017

According to Phan Xuan Can, director of SohoVietnam, a mergers-and-acquisition (M&A) broker for many large-scale projects, Vietnam’s real estate market is attracting M&A notice from developers, investors, and brokers alike.

Around half of Singapore and Hong Kong’s 2017 M&A deals were finished projects. In Vietnam, however, M&A deals mostly centered on unfinished projects to be developed by the new arrivals, at a proportion of 80% to 90%.

“This is quite difficult because the new arrivals will have to bear higher risks. They will have to start projects from the beginning, build them, and then operate them. They will not see the early benefits as those with projects which are already finished and operational,” Can said.

“However, the high rate of M&A deals in Vietnam shows the attractiveness of this market,” he added.

Can told VIR that land plots for hotel and office buildings are most favoured by buyers. In August of this year he successfully brokered for one high-end resort on Phu Quoc Island with investment capital of US$80 million, as well as a 5,000 square metre plot of land in Hanoi to develop a 5-star hotel.

In 2017, the majority of transactions took place in Hanoi and Ho Chi Minh City. Ho Chi Minh City is preferred by investors, with greater transparency and more announcements to the public.

A range of large-scale transactions were undertaken by local investors including Phat Dat Real Estate, An Gia Real Estate, Novaland, Sun Group, Vingroup, and many others.

Foreign investors have also been participating in M&A activities. Notable investors include Mapletree, Keppel Land, Frasers Centrepoint, Hongkong Land, Lotte E&C, and others.

At a recent meeting with the Ho Chi Minh City People’s Committee, a group of Singaporean investors expressed their interest in a range of projects, such as Duxton Hotel Saigon, Empire City, Kumho Asiana Plaza, and Mizuki Park.

Stephen Wyatt, general director of JLL, a consulting firm successful in large-scale transactions, said that 2018 will be an even more prosperous year for M&A.

“With the highest increase of urban population and mid-income earners in the Southeast Asia region, Vietnam is now at the high position of investment attraction from foreign investment capital flow.”

In 2017, real estate was one of the top-five sectors attracting foreign direct investment in Vietnam. The five largest investors into Vietnam were the Republic of Korea, Japan, Singapore, China, and Taiwan (China).

In 2017, the residential segment was still the most attractive target for M&A. However, according to JLL, the commercial segment will grow in 2018, especially offices for lease and hotels.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said that M&A in real estate will be more active since there are more than 500 projects which are being delayed or postponed pending new investors.