Real estate M&As 2018: golden time for foreign capital
The M&A deals made in 2017 are expected to have the value of US$2 billion, and the same value or higher has been predicted for 2018.
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According to Dang Xuan Minh, CEO of AVM Vietnam & Vietnam M&A Forum, the Vietnamese market has been witnessing a second M&A wave since 2015 and it will continue in 2018.
The total value of M&A deals has been increasing year after year. Minh said there are three reasons for him to believe that the current growth will continue in 2018.
First, the equitization of state-owned enterprises has accelerated. Second, the market now sees a strong rise of many private businesses and Vietnamese enterprises making M&A deals.
Third, more foreign investors are showing interest in Vietnam. Since 2016, Ho Chi Minh City has been the investment destination recommended for investors.
Meanwhile, Can Van Luc, a respected economist, pointed out that the enactment of the National Assembly’s Resolution No 42 on bad debt settlement will be a major factor in accelerating M&As in the real estate market.
A report shows that property is the mortgaged asset for most bad debts, which accounts for 62% of total mortgaged assets at VAMC (Vietnam Asset Management Company).
Therefore, analysts believe there are great opportunities for M&A activities in the real estate market.
JLL’s investment director Nguyen Thi Van Khanh said foreign investors will be the major driving force for the M&A deals in the time to come, especially those from Asia, including Thailand, Japan and Singapore.
US-based Warburg Pincus has cooperated with VinaCapital to set up a hotel development joint venture worth US$300 million. Mapletree from Singapore has taken over Kumho Asiana Plaza Saigon, and Keppel Land plans to develop the land plot in Thu Thien Urban Area.
Son Kim Land has announced it has raised US$100 million worth of funds from the international market. Meanwhile, Becamex IDC in September signed a strategic cooperation with Warburg Pincus.
“With high GDP growth rates, open policies and promising capitalization rates, foreign investors want to make investments in Vietnam,” Khanh said.
However, in order to attract foreign capital, the Vietnamese market and real estate developers have to maintain the attractiveness of their projects.
Phan Xuan Can, chair of SohoVietnam, a consultancy firm, noted that the opportunities are not reserved for all.
Habico Tower on Pham Van Dong street in Bac Tu Liem district in Hanoi, for example, has been left idle for the last 10 years because no investor can be found to restart it.
Meanwhile, another project in the same area kicked off after a Vietnamese investor signed a cooperation contract with a foreign investor.
