Written by Vu Pham, Minh Hue
Wednesday, October 30, 2024 | 4:14 PM GMT+7
2024 is expected to be an active year for mergers and acquisitions (M&A) in Vietnam’s real estate sector, as domestic real estate companies continue to face challenges related to capital and restructuring, according to experts. .
The 64-hectare Saigon Sports City project in Tu Duc City, Ho Chi Minh City. Photo courtesy of The Investor/Vu Pham
Earlier this month, Singaporean conglomerate Keppel announced it would sell half of its 70% stake in the 64-hectare Saigon Sports City project in Ho Chi Minh City’s Thu Duc to HTV Dai Phuoc Company Limited, a construction and real estate company. Business based in Dong Nai province.
Dai Phuoc will offer approximately VND320 billion ($13 million) for 5% of the shares and VND2,879 billion to VND3,291 billion ($113.9 million to $130 million) for the remaining 30%. We plan to pay cash consideration.
The remaining half will be purchased by Vinobly Investment Real Estate JSC for VND3,359 billion to VND3,839 billion ($132.79 million to $151.77 million).
Industry insiders said this year’s M&A activity was driven by continued financial difficulties faced by domestic real estate companies and restructuring efforts in response to new market conditions. In the first nine months of 2024, Vietnam’s real estate market recorded 11 successful M&A transactions.
Notable deals include Kim Oan Group’s sale of the One World project in southern Binh Duong province to Sumitomo Forestry, Kumagai Gumi and NTT Urban Development for $1 billion. Vingroup then sold its 55% stake in SDI, the major indirect shareholder of its subsidiary Vincom Retail, for $982 million.
Becamex IDC has sold the Tan Thanh Binh Duong residential and urban complex to Sycamore Limited, a subsidiary of Singaporean company CapitaLand, for $553 million. and Sonadezi Chau Duc sold 18 hectares of industrial land to Taiwan-based Tripod Technology Corporation for $250 million.
high average value
According to the Vietnam Association of Real Estate Agents (VARS), the total amount of 9 of the 11 recorded M&A transactions exceeded $1.8 billion, with the largest single transaction valued at $982 million, as of December 2023. It increased by 2.2 times compared to the maximum amount recorded.
The average value of real estate M&A deals in the first nine months of 2024 reached a six-year high, despite the value of 2 out of 11 deals not being fully finalized, and at least 2 in 11 deals in 2023. It has doubled.
VARS Chairman Nguyen Van Dinh said M&A activity in the near future will focus on the residential, industrial and logistics sectors due to changes in global supply chains due to rising demand for housing and the need for industrial park development. I predicted it would be.
A notable trend in recent M&A is a shift from “outright purchases” to “joint ventures” between companies. Cushman & Wakefield reports that a number of M&A transactions are currently in negotiation stages and are moving toward positive outcomes.
Foreign investors continue to seek clean, high-quality land with full legal status and great development potential, he added.
However, Savills Vietnam senior director Su Ngoc Cuong highlighted the challenges foreign investors face in navigating complex legal and land access issues in major cities such as Hanoi and Ho Chi Minh City. .
“These markets offer enormous opportunities for foreign investors, but those who already own projects that completed legal formalities five to seven years ago or have established partnerships with domestic companies,” he said. “Unless there is, entry will remain difficult.”
