With the Government and relevant ministries’ support, the real estate market has been better, especially in mergers and acquisitions (M&A) activities.
At the end of December 2023, the People’s Committee of Binh Duong Province approved a decision allowing Becamex IDC to transfer the 18.9-hectare Tan Thanh urban area project in Thu Dau Mot City to Singapore-based CapitaLand. The project’s construction area is nearly 593,000 square meters with a total investment of VND13,645 billion (US$551.71 million) to provide 462 villas and about 3,300 apartments. The project’s land use rights transfer value is VND5,085 billion.
Furthermore, a series of other deals attracted people’s attention. For instance, Malaysia-based Gamuda Land agreed to spend US$315.8 million on the 3.68ha project of Tam Luc Real Estate Joint Stock Company in Thu Duc City.
Another case is Sky World Development Berhad’s purchase of a project with 2,060 square meters of land in HCMC’s District 8 from Thuan Thanh Joint Stock Company at the price of US$14.3 million. Moreover, CapitaLand bought a project of 4,000 apartments in the capital city of Hanoi’s western gate.
Additionally, domestic businesses such as Kim Oanh Group also signed cooperation agreements with Singapore’s Surbana Jurong Group, and Hung Thinh with Japanese multi-industry corporation Marubeni to implement the project in Thu Duc City. Last but not least, the First Real Land bought 22 percent of the charter capital of Bach Dang Service Trading Joint Stock Company which is the owner of a 6,879 square meter land project in Da Nang City worth $8.2 million.
Notably, a large amount of foreign direct investment (FDI) continues to increase in Vietnam. In 2023, the total registered FDI capital in Vietnam will reach nearly $36.61 billion an increase of 32.1 percent compared to 2022. In particular, the real estate business industry still maintained the second position with a total investment capital of nearly $4.67 billion accounting for more than 12.7 percent of total registered investment capital.
According to data from the Foreign Investment Agency under the Ministry of Planning and Investment, in January 2024, the total FDI capital registered in Vietnam including newly registered capital, adjusted registered capital and value of capital contributions and share purchase by foreign investors reached about $2.4 billion, an increase of 40 percent over the same period in 2023.
Of these, real estate business activities with new foreign investment licenses saw the largest with a registered capital of more than $1.24 billion, accounting for nearly 62 percent. This is the first time that the real estate sector has surpassed the processing and manufacturing industry in attracting FDI capital.
Assessing M&A activities and the trend of cooperation with foreign businesses, a global real estate services firm in the field of commercial property and investment management JLL Vietnam said that in the current context, Vietnamese real estate businesses are forced to restructure their products and investment portfolio. They should be more motivated and open to foreign investors especially when the majority of investors, who have been bumping into financial difficulties but they are unable to find a solution for their problems soon.
Economic expert Le Ba Chi Nhan said that foreign investors should carefully study and evaluate Vietnam’s policies and market before investing in the Southeast Asian country. Vietnam’s population is over 100 million people, so the demand for housing and offices in urban areas is very huge.
Currently, foreign investors eyeing the country’s real estate sector from Singapore, Japan or Korea are those who are willing to cooperate in investing if a project has a complete legal basis.
Meanwhile, General Director Trang Bui of global real estate service provider Cushman & Wakefield commented that foreign investors are currently starting to transfer capital into real estate projects in the form of buying back shares. The group of foreign investors from Northeast Asia and Southeast Asia has quite large demand with a scale for each deal of about $20 million-$50 million. In particular, the current time is considered a very good opportunity for foreign investors who have available funds to start the collection and purchase of projects whose investors are short of capital.
According to forecasts of economic experts, foreign investors will pour a huge amount of capital into the Vietnamese real estate market in the period 2024-2026, and many transactions are under active negotiation. Investment needs are projects with clean land funds, good quality, real value as well as legal ownership, complete site clearance and development potential.
Furthermore, the amended Land Law has been issued with specific regulations on determining land use fees and land origin for implementing commercial projects and planning new projects. The new law is helpful in shortening the time and legal procedures for the implementation of projects and improvement of the market supply, which is expected to create new momentum for the real estate market.
