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Real Estate Market Waiting for New Capital Flows

Posted: Wednesday, September 20, 2017

Since the beginning of 2017, the real estate market of Vietnam has recovered its strength and become increasingly attractive to foreign investors with many large corporations accelerating their investment in Vietnam. According to many experts, in the last months of the year, cash flow into the sector will continue to increase sharply through the merger and acquisition (M & A).

Foreign investors increasingly interested
According to Jones Lang LaSalle Company (JLL) - a global real estate services firm specialising in commercial property and investment management, Vietnam’s real estate is now considered an attractive market for investors to pour their capital in, especially individual investors based on demand and financial ability of the market.

JLL said that the real estate market has many breakthroughs as the number of business operating in this industry increased sharply. In addition, capital flows will outstrip the market.

According to a report by the Foreign Investment Agency, Ministry of Planning and Investment, in the first 7 months of 2017, the total newly foreign direct investment (FDI) reached US$19.22 billion, up 54.8 percent over the same period in 2016. Real estate ranks 4th in attracting investment capital, with a total registered capital of more than US$1.15 billion (accounting for nearly 6 percent of total registered FDI).

According to the statistics of the Foreign Investment Agency, as of the end of July 2017, there were 619 real estate projects active in Vietnam with the total capital of US$51.6 billion.

In the first half of 2017, the real estate market in Vietnam also witnessed a lot of M&A transactions conducted by foreign investors with a total value of work up to hundreds of millions of US$, especially by those from Japan or Singapore, with big names such as Maaed, Creed Group, Mitsubishi, Nishi Nippon Railroad, Kajima, CapitaLand, Keppel Land or Mapletree.

The typical example is the joint project between Nam Long Joint Stock Company and two Japanese top investors Hankyu Realty from Osaka and Nishi Nippim Railroad from Fukuoka, co-developing Mizuki Park on a scale of 26 ha with the total value of VND8 trillion.

Another example is the business cooperation between EXS Capital and SonKim Land Company in May when EXS Capital poured US$100 million into SonKim Land. This is the second time they have cooperated through Lemongrass Master Fund.

In the late June, the real estate market also witnessed the investment of Indochina Capital in Toong Co-working Space. The funding from Indochina Capital will allow Toong to provide more modern, progressive, and conducive working environments for companies and individuals in Vietnam.

Active M&As
Experts say that toward the end of the year, the real estate market will continue to be vibrant as investors continue to enter the market through M &As. The “magnet” will attract hundreds of projects which are idle because of lack of investment capital in Hanoi, Ho Chi Minh City, Da Nang, etc.

It can be seen that from 2013 until now, the M&As in Vietnam have been vibrant with active engagement of foreign investors over the years. Investors are giving priority to businesses are aiming at large land resources and experience and prestige.

Report of CBRE Vietnam showed that from the beginning of 2017 to now, many foreign corporations have increasingly wished to cooperate with large real estate corporations in the country such as Vingroup, Hung Thinh, Novaland, Land Green, Nam Long, Khang Dien, Tecco, etc because of their big number of projects and prestige in the market.

In addition, the retail, resort and residential markets have also attracted foreign investment. Especially with the resort area, investors currently on only focus on developing 4 or 5 star-hotels but also invest in hotel operation.

According to Matthew Powell, Director of Savills Hanoi, the real estate market in Vietnam is having an advantage in attracting foreign investors thanks to stable growth economy, stable benchmarking platform, the advantage of population structure and the rising income of people.

Luong Tuan

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