Vietnam’s economic integration is quite active. Apart from great results in economic development, its integration progress has gradually established a firm position on the international arena by means of trade agreements it signed like the ASEAN Economic Community (AEC), the Trans-Pacific Partnership (TPP), Vietnam - EU Free Trade Agreement (FTA) and Vietnam - Korea FTA.
The signing of FTAs is opening up new opportunities and new playing fields for the Vietnamese business community and bringing Vietnamese investors closer to foreign investors. In the real estate sector, the integration process has brought more opportunities for market development and this is one of the factors boosting the transparency of this market. Particularly, in recent years, mergers and acquisitions (M&As) in the property market have been quite busy.
After a long lacklustre period, the real estate market began to recover from late 2015. And, according to experts, this market is entering a new phase of development, evidenced by the advent of a series of foreign investors on the Vietnamese real estate market. M&As in 2015 broke the record set in 2012 with approximately US$5.2 billion.
In 2016, M&A deals increase in value, particularly deals related to investors from Japan, South Korea and Singapore.
According to survey results released by Jones LangSalle Vietnam Limited (JLL), M&A activity on the real estate sector became more diverse from value to investment activity in the first half of 2016. Accordingly, in the first six months of 2016, M&A deal value surpassed US$3 billion, up 28 per cent over the same period of 2015. Big M&A deals include the cooperation between South Korea’s Mirae Asset and the UK-based AON BGN Investment Company to buy Keangnam Hanoi Landmark Tower for 500 billion won or Japan’s Creed Group’s purchase of 20 per cent of stake in An Gia Real Estate Investment and Development Joint Stock Company for US$200 million.
Keppel Land transferred 40 per cent of stake in Empire City Project in District 2, Ho Chi Minh City for US$93.9 million. Besides, many big cooperation deals were also concluded, e.g. a US$500 million investment into River City Project by Creed Group and Phat Dat Company.
Mr Nguyen Noi, Deputy Director of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI), said, new laws like the Investment Law, the Land Law, the Law on Real Estate Business and the Law on Enterprises are becoming leverage for the real estate market, where M&As are still the main drivers. Foreign investors are increasingly interested in the Vietnamese real estate market thanks to more open rules on conditions for foreign property ownership, investment and business in Vietnam. With new regulations, investors are allowed to transfer a part of their projects instead of transferring the entirety of their projects as before. This move is seen as the basis for drawing more investors.
According to FIA, in the first seven months of 2016, foreign investors spent US$12.94 billion in Vietnam, up 46.9 per cent over the same period in 2015. The real estate sector drew the second biggest value with US$956.7 million.
CBRE Vietnam said that Vietnam is becoming a potential destination for investors across the world as it has a more liberal investment environment. Strong FDI attraction is an opportunity for foreign investors to learn more about the investment environment in Vietnam. Therefore, experts believe that, with a stable developing economy and high GDP growth, the value of real estate M&As will further increase in the second half of 2016.
And, when the Trans-Pacific Partnership (TPP) and the ASEAN Economic Community (AEC) plus bilateral trade agreements signed, the property market will continue to receive bigger investment waves and the market will reach a new level. Property M&A value was projected to reach US$6 billion in 2016, a new record.
Luong Tuan
Vietnamese
