VIETNAMESE REAL ESTATE MARKET CONTINUES SHOWING IRRESISTIBLE APPEAL TO FOREIGN INVESTORS
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| Singaporean company Keppel Land spent VND845.9 billion ($37.3 million) to acquire 16 per cent of Saigon Centre |
The Vietnamese real estate market continues to attract capital from regional foreign investors, mostly through mergers and acquisitions.
Stephen Wyatt, country head
for Jones Lang LaSalle Vietnam, said that in 2017 M&A in real
estate may increase very sharply and reach record levels. As the company
observed, billions of dollars are just waiting to be poured into the market in
most segments, with a focus on apartments, offices, hotels, and industrial realestate.
Since the beginning of the
year, there have been several big M&As in the field. In March, Singaporean company Keppel Land bought the entire stake (16 per cent) of
Southern Waterborne Transport Corporation (Sowatco) in Saigon Centre for
VND845.9 billion ($37.3 million) through subsidiary Krystal Investments Pte.,
Ltd.
Also in the same month, Hong Kong Land from
Hong Kong became the strategic partner of Ho Chi Minh City Infrastructure
Investment Joint Stock Company (CII) in developing residential housing in Thu
Thiem New Urban Area.
Japanese investors are also increasing involvement in Vietnam.
Last September, Kajima, one of the four biggest contractors in Japan, set up a
50:50 joint venture with Indochina Capital to invest $1 billion in 10 years. At
first the joint venture is going to focus on residential units, hotels, and
resorts in Hanoi, Ho Chi Minh City, and Danang. Keisuke Koshijima, senior
executive officer and general manager of the overseas division at Kajima
Corporation, called Vietnam Kojima’s key market in the region.
Besides the residential and commercial
segments, industrial real estate also attracted heavy interest from foreign
investors. CFLD Vietnam Real Estate Development Co., Ltd. (CFLD Vietnam), a
subsidiary of China Fortune Land Development Co. (CFLD), said it plans to build
dozens of industrial cities mostly in Southeast Asia, where Vietnam is animportant destination.
In January last year the company worked with
the Dong Nai People’s Committee to find investment opportunities. In September,
CFLD Vietnam signed a memorandum of understanding with Tin Nghia Corporation to
build a New Industry City (NIC) in Ong Keo Industry Park, which is located in
Dong Nai, east of Ho Chi Minh City.
In April 2017, the company spent $65 million
through subsidiaries CFLD Investment 27 Pte., Ltd. and CFLD Investment 28 Pte.,
Ltd. to buy over 70 per cent of Dai Phuoc Lotus, also in Dong Nai, from
VinaLand Limited and VinaCapital’s Vietnam Opportunity Fund.
Masataka Sam Yoshida, senior executive for
Vietnam at Tokyo-based M&A consultancy company Recof, said that Japanese
investors are now more interested in the Vietnamese real estate market and are
more willing to accept associated risks. Many experts said that the new found
propensity to take risks is due to the optimistic macroeconomic outlook of the
country. Also, political stability and the stable currency are further
incentives.
Meanwhile, the profitability of commercialprojects is higher in Vietnam than in other countries. For example, office
space rental in Vietnam can return a profit of 8-10 per cent a year, while the
figure is 4-6 per cent in Singapore.
Duong Thuy Dung, CBRE Vietnam’s head of
market research, said that the most popular way for foreign investors to join
the Vietnamese real estate market is through setting up joint ventures with
domestic companies to take advantage of their land reserves and connections in
the field.
They will contribute to the joint venture
with their financial capabilities and experience gained in more developed
markets. Another method is to set up a 100 per cent foreign-owned subsidiary
then buy a project or stake in a Vietnamese real estate developer.
Observers say that M&A is the way to
increase liquidity for the market as well as save costs and time for investors.
"Source: Vietnam Investment Review"
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