|The real estate market is expected to see more M&A deals this year. - Photo tapchitaichinh.vn|
HÀ NỘI – The real estate market is busy with mergers and acquisitions (M&A), which are forecast to touch a record high this year, driven by the sector’s steady recovery.
M&A have become popular among developers who have the financial capacity as it is a quick way to acquire clean land funds for property development and catch the opportunities on time in a fast-recovering market.
Fresh capital inflows from M&A have helped revive a number of long-delayed projects, reducing inventories and bad debts in the sector, said property expert Đặng Hùng Võ.
One of the major M&A deals this year was developer Quốc Cường Gia Lai selling the Phước Kiển project in HCM City’s Nhà Bè District to Sunny Island Investment for an undisclosed amount. However, Quốc Cường Gia Lai is known to have received US$50 million, which went into paying off a VNĐ1.35 trillion ($59 million) debt to the Bank for Investment and Development of Việt Nam (BIDV).
Recently, Phát Đạt Real Estate Development Corporation announced that it has found a partner to transfer a part of EverRich 3 project in HCM City, into which the developer had poured in VNĐ1.58 trillion in 2016 and planned to spend another VNĐ642 billion in 2017. Phát Đạt is expected to sell off the entire project for VNĐ2.5 to VNĐ3 trillion, which will be used to repay debts.
In March, An Gia Real Estate Development and Investment Company saw investment from Japan’s Creed Group and acquired seven blocks of the Lacasa project in HCM City’s District No 7 from Vạn Phát Hưng. Previously, An Gia had bought several stagnant projects; it expects more M&A deals in the future.
M&A has become a strategy for real estate companies such as Hưng Thịnh Real Estate, which has acquired some 20 long-delayed projects. It has resumed construction in 10 of these projects and sales have begun, such as Moonlight Park View, Tân Hương Tower, Sky Centre and Mekody Residences.
Other realty firms such as Novaland, Greenland, Thủ Đức House have also hopped onto the M&A bandwagon.
Lê Hoàng Châu, president of HCM City Real Estate Association, said M&A deals have become the buzz word in the property sector during the past two years as investors see significant opportunities in the recovering market. It is also the fastest way to acquire clean land with the legal work done, as available land dries up in major cities such as Hà Nội, HCM City and Đà Nẵng.
According to Châu, there is scope for more M&A deals in the southern city, which has around 500 delayed projects. Investors are cooperating with each other and seeking partners with funds to implement projects as credit policies for property development get tougher.
There is a growing interest in the Vietnamese property market among foreign investors from Hong Kong, Korea and Singapore, JLL Việt Nam said. Stephen Wyatt, general director of JLL Việt Nam, was quoted by cafef.vn as saying that several foreign investment funds are looking to expand their presence in Việt Nam through M&A deals.
Previously, Wyatt had forecast a record year for M&A deals in the real estate sector, driven by an improved economy.
Property services firm Savills Việt Nam also expects a rise in property M&A deals this year.
Nguyễn Văn Đông, M&A consultancy director of Rồng Việt Securities Company, has also said that M&A deals in the realty market would dominate this year, in an interview with Đầu Tư Chứng Khoán (Securities Investment). - VNS