Actual property M&As acquire tempo as native companies combat with capital insufficiency, restructuring: professionals

2024 is considered a vibrant year for mergers and acquisitions (M&A) in Vietnam’s real estate sector, as domestic property companies still face challenges related to capital and restructuring, according to experts.

Earlier this month, Singaporean conglomerate Keppel announced it would sell 70% of its stake in the 64-hectare Saigon Sports City project in Thu Duc city, Ho Chi Minh City, half of it to HTV Dai Phuoc Company Limited, a construction and real estate business based in Dong Nai province.

Dai Phuoc will pay cash consideration of approximately VND320 billion ($13 million) for a 5% stake and between VND2,879-3,291 billion ($113.9-130 million) for the other 30%.

The other half will be purchased by Vinobly Investment Real Estate JSC for VND3,359-3,839 billion ($132.79-151.77 million).

Industry insiders say that this year’s M&A activities have been boosted by ongoing financial difficulties faced by domestic real estate firms, as well as their efforts to restructure in response to new market conditions. In the first nine months of 2024, the Vietnamese real estate market recorded 11 successful M&A transactions.

Notable deals included the sale of The One World project in the southern province of Binh Duong by Kim Oanh Group to Sumitomo Forestry, Kumagai Gumi and NTT Urban Development for $1 billion; and Vingroup’s divestment of a 55% stake in SDI, a major indirect shareholder of its subsidiary Vincom Retail, for $982 million.

Becamex IDC sold the Tan Thanh Binh Duong housing-urban area complex to Sycamore Limited, a subsidiary of Singaporean firm CapitaLand, for $553 million; and Sonadezi Chau Duc divested 18 hectares of industrial land to Taiwanese-based Tripod Technology Corporation for $250 million.

High average value

According to the Vietnam Association of Realtors (VARS), the total value of nine of 11 recorded M&A transactions topped $1.8 billion with the biggest single deal valued at $982 million, marking a 2.2-fold increase compared to the largest recorded as of December 2023.

Even without fully determining the transaction values of two of the 11 deals, the average value of real estate M&A transactions in the first nine months of 2024 reached its highest level in six years, at least double that of 2023.

VARS chairman Nguyen Van Dinh forecast that M&A activities in the near future will focus on residential, industrial and logistics segments, driven by high demand for housing and a global supply chain shift alongside the need for industrial park development.

A notable trend in recent M&A activities has been the shift from “outright purchase” to “joint ventures” among companies. Cushman & Wakefield reports that many M&A transactions are currently in the negotiation stages, heading towards positive outcomes.

Foreign investors continue to seek clean, high-quality land with full legal status and significant development potential, he added.

However, Su Ngoc Khuong, a senior director at Savills Vietnam, highlighted the challenges that foreign investors face in navigating legal complexities and land access issues in major cities like Hanoi and HCMC.

“These markets present vast opportunities for foreign investors, but entry remains difficult, unless they have already owned projects with legal procedures completed 5-7 years ago or have set up partnerships with domestic firms,” he said.