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Property

JLL reports on real estate M&A in first half

Released at: 07:40, 28/07/2018

JLL reports on real estate M&A in first half

Photo: Sunwah Tower

Local market continues to attract substantial interest from foreign investors.

by Doanh Doanh

Vietnam’s real estate market continued to exhibit irresistible appeal among foreign investors in the first half of 2018 and continued to witness high-value merger and acquisition (M&A) transactions in a variety of sectors such as residential, commercial, and industrial, according to Ms. Khanh Nguyen, Associate Director, Capital Markets, Vietnam, at JLL.

Joint ventures have become popular among foreign developers who have strong financial capacity and track record, with them joining forces with local developers who own land and have strong connections with the local community. Foreign investors are from many different countries, such as Japan, South Korea, and Singapore, and with an increasing number of groups from Mainland China.

JLL observes that there is an increasing number of local investors who are actively seeking real estate deals alongside foreign investors.

2018 started off with the acquisition of Sun Wah office tower by Nomura Real Estate Development. Nomura acquired a 24 per cent stake in the Grade A office building located in a prime location in District 1, Ho Chi Minh City. This was the company’s first office project in Vietnam and second project in the country, confirming its strong interest in the Vietnam market and its long-term commitment in the country.

The residential sector continued to be buoyant, with five major M&A transactions within the first six months. In March, CapitaLand announced that its wholly-owned subsidiary CVH Nereus Pte. Ltd. Had acquired 16.9 million ordinary shares, representing 99.5 per cent of charter capital, of the Hien Duc Tay Ho JSC, for a total cash consideration of approximately VND685 billion (approximately $29.8 million).

In April, Frasers Property entered into a conditional share purchase agreement with the Tran Thai Lands Company Limited to acquire 24 million ordinary shares, representing 75 per cent of the issued share capital of the Phu An Khang Real Estate JSC.

Another major mixed-use residential development deal in June 2018 was the divestment of Keppel Land’s stakes in the Quoc Loc Phat JSC (QLP)’s development project in District 2, Ho Chi Minh City.

Keppel Corporation Limited has recently announced that its wholly-owned subsidiary, Keppel Land Limited (KLL), through KLL’s wholly-owned subsidiaries Keppel Land Thu Thiem Pte. Ltd. and its indirect wholly-owned subsidiary Orbista Pte. Ltd. (which had a 20 per cent and 25 per cent interest in QLP, respectively) has entered into a sales and purchase agreement to divest their stake in QLP for VND702 billion ($30.6 million).

Malaysia’s Berjaya Land Berhad announced that its wholly-owned subsidiary, Berjaya Leisure (Cayman) Limited, had divested its entire resultant 32.5 per cent of the capital contribution in Berjaya Vietnam Financial Center Limited to the Vinhomes JSC and the Can Gio Tourist City Corporation for a cash consideration of VND884.9 billion ($38.4 million).

Investment deals in the first half were diversified, with a good variety of asset and property types transacted.

“When looking at the market as a whole we expect continued growth through most asset types,” Ms. Nguyen said. “Hospitality has been interesting over the past year, with new funds with foreign capital now specifically targeting the sector. We expect that this trend will continue in hospitality and in other growing sectors such as industrial and alternatives like education. The affordable housing market is another key growing sector, now drawing specialist capital sources who identify value in the underlying fundamentals, including a growing middle class.”

JLL expects foreign investors to continue showing a keen interest and strong commitment in Vietnam’s real estate market and that the market is still growing. “Due to the strong focus on Vietnam from regional investors, we expect M&A activities to reach record levels in 2018,” Ms. Nguyen said.

M&A transactions in Vietnam, 1H 2018

Source: Real Capital Analytics

Date

Property Name

Type

City

Jun 18

The Vietnam Financial Centre

Dev Site

Ho Chi Minh City

May 18

Binh Xuyen II Industrial Park land plot

Dev Site

Binh Xuyen

Apr 18

District 2 land plot

Dev Site

Ho Chi Minh City

Apr 18

Vietnam International University (VIUT) Project

Dev Site

Ho Chi Minh City

Apr 18

Ngan Binh Complex

Dev Site

Ho Chi Minh City

Apr 18

Eco-Green Saigon

Dev Site

Ho Chi Minh City

Mar 18

Malibu project

Dev Site

Hoi An

Feb 18

Tay Ho District land plot

Dev Site

Hanoi

Jan 18

51 Phan Boi Chau

Dev Site

Hanoi

Jan 18

Sunwah Tower

Office

Ho Chi Minh City

Jan 18

Project Site Guest Park Hyatt Hanoi

Dev Site

Hanoi

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