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JLL: Vietnam finding favor among foreign real estate investors

Released at: 17:17, 28/02/2019

JLL: Vietnam finding favor among foreign real estate investors

Photo: Viet Tuan (VET)

Vietnam will continue to see more M&A deals in the time to come, according to JLL Vietnam.

by Hung Cao

Vietnam has become an attractive destination for many foreign investors, largely due to the country’s friendly policies encouraging FDI, its political stability, and strong economy, according to JLL Vietnam.

The country has also been adopting initiatives to improve its transparency to the next level, according to JLL’s Global Real Estate Transparency Index. Vietnam remains one of the most-favored destinations for foreign investment in Southeast Asia.

2018 started off with the acquisition of Sun Wah office tower by Nomura Real Estate Development. According to their press release, Nomura acquired a 24 per cent stake in the Grade A office building in Ho Chi Minh City’s CBD. In the residential sector, CapitaLand announced the acquisition of a 0.9-ha development site in Hanoi’s Tay Ho district in March for approximately $29.78 million.

Later, in the third quarter, CapitaLand then bought a 6-ha development site in Ho Chi Minh City’s District 2 for about $60 million. The development is expected to yield more than 100 landed residential units, targeted for completion by 2021.

Another property giant, Frasers Property, announced last year that it had entered into a conditional share purchase agreement with Tran Thai Lands to acquire 75 per cent of the issued share capital in both Phu An Khang Real Estate (PAK) and Phu An Dien Real Estate (PAD). PAK and PAD will undertake the development of residential-commercial projects in District 2 and Thu Duc district, respectively.

Vingroup and its affiliates will potentially acquire the Berjaya Vietnam International University Town One Member Limited Liability Company (BVIUT) and have injected capital and raised its stake to 99.2 per cent. Berjaya’s initial stake in BVIUT, through its subsidiary, has been diluted from 100 per cent to 0.8 per cent and it intends to dispose of the remaining stake in the near future.

In December, Berjaya announced it had divested its entire stake of 75 per cent in T.P.C Nghi Tam Village Ltd. to Hanoi Hotel Tourism Development Ltd. for a cash consideration of $54.13 million. TPC Village is involved in the operation of the five-star Intercontinental Hanoi West Lake Hotel.

Real estate transactions in 2018 were diversified, with a good variety of asset and property types. In May, one of Japan’s largest management companies specializing in real estate properties for logistics operations, CRE Inc., through its subsidiary CRE Asia, agreed to invest $6.2 million in Sembcorp Infra Services (SIS) in a share subscription agreement. The new capital from CRE Asia and bank borrowings will fund the development of an additional 30,000 sq m of warehouse space in Vietnam by SIS.

Another industrial transaction last year was the sale and leaseback of a warehouse at VSIP 1 in southern Binh Duong province in the last quarter. Mapletree Logistics Trust entered into a conditional asset transfer agreement with Unilever International to acquire the warehouse for $31.5 million. Upon completion of the acquisition, the property will be leased to Unilever Vietnam for ten years with annual rent escalations.

“When looking at the market as a whole, we expect continued growth through most asset types, including industrial and other growing sectors such as hospitality alternatives like education,” said Ms. Khanh Nguyen, Senior Director of Capital Markets at JLL Vietnam. “The industrial market will be the hottest sector in 2019, backed by continued movements from China and the positive impact of some free trade agreements.”

“We expect foreign investors to continue showing their keen interest and strong commitment to Vietnam’s real estate market. 2019 will be a year of reform for the market, with more regulations and reconciliation taking place. The prolonged approval process may impact new developments in 2019. Therefore, sourcing for ‘clean’ and ‘clear’ projects that are ready for development will be a challenge for investors in the upcoming year. However, we believe that the reform of regulations will help improve transparency, making Vietnam’s real estate market even more attractive to foreign investors.” 

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