Singapore's CapitaLand recently agreed to buy a controlling stake in developer Ascendas-Singbridge in a deal which would value the target company at S$11 billion (US$8.13 billion). Last August, private equity firm Actis acquired Standard Chartered's principal finance real estate business in Asia.
For Vietnam's real estate market, 2018 starts off with the acquisition of Sun Wah office tower by Nomura Real Estate Development. According to their press release, Nomura acquired 24% stake in the Grade A office building located in the CBD of Ho Chi Minh. As for the residential sector in March 2018, CapitaLand announced the acquisition of 0.9-ha development site in Tay ho District, Hanoi, for approximately VND 685 billion (approximately US$29.78 million). Later, in the third quarter of 2018, CapitaLand bought a 6 hectares development site in Binh Trung Dong Ward, District 2, Ho Chi Minh City for VND 1.38 trillion (about US$60 million). The development is expected to yield more than 100 landed residential units, targeted for completion by 2021.
Another property giant, Frasers Property has publicly announced last year that they entered into a conditional share purchase agreement with Tran Thai Lands Company Limited to acquire 75% of the issued share capital of each Phu An Khang Real Estate JSC (PAK) and Phu An Dien Real Estate JSC (PAD). It is intended that PAK and PAD will undertake the development of residential-cum-commercial project in District 2 and Thu Duc District of HCMC, respectively.
One more of the notable transactions includes Keppel Land's divestment of its stakes in Quoc Loc Phat JSC (QLP)'s development project in District 2, Ho Chi Minh City. Malaysia's property group Berjaya Land Berhad also announced in a filing that it divested its entire resultant 32.5% of the capital contribution in Berjaya Vietnam Financial Center Limited (BVFC) to Vinhomes JSC (Vinhomes) and Can Gio Tourist City Corporation for a cash consideration of VND884.9 billion (approximately US$38.47 million). The development project would comprise "office building, a five-star hotel, service residences and shopping mall on a 6.64-ha land" in District 10, HCMC.
In conjunction with the disposal, Vingroup and its affiliates will potentially acquire Berjaya Vietnam International University Town One Member Limited Liability Company (BVIUT) and have injected capital and raising its stake in the firm to 99.2%. Berjaya's, through its subsidiary, initial stake in BVIUT has been diluted from 100% to 0.8% and the company intends to dispose the remaining stake in the near future. As of December 2018, Berjaya announced that it divested its entire stake 75% in T.P.C Nghi Tam Village Ltd. ("TPC Village") to Hanoi Hotel Tourism Development Limited Liability Company for a cash consideration of VND1.245 trillion (or about US$54.13 million). (TPC Village), which is involved in the operation of the five-star Intercontinental Hanoi West Lake Hotel, Hanoi.
Real estate transactions in 2018 were diversified with a good variety of asset and property types. In May 2018, one of Japan's largest management companies specialising in real estate properties for logistics operations CRE Inc. – through subsidiary CRE Asia – agreed to invest US$6.2 million (approx. VND142.6 billion) in Sembcorp Infra Services (SIS) in share subscription agreement. The new capital from CRE Asia and bank borrowings will fund the development of an additional 30,000 sqm of warehouse space in Vietnam by SIS.
Within the same month, global private equity fund Warburg Pincus and industrial real estate developer Becamex IDC Corp officially launched their joint venture BW Industrial Development JSC ("BW Industrial"). With over 200ha of projects under development and initial investment of more than $200 million, BW Industrial is the largest "for-rent" industrial and logistics developer in Vietnam, according to their announcement.
Another industrial transaction in 2018 is the sale and leaseback of a warehouse in VSIP 1, Binh Duong Province in the last quarter of 2018. Mapletree Logistics Trust have entered into a conditional asset transfer agreement with Unilever International Company Limited ("Unilever Vietnam") to acquire the warehouse unit for VND725.1 billion (approx. US$31.5 million). Upon completion of the acquisition, the property will be leased to Unilever Vietnam for 10 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. The industrial market will be the hottest sector in 2019, backed by continued movements from China and positive impact from the Comprehensive and Progresive Agreement for Trans-Pacific Partnership and the EU-Vietnam Free Trade Agreement.
We expect foreign investors to continue showing their keen interest and strong commitment to the Vietnamese real estate market. 2019 will be a reforming year 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 would be a challenge for investors for the upcoming year. However, we believe that the reform of regulations would help improve the transparency, making the Vietnamese real estate market even more attractive to foreign investors.
(Source: JLL)
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