Powerful M&A drive in real estate

Powerful M&A drive in real estate

VIR - Mergers and acquisitions activity is growing across the Asia-Pacific real estate market, a sign that institutional investors are continuing to increase their allocations to the industry.
03:00, 10/03/2019

Vietnam has become an attractive destination for many foreign investors largely due to the country’s policies encouraging foreign direct investment (FDI), its political stability, and strong economy. Furthermore, the country has been taking the initiative to improve its transparency, according to JLL’s Global Real Estate Transparency Index. Vietnam remains one of the most favoured destinations for foreign investment in Southeast Asia.

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 ($8.13 billion). Last August, private equity firm Actis acquired Standard Chartered’s principal finance real estate business in Asia.

In the Vietnamese real estate market, 2018 started off with the acquisition of Sunwah office tower by Nomura Real Estate Development Co., Ltd. According to a press release, Nomura acquired a 24 per cent stake in the Grade A office building located in the Central Business District (CBD) of Ho Chi Minh City.

As for the residential sector, in March 2018 CapitaLand announced the acquisition of a 0.9 hectare development site in Tay Ho district of Hanoi, for approximately VND685 billion (approximately $29.78 million).

Later, in the third quarter of 2018, CapitaLand bought a 6-hectare development site in Binh Trung Dong ward of District 2 in Ho Chi Minh City for VND1.38 trillion ($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 Co., Ltd. to acquire 75 per cent of the issued share capital of Phu An Khang Real Estate JSC (PAK) and Phu An Dien Real Estate JSC (PAD) each. It is intended that PAK and PAD will undertake the development of residential-cum-commercial projects in District 2 and Thu Duc district of Ho Chi Minh City.

Another notable transaction is Keppel Land’s divestment of its stakes in Quoc Loc Phat JSC’s project in District 2. 

Malaysian property group Berjaya Land Bhd. also announced in a filing that it divested its entire resultant 32.5 per cent of the capital contribution in Berjaya Vietnam Financial Centre Limited to Vinhomes JSC and Can Gio Tourist City Corporation for a cash consideration of VND884.9 billion ($38.47 million).

The development project would comprise of an office building, a five-star hotel, service residences, and shopping mall on a 6.64ha land in District 10 of Ho Chi Minh City.

In conjunction with the disposal, Vingroup and its affiliates are also being considered as potential buyers of Berjaya Vietnam International University Town One Member LLC (BVIUT) and have injected capital and raised its stake in the company to 99.2 per cent. Through its subsidiary, Berjaya’s initial stake in BVIUT has been diluted from 100 to 0.8 per cent and the company intends to dispose of the remaining stake in the near future.

Powerful M&A drive in real estate, illustration photo.

Powerful M&A drive in real estate, illustration photo.


As of December 2018, Berjaya announced that it divested its entire 75 per cent stake in T.P.C Nghi Tam Village Ltd. (TPC Village) to Hanoi Hotel Tourism Development LLC for a cash consideration of VND1.245 trillion ($54.13 million). TPC Village is involved in the operation of the five-star Intercontinental Hanoi West Lake Hotel in 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 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 square metres of warehouse space in Vietnam by SIS.

Within the same month, global private equity fund Warburg Pincus and industrial real estate developer Becamex IDC officially launched their joint venture BW Industrial Development JSC (BW Industrial). With over 200ha of projects under development and the 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 in the southern province of Binh Duong in the last quarter of 2018.

Mapletree Logistics Trust Management Ltd. has entered into a conditional asset transfer agreement with Unilever International Co., Ltd. (Unilever Vietnam) to acquire the warehouse unit for VND725.1 billion (approximately $31.5 million). Upon the 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 impacts from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the EU-Vietnam Free Trade Agreement.

We expect foreign investors to continue showing 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 in the upcoming year.

However, we believe that the reform of regulations would help improve transparency, making the Vietnamese real estate market even more attractive to foreign investors.

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