Foreign investors buy up profitable properties in Vietnam: analysts

Analysts predict that foreign investors will dramatically increase the volume of M&A deals in the real estate sector starting later this year.

In July, Singapore-based Keppel Land announced it had bought a 65% stake in a local company for VND1 trillion (US$41.7 million) that plans to open a shopping center in Hanoi in 2025. Two months earlier, it acquired two residential projects from Khang Dien firm in Thu Duc, Ho Chi Minh City for VND3 trillion.

Malaysia's Gamuda has invested VND7.3 trillion to buy a 3.7-hectare project from Tam Luc Real Estate. The project in Tu Duc City, which will include six towers with nearly 2,000 apartments, earlier this year successfully navigated the legal challenges it faced earlier.

There were also M&A deals in the tourism and resort real estate sector. The unfinished Nam Hoi An (Hoiana) resort project in Quang Nam province was acquired by Hong Kong billionaire Henry Cheng. The project has a total investment of US$4 billion. Two hotels in District 7 of Ho Chi Minh City were also sold in mid-2023: the three-star Ibis Saigon South and the four-star Capri Hotel.

Consulting firm JLL said: “Recent large M&A deals partly reflect investors' confidence in the Vietnamese economy as a whole, and especially in the real estate market.” JLL cited statistics from Real Capital Analytics, which analyzes global real estate investment and transaction data, saying the total value of M&A deals in Vietnam last year was US$1.5 billion, the highest since 2018.

Some experts suggest that mergers and acquisitions will increase by the end of this year, as many developers are forced to sell assets to pay off debts. Tran Van Binh, vice president of the Vietnam Association of Realtors (VARS), stated that he has noticed an increase in merger and acquisition activity in the real estate sector since August.

Fan Suan Kang, chairman of Sohovietnam, a company with over 10 years of experience in merger and acquisition consulting, stated that deals with foreign investors typically take between six months to a year. Mergers and acquisitions rarely conclude faster, as foreign companies conduct their due diligence very thoroughly, he explained.

Large foreign investors are showing great interest in the Vietnamese housing sector, as they believe it has significant potential due to the enormous demand. They prefer merger and acquisition deals in Hanoi and Ho Chi Minh City, as well as in neighboring areas such as Bac Ninh, Bac Giang, Hung Yen, and Hai Duong in the north, and Binh Duong, Dong Nai, and Long An in the south, because they are close to airports and have many industrial parks, he said. They are also looking for projects in economic centers such as the northern city of Haiphong and Quang Ninh province, as well as in tourist centers like Da Nang and Hoi An, Phu Quoc Island, and Nha Trang.

The real estate market as a whole is expected to improve soon due to the decline in bank interest rates, better investor sentiment, and increased liquidity, experts predict. JLL forecasts that there will be more successful transactions in the near future, considering that many Vietnamese developers are still facing financial difficulties.