Southern Vietnamese real estate market: emergence of large M&A deals

11:18 | 25/07/2020
The southern real estate market has witnessed a series of impressive mergers and acquisitions (M&A) deals. This trend is expected to be more vibrant in the near future.

Regarding difficulties in real estate market post-COVID-19, many small-scale enterprises have to operate moderately. In contrast, businesses with large financial potentials have augmented their land hunting activities.

Despite the optimistic signs of M&A activities, most projects belong to a small number of large real estate companies such as Hung Thinh, Dat Xanh, and LDG Group.

One of the most frequently mentioned names is Danh Khoi Group, which spent thousands of billions of VND to revitalise “hibernating” projects. One notable example is the acquisition from Japanese firm Sun Frontier Investment Co., Ltd. to officially become the investor of the Sun Frontier project in Danang city.

southern vietnamese real estate market emergence of large ma deals
The southern real estate market has witnessed a series of impressive M&A deals

Also in Danang, Danh Khoi acquired the coastal project of Hotel and Resort Danang. from Hanoi-Non Nuoc Tourism Investment JSC. This project, with the scale of 7.5 hectares at a relatively favourable position on Truong Sa road, has been delayed for a long time. After the tie-up, it is now under construction and given a new name: Aria Danang Hotel & Resort.

An M&A tycoon, Hung Thinh Group, also spent thousands of billion to buy a project in Nhon Hoi, Binh Dinh province with an area of over 1,000 hectares. Hung Thinh is planning to deploy and turning this into a complex of houses, villas, hotels, and resorts. In addition, the company has recently spent large sums of money to purchase thousands of hectares of land in Bao Loc, Lam Dong to develop the project.

Likewise, LDG Group recently announced the successful purchase of Song Da Riverside Luxury Apartments project in Thu Duc district, Ho Chi Minh City from Quoc Cuong Gia Lai Investment JSC. After joining LDG, the project is named LDG River luxury apartment building, with a total investment of about VND4.153 trillion ($180.57 million).

"This is not the first time LDG Group has shaken hands with Quoc Cuong Gia Lai JSC, but this cooperation is the biggest deal," said Nguyen Khanh Hung, chairman of LDG Group's Board of Directors. The project will develop high-class apartments and supply thousands of products to the market.

Similarly, Saigon Real Estate JSC confirmed the successful transfer of 20 per cent of the contributed capital in the housing project south of Xuyen A street from Sai Gon Real Estate Corporation (Resco).

In addition, this enterprise also plans to buy back land banks in the surrounding provinces and is urgently completing the transfer of the Gem Premium project (Thu Duc district, Ho Chi Minh City) to Dat Xanh Group.

Undercurrents

According to data from property consultancy firm Sohovietnam, the demand of hoteliers has been improving recently.

For hotels and resorts, investors are willing to fork out VND8-10 trillion ($347.83-464.78 million), with criteria focusing on assets and infrastructure that have been completed, are in operation, or are under construction.

Similarly, a recent report by Savills Vietnam also pointed out that many potential investors are ready to buy and receive projects. Since 2019 to date, negotiations paving the way for upcoming deals have a total value of more than $500 million. The representative of this unit also said that there will be more investors seizing opportunities to close deals soon.

Raymond Clement, CEO of Savills Hotels Asia-Pacific commented that under the impact of COVID-19, real estate M&A transactions will accelerate as prices are becoming more appealing than before.

The segments that investors are most interested in this year are forecast to be the office and project land for apartment complexes and commercial services. Concerning the hotel segment, products in prime locations are still interesting but asking prices will be reduced. At construction land projects, if the process of applying for approval for total ground and architectural planning to grant construction permits is not accelerated, the investor’s fund will be stagnant and unable to be transferred until the permit is granted

By Quoc Nguyen

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