M&A market likely to bustle at year-end: Experts

Right from the beginning of October, the southern real estate market witnessed two large-value M&A projects, with the seller being a "giant" from Singapore - Keppel Group.

In a statement, the firm said that its subsidiary Jencity Limited is divesting 70% of its capital from the Saigon Sports Company Limited - the investor of the "super" project Saigon Sports City. The buyers are two domestic enterprises, each purchasing 35% of the capital. The transaction value is nearly VND7.5 trillion (US$300.3 million).

Another big deal being executed by Keppel is also a capital sale related to Phase-3 Saigon Centre project in District 1, Ho Chi Minh City. Toshin Development, a Japanese company, wants to pay about US$46.4 million in cash to buy shares of Himawari VNSC3, a subsidiary of Keppel that is managing the project.

In late September, global reinsurance company AON Plc wanted to sell the Landmark 72 complex of three buildings in Hanoi, including the second tallest skyscraper in Vietnam, Keangnam Hanoi Landmark Tower. The assets are worth nearly US$749 million. One of the interested parties is the Republic of Korea's Mirae Asset Securities.

Another notable deal is Bitexco Group LLC selling 100% of its capital at the Ben Thanh quadrangle super project with the name of The Spirit of Saigon in the context of being under the pressure to repay 10 lots of bonds worth VND10 trillion.

These big deals have heated up the M&A market. However, the heat has yet to meet expectations, especially as M&A projects in major cities such as Hanoi and HCM City have faced many difficulties.

Le Hoang Chau, President of the HCM City Real Estate Association (HoREA), said that there were no projects implemented through M&A in the first eight months of this year in HCM City, while M&A deals can help clear inventory faster and bring in investors with stronger financial capacity.

He held that the reason behind this situation is the Law on Real Estate Business that requests the transferor to fulfil financial obligations before receiving transfer permission.

Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, said foreign investors have recognised large cities like Hanoi and HCM City as metropolises with very attractive investment potential. However, they have faced difficulties due to legal issues and access to land funds, making it difficult for them to penetrate these two markets, forcing them to partner with domestic enterprises.

However, in the remaining months of 2024 and in 2025, Savills Vietnam expects that FDI capital will continue to flow into Vietnam and M&A deals will increase thanks to the improvement in the legal framework and infrastructure development. The industrial park real estate market is forecast to be the main destination for foreign capital inflows, as demand for production space increases from foreign investors, said Khuong.

Meanwhile, Trang Bui, General Director of Cushman & Wakefield, said that foreign investors have begun to transfer capital into real estate projects in the form of buying back shares. The majority of foreign investors are from Singapore, Taiwan (China), Japan, and Malaysia. The capital scale for each transaction is about US$20 - 50 million. Trang held that this is a very good opportunity for foreign investors who have funds at hand and are waiting to start collecting, buying, or investing in projects that are in need of capital.

Dr. Nguyen Duy Phuong from DG Capital underlined that the financial health of many domestic real estate enterprises is still poor and they have not yet been able to access large capital sources, while project development costs are increasing. Therefore, selling projects to investors with better financial potential and project implementation capacity will help the sellers earn a large amount of money to serve investment and business activities, he added.

Phuong predicted that a large amount of capital from foreign investors will flow into the Vietnamese real estate market in the 2024 - 2026 period, while many transactions are in the process of intensive negotiations.