New M&A wave to sweep into Vietnam's property market: experts

Vietnam's real estate market is expected to heat up in 2025, driven by a strong influx of foreign direct investment (FDI) and a surge in mergers and acquisitions (M&A) deals, according to experts.

Evaluating the prospects for Vietnam’s real estate market in 2025, experts from JLL Vietnam believed that the sector is poised for significant growth, thanks to the government’s robust investment in infrastructure.

This year, the government has allocated an amount equivalent to 8% of GDP for infrastructure development, which will be a key driver of GDP growth.

Trang Le, CEO of JLL Vietnam, highlighted several factors that contribute to an optimistic outlook for the real estate market in 2025, including interest rates.

This year, the State Bank of Vietnam plans to maintain interest rates that were lowered last year to foster economic growth, while increasing credit growth to over 16%.

The acceleration of infrastructure development, with VND900 trillion ($35.27 billion) allocated for public investment, is another key factor fueling real estate growth this year.

Streamlining administrative processes and merging localities in the near future will further facilitate legal procedures, fostering long-term growth. These significant reforms not only support the real estate sector but also contribute to the sustainable development of the private economy, Trang Le noted.

However, she pointed out that the biggest challenge facing Vietnam’s real estate market is the shortage of supply across all segments, particularly in affordable housing, due to skyrocketing prices in recent years.

The market, with a population exceeding 100 million, has also largely focused on traditional segments like residential, office, retail, and industrial real estate, leaving many other potentially lucrative segments untapped.

"These challenges, combined with global economic instability, will drive Vietnam’s real estate market into a new development cycle. In the coming years, the market is expected to shift towards secondary real estate, data centers, and housing for the elderly.

"This will lead to a more sophisticated, professional, and sustainable market - an evolution that has never been so clearly evident in Vietnam. Furthermore, the true value of real estate will become the foremost criterion in this new phase, aligning the market more closely with real demand, particularly in the housing segment," she predicted.

Trang Le also emphasized that the "key" to unlocking this new phase of development lies in the optimistic signals from FDI, as foreign investors recognize the government’s commitment to long-term growth.

"FDI capital is poised to flow strongly into Vietnam’s real estate market, with optimistic forecasts that the market will gain momentum following decisive moves by the government. A wave of M&A activity is expected soon, as many of JLL Vietnam’s foreign partners are closely studying projects and companies within this 100-million-strong market.

"Additionally, the global economic impact has made Vietnam’s office and industrial real estate segments increasingly attractive, potentially boosting the commercial property sector," she added.

Similarly, a report titled "Tariffs and the Impact on Asia-Pacific," published by Cushman & Wakefield (C&W) on Thursday, showed that Asia Pacific commercial real estate (CRE) has performed well under various political landscapes, so having a long-term view will be a useful strategy in making real estate decisions.

Property markets across Asia Pacific were gaining momentum going into 2025. The region was coming off of two challenging years in the face of higher interest rates. Towards the end of 2024, the regional economy remained resilient, central banks were largely pivoting, CRE values were stabilizing, and optimism was returning to the property sector.

"Asia Pacific has momentum which will help provide a buffer and likely keep property performing well in 2025," the report said.

"The recovery in the capital markets which started in 2024 will continue in 2025; albeit, it will now likely be a bit choppier. The uncertainty around tariffs and inflation and the path of central bank policy adds natural volatility to the bond markets and will make it more difficult for investors to feel confident in where conditions are headed in the near-term.

"Less confidence translates to less investor and business conviction, implying that investor behavior will remain cautious. However, the interest rate trajectory is still downwards and the pricing outlook is stable, which should provide baseline support for commercial real estate investment,” according to the report.

Investors and occupiers should remain focused on longer-term trends and themes. From an investor/lender perspective, it is important to keep in mind that CRE is a long-term investment, it said.

There are lags in the impacts of policy changes, and many leases and loans are going to outlive these policy changes. From an occupier perspective, look for opportunities to capitalize on the uncertainty, as it may create space options and rental discounts that wouldn’t otherwise be there, the report added.