Vietnam real estate industry carries great M&A potential: execs

There is high potential for M&A transactions in Vietnam’s real estate sector across all segments, particularly industrial property, industry insiders said at a forum Tuesday.

Strong foreign direct investment has driven up interest in industrial properties in the country, Truong An Duong, general manager of Residential at Frasers Property Vietnam, told a panel discussion at the Vietnam M&A Forum 2023 in Ho Chi Minh City.

“We believe that the industrial property segment will still see positive growth in the time to come, and the number of M&A deals in the real estate sector will rise,” he said.

Duong also saw big opportunities in the office segment. He said M&A demand in all real estate segments is likely to rise in the coming years.

Angus Liew, chairman of Malaysia-invested Gamuda Land Vietnam, noted that housing demand in Vietnam is huge, given the limited supply.

He said that his company, like other developers, was able sell its products while the project was still under construction, a practice now allowed in several countries.

Gamuda Land has opted for M&A because it offers the shortest way ahead the real estate sector, he added.

Liew also said that the recent passing of several real estate-related laws has resulted in a more enabling environment and enhanced investor confidence. Many players are gauging the impact of new regulations on the market.

While it is a good time to develop realty projects, particularly the hospitality segment, foreign investors are hesitant because the ownership duration is limited to 50 years, he added.

$1 billion in M&A deals

Vietnam’s real estate market has seen M&A transactions worth around $1 billion so far this year.

ESR Group Limited spent $450 million on a strategic stake in BW Industrial Development JSC, while Gamuda Land wholly acquired Ho Chi Minh-based Tam Luc Real Estate Corp. for $316 million.

Singapore’s Keppel closed a deal worth $50.4 million with a Hanoi-based firm that holds commercial property and spent another $136 million on a 49% stake in two residential projects in HCMC.

Reuters had reported in March that CapitaLand was in talks to acquire assets worth roughly $1.5 billion in from Vinhomes, a subsidiary of Vingroup, the country's largest private conglomerate. However, no further information about the deal has come out since.

Warrick Cleine, chairman and CEO of KPMG Vietnam and Cambodia, said real estate, green energy, technology and healthcare will be sectors of investor interest next year.