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Rise in M&A deals stir up nation’s property market

Mergers and acquisitions (M&A) in the domestic real estate sector have always depended strongly on the property market in the capital city, experts said.


According to the Thoi bao Ngan hang newspaper, the experts cited the large business transactions that have taken place in the capital city, including Daibiru Group of Japan's purchase of office area at the corner of VIBank worth US$60.1 million, Licogi 16 Company's purchase of the VND143-billion ($6.7-million) Sky Park Residence project from Thanh Hoa Construction Corporation, and FLC Group's purchase of land worth VND198 billion ($9.34 million) at 36 Pham Hung St from Hai Phat Company.



Also, numerous companies have purchased shares to gain management rights in other companies. For instance, Vingroup, via Sai Dong Urban Investment and Development Joint Stock Company, bought 128.6 million shares of the Hong Ngan Real Estate Company to own the Green City project, with a total area of 17.6 ha and a total investment capital of VND7.9 trillion ($372.6 million).


Vingroup also bought 70 per cent of Ocean Retail from the Ocean Group to change the name of Ocean Mart to VinMart.


Richard Leech, CBRE Viet Nam's executive director, said that since 2011, an average of 15 M&A transactions, mainly by domestic companies, have been taking place in the real estate sector every year. Domestic companies have accounted for 63 per cent of the total number of sellers and 54 per cent of the total number of buyers of property projects.


However, foreign direct investment (FDI) in the real estate sector in the first three quarters of this year reached $1.2 billion, all in M&A, he added.


M&A in the real estate sector developed strongly, with an increase in the number of business transactions and requests for assessments and market studies, Leech revealed.


Now, foreign investors are entering the domestic real estate market to conduct market studies, including those from South Korea, Japan and Singapore, he noted.


A good number of foreign investors are planning to buy office buildings in Ha Noi and HCM City, including projects that are completed, undergoing completion or scheduled for construction in the future.


"Every year, business transactions in the M&A market of the domestic real estate sector are increasing because the sector is an attractive market, but companies just announce the business transactions under their strategy of marketing their trademarks," Ngo Thi Huong Giang, Savills Viet Nam's senior manager of research and consultancy, told Viet Nam News.


Phan Xuan Can, chairman of the Soho Viet Nam Real Estate Consulting Company, said there were M&A activities in the domestic property market than previously because of the increase of equity in the market, low interest rate of loans and low supply of property products.


Vu Minh Giang, chairman of the Thai Minh Quang Joint Stock Company, said the M&A activities have increased and often developed in the inner city districts, especially for investors with good financial ability.


Investors were attracted to the inner districts of Cau Giay, Tu Liem, Thanh Xuan and Hoang Mai, where most enterprises have had many projects and have sold some of them to restructure their investment in their companies, Giang added.

Source: Vietnam News