Powerful M&A drive in real estate

Vietnam has become an attractive destination for many foreign investors largely due to the country’s policies encouraging foreign direct investment (FDI), its political stability, and strong economy. Furthermore, the country has been taking the initiative to improve its transparency, according to JLL’s Global Real Estate Transparency Index. Vietnam remains one of the most favoured destinations for foreign investment in Southeast Asia.

Singapore’s CapitaLand recently agreed to buy a controlling stake in developer Ascendas-Singbridge in a deal which would value the target company at S$11 billion ($8.13 billion). Last August, private equity firm Actis acquired Standard Chartered’s principal finance real estate business in Asia.

In the Vietnamese real estate market, 2018 started off with the acquisition of Sunwah office tower by Nomura Real Estate Development Co., Ltd. According to a press release, Nomura acquired a 24 per cent stake in the Grade A office building located in the Central Business District (CBD) of Ho Chi Minh City.

As for the residential sector, in March 2018 CapitaLand announced the acquisition of a 0.9 hectare development site in Tay Ho district of Hanoi, for approximately VND685 billion (approximately $29.78 million).

Later, in the third quarter of 2018, CapitaLand bought a 6-hectare development site in Binh Trung Dong ward of District 2 in Ho Chi Minh City for VND1.38 trillion ($60 million). The development is expected to yield more than 100 landed residential units, targeted for completion by 2021.

Another property giant, Frasers Property has publicly announced last year that they entered into a conditional share purchase agreement with Tran Thai Lands Co., Ltd. to acquire 75 per cent of the issued share capital of Phu An Khang Real Estate JSC (PAK) and Phu An Dien Real Estate JSC (PAD) each. It is intended that PAK and PAD will undertake the development of residential-cum-commercial projects in District 2 and Thu Duc district of Ho Chi Minh City.

Another notable transaction is Keppel Land’s divestment of its stakes in Quoc Loc Phat JSC’s project in District 2.

Malaysian property group Berjaya Land Bhd. also announced in a filing that it divested its entire resultant 32.5 per cent of the capital contribution in Berjaya Vietnam Financial Centre Limited to Vinhomes JSC and Can Gio Tourist City Corporation for a cash consideration of VND884.9 billion ($38.47 million).

The development project would comprise of an office building, a five-star hotel, service residences, and shopping mall on a 6.64ha land in District 10 of Ho Chi Minh City.

In conjunction with the disposal, Vingroup and its affiliates are also being considered as potential buyers of Berjaya Vietnam International University Town One Member LLC (BVIUT) and have injected capital and raised its stake in the company to 99.2 per cent. Through its subsidiary, Berjaya’s initial stake in BVIUT has been diluted from 100 to 0.8 per cent and the company intends to dispose of the remaining stake in the near future.