Illustrative image (Source: VNA) M&A havebecome popular among developers who have the financial capacity as it is aquick way to acquire clean land funds for property development and catch theopportunities on time in a fast-recovering market.
Fresh capitalinflows from M&A have helped revive a number of long-delayed projects,reducing inventories and bad debts in the sector, said property expert Dang HungVo.
One of the majorM&A deals this year was developer Quoc Cuong Gia Lai selling the Phuoc Kienproject in HCM City’s Nha Be district to Sunny Island Investment for an undisclosedamount. However, Quoc Cuong Gia Lai is known to have received 50 million USD,which went into paying off a 1.35 trillion VND (59 million USD) debt to theBank for Investment and Development of Vietnam (BIDV).
Recently, Phat Dat Real Estate Development Corporation announced that it hasfound a partner to transfer a part of EverRich 3 project in HCM City, intowhich the developer had poured in 1.58 trillion VND in 2016 and planned tospend another 642 billion VND in 2017. Phat Dat is expected to sell off theentire project for 2.5 to 3 trillion VND, which will be used to repay debts.
In March, An Gia Real Estate Development and Investment Company saw investmentfrom Japan’s Creed Group and acquired seven blocks of the Lacasa project in HCMCity’s District No 7 from Van Phat Hung. Previously, An Gia had bought severalstagnant projects; it expects more M&A deals in the future.
M&A hasbecome a strategy for real estate companies such as Hung Thinh Real Estate,which has acquired some 20 long-delayed projects. It has resumed constructionin 10 of these projects and sales have begun, such as Moonlight Park View, TanHuong Tower, Sky Centre and Mekody Residences.
Other realty firms such as Novaland, Greenland, Thu Duc House have also hoppedonto the M&A bandwagon.
Le Hoang Chau,president of HCM City Real Estate Association, said M&A deals have becomethe buzz word in the property sector during the past two years as investors seesignificant opportunities in the recovering market. It is also the fastest wayto acquire clean land with the legal work done, as available land dries up inmajor cities such as Hanoi, HCM City and Da Nang.
According to Chau,there is scope for more M&A deals in the southern city, which has around500 delayed projects. Investors are cooperating with each other and seekingpartners with funds to implement projects as credit policies for propertydevelopment get tougher.
There is agrowing interest in the Vietnamese property market among foreign investors fromHong Kong, Korea and Singapore, JLL Vietnam said. Stephen Wyatt, generaldirector of JLL Vietnam, was quoted by cafef.vn as saying that several foreign investment fundsare looking to expand their presence in Vietnam through M&A deals.
Previously, Wyatthad forecast a record year for M&A deals in the real estate sector, drivenby an improved economy.
Property servicesfirm Savills Vietnam also expects a rise in property M&A deals this year.
Nguyen Van Dong,M&A consultancy director of Rong Viet Securities Company, has also saidthat M&A deals in the realty market would dominate this year, in aninterview with Dau Tu Chung Khoan (Securities Investment).-VNA
VNA
