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Vietnamese real estate is constantly attracting capital FDI

Tuesday - 31/07/2018 21:46
JLL's report on Vietnam M & A activities in the first half of 2018 shows that Vietnam is one of the potential markets for investment. The report also shows that Vietnam has gradually improved transparency in the real estate market.
FDI disbursement was up 8.4% from the same period last year to $ 8.37 billion in the first six months of 2018, according to statistics from the Foreign Investment Agency (Ministry of Planning and Investment).

JLL's Global Property Transparency Report also shows that Vietnam has been gradually improving its transparency, indicating that Vietnam is still one of the potential markets for investment in Southeast Asia Area.

Nguyen Khanh - JLL's Director of Capital Markets in Vietnam, said that Vietnam has become an attractive destination for many foreign investors thanks to the policies of encouraging investment and political stability. The rapid growth of FDI inflows has led to increased.

Joint ventures become commonplace

An analysis of the real estate market in the first half of 2018 shows that the real estate market in Vietnam continues to be active with a number of M & A deals in the residential, commercial and industry segments.

Joint ventures are becoming more popular among foreign investors - with strong financial strength and experience, they will work with the local business community - investors who are holding land and also has a close relationship with local authorities.

JLL also noted that in addition to the increase of foreign investors, more and more transactions of real estate acquisition from domestic investors.

2018 begins with the sale of the Sun Wah office building by Nomura Real Estate Development. According to a press release issued in January this year, Nomura officially announced the acquisition of a 24% stake in Grade A office building in prime location in District 1, Ho Chi Minh City.

After the project "Phu My Hung Midtown" in District 7, Ho Chi Minh City, Sun Wah Building is Nomura's second project in Vietnam and also the first office project of this group. This deal demonstrates Nomura's strong interest and long-term commitment to the domestic market.

The housing segment continued to be active with the main M & A transaction in the first 6 months. Last March, CapitaLand announced its subsidiary, CVH Nereus Pte. Ltd. bought 16.9 million common shares, accounting for 99.5% of charter capital of Hien Duc Tay Ho Joint Stock Company (HDTH), about 685 billion VND (equivalent to 29.8 million USD). HDTH owns a land plot of 0.9 hectares in Tay Ho district, Hanoi, which will be developed into a complex project with residential, apartment, office and retail units.

In addition, Frasers Property has signed a conditional buy-back agreement with Tran Thai Co., Ltd. with 24 million common shares, representing 75% stake in Phu An Khang Real Estate Joint Stock Company (PAK) . In the coming time, PAK will build a residential and commercial project on the developed land in District 2, Ho Chi Minh City, owned by PAK. The transaction was proposed to be purchased at VND 408.6 billion (equivalent to USD 18 million).

Another large mixed-use development deal in June 2018 was the divestment of Keppel Land at the development of Loc Phat Joint Stock Company in District 2, Ho Chi Minh City.

Also in June, Berjaya Land Berhad of Malaysia announced their subsidiary, Berjaya Leisure Limited (BLeisure Cayman) has withdrawn all 32.5% stake in Berjaya Vietnam Financial Center Limited (BVFC) for the company. Vinhomes (Vinhomes) and Can Gio Tourism Corporation with the estimated cost of 884.9 billion VND (equivalent to 38.4 million USD).

According to the latest press release, BVFC is developing projects including "office buildings, five-star hotels, service centers and shopping centers on 6.64 hectares of land in District 10, Ho Chi Minh City. HCM ". Up to now, the company has not officially operated.

In addition, the same announcement from Berjaya Land Berhad on June 4, 1818, Vingroup and its subsidiaries are likely to acquire Berjaya Vietnam International University One-Member Limited Liability Company ( BVIUT) after injecting VND11,904 billion (US $ 518 million) into BVIUT in December 2017.

To increase efficiency, the group increased its stake in the company to 99.2%. Initial stock of BLeisure Cayman BVIUT has been reduced from 100% to 0.8% and the company intends to withdraw the remaining shares at the earliest.

Diversified investment type

The JLL report shows that investment transactions in the first half of 2018 are quite diverse with a variety of property types and types of real estate.

In May, Sembcorp Industries (Sembcorp) announced its subsidiary, Sembcorp Infra Services (SIS), to sign a share subscription agreement with CRE Asia, a SIS-listed company.

SIS and its wholly-owned subsidiary Hai Phong is the developer of approximately 30,000 square meters of factory space in Vietnam's Industrial Park of Singapore (VSIP) in Hai Phong, Vietnam. New capital from CRE Asia and bank loans will finance the development of an additional 30,000 m2 of warehouse space in Vietnam invested by SIS.

From the analysis of the overall picture of the market, JLL expects continued growth across all types of assets. Hotel segment was quite active last year with foreign investment funds paying special attention to this area.

According to JLL's forecast, this trend will continue to grow as well as in other developing sectors such as industry and alternative sectors such as education. In addition, the low-end housing market is also an important development area, which is currently attracting specialized funds based on the fundamentals of the middle class.

"We expect foreign investors will continue to take strong interest and commitment in the growing real estate market in Vietnam. Existing and prospective foreign investors are actively hunting for "clean" and "clean" projects that can meet the conditions and profits needed. Given the strong focus on Vietnam from investors in the region, we expect M & A activities to set a new record in 2018, "Nguyen Khanh said.

Author: Hồng Hương

 Tags: JLL

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