Opportunities in slumping real estate sector

Saturday, Apr 13, 2013 08:53

HA NOI (VNS) — Many foreign firms are looking to invest in Viet Nam's real estate market, a sign that mergers and acquisitions (M&A) could soar this year, according to a property consultancy company.

The real estate market saw many M&A deals in the first months of the year, such as Thu Duc House's transfer of capital to the VND80 billion (US$3.809 million) Dong Mai – Ha Dong project and the Viet Nam International Township Development Joint Stock Company transferring its Park City project in Ha Noi to a Malaysian company.

In the HCM City market, four buildings in the centre with an estimated value of more than $600 million were transferred during the first quarter.

Those included Korean-Kumho Group's purchase of 50 per cent of the $93.9 million Asiana Airlines complex from Kumho E&C and VinaCapital's sale of the Legend Hotel to Lotte Hotel and Resort Group for $62.5 million.

This year many Vietnamese enterprises are transferring projects to other Vietnamese investors, and foreign investors are acquiring projects in Viet Nam for attractive prices, according to Luong Tri Thin, chairman of Dat Xanh Real Estate Company.

Investors with long-term strategies and significant capital would be able to take advantage of the declining market to negotiate better prices, Thin said.

Nguyen Quang Cung, deputy chairman of the Viet Nam Association of Building Materials, said M&A deals would help the stagnant market, but estimated that the number of real estate enterprises would need to be reduced by one-third for the market to fully recover.

More successful deals were expected to be carried out after investors recovered from capital difficulties, another expert said, adding that ineligible investors would be forced to quit the market after the long stagnation.

General director of Hopefluent-Compareal Company Huynh Duy Anh told Thoi Bao Ngan Hang (The Banking Times) that many developers from Hong Kong, mainland China, Taiwan and Singapore were starting negotiations to acquire stakes in projects, as they saw huge investment opportunities in the country.

While 2011 and 2012 were dominated by deals between Vietnamese enterprises, this year foreign investors were showing greater interest in real estate projects in Viet Nam, according to an expert from CB Richard Ellis Viet Nam.

In the first quarter, foreign investors poured around $249.84 million into the real estate market, accounting for nearly 4.1 per cent of the total foreign direct investment into the country. — VNS

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