M&A activities expected to reach record levels in 2018

Foreign direct investment (FDI) disbursements rose 8.4 per cent year-on-year to US$8.37 billion in the first six months of 2018, according to figures from the Foreign Investment Agency.

Vietnam has been taking initiatives to improve its transparency and the country remains one of the most favorable destinations for foreign investment in South East Asia, according to JLL’s Global Real Estate Transparency Index.

In the first half of this year, the real estate market continued to appeal to foreign investors and witnessed high-value merger and acquisition (M&A) deals in a variety of sectors such as residential, commercial and industrial.

Joint ventures have become popular among foreign developers who have strong financial capacity and a track record of joining forces with local developers who own land and have strong connections with the local community.

Foreign investors are from many countries, including Japan, Korea and Singapore, with an increasing number of groups from mainland China.

More local investors are also actively seeking real estate deals alongside foreign investors, the JLL report said.

The year started off with the acquisition of the Sun Wah office tower by Nomura Real Estate Development, while the residential sector continued to be buoyant with five major M&A transactions within the first six months.

Investment deals in the first half this year were persified with a good variety of asset and property types transacted.

As for the market as a whole, JLL experts expect continued growth through most asset types.

The hospitality sector has been of interest over the past year, with new funds with foreign capital now specifically targeting this sector.

“We expect this trend will continue in hospitality and other growing sectors such as industry and education,” said Khánh Nguyễn, associate director for capital markets at JLL Vietnam.

The affordable housing market is another key growing sector, now drawing specialist capital sources that identify value in these underlying fundamentals, including the growing middle class.

“We expect foreign investors to continue showing keen interest and strong commitment in the Vietnamese real estate market. The market is still growing,” she added.

Both incumbent and incoming foreign investors are actively looking for “clean” and “clear” projects that can meet their required returns and conditions.

Due to the strong focus on Vietnam from regional investors, M&A activities are expected to reach new record levels this year.