Key Highlights of Notable Real Estate M&A Transactions in Viet Nam for Q2 2024

Key Highlights of Notable Real Estate M&A Transactions in Viet Nam for Q2 2024

• Savills has recently released the Asia-Pacific Investment Quarterly (APIQ) report for Q2 2024.

• The report highlights several significant industrial and residential real estate investment deals.

• Notably, Japanese capital has been prominent in equity transfers related to residential projects in Dong Nai and Binh Duong.

Investment Environment Stabilises

Overall, Savills APIQ Q2 2024 report notes that Viet Nam's Consumer Price Index (CPI) increased by 4.0% year-on-year during the first five months of 2024. Standard Chartered Bank has recently revised its 2024 GDP growth forecast for Viet Nam to 5.3% for Q2, down slightly from its Q1 forecast of 5.7%.

While this indicates a slowing trend, the overall recovery remains intact. However, geopolitical tensions, global inflationary pressures, and weak investment demand could persist into Q3 and potentially affect recovery.

Troy Griffiths, Deputy Managing Director of Savills, commented: "Economic challenges may continue into Q3, including global purchasing power, geopolitical tensions, and inflationary pressures. Nevertheless, positive domestic FDI and infrastructure investment will drive the economy forward."

According to Troy Griffiths, the 7.8% year-on-year increase in FDI disbursement to US$8.3 billion in May is a positive economic indicator. The industrial real estate sector is expected to experience stable demand, supported by FDI flows and infrastructure development.

"This will encourage developers to expand their portfolios, such as VSIP, which is constructing a 600-hectare industrial park in Lang Son, and Gaw NP Industrial, which is introducing nearly 100,000 square metres of pre-built factories and warehouses in Ha Nam," he added.

Tourism Sector Recovery

On another front, Viet Nam's tourism sector rebounded in the first five months of 2024, with approximately 7.6 million international visitors, marking a 64.9% increase compared to last year and surpassing pre-pandemic levels by 3.9%. Savills report views the tourism sector's recovery as encouraging, although the long-term outlook will depend on unpredictable global tourism trends.

Residential and Industrial Projects Attract Investment

The residential real estate market continues to advance cautiously. Amid economic fluctuations and potential buyers adopting a wait-and-see approach, developers are still launching new projects to gauge market sentiment.

For instance, Masterise Homes has introduced a 7.2-hectare residential project in Hai Phong, while Ecopark has launched a 1.3-hectare project in Nghe An. In Ho Chi Minh City, Gamuda unveiled The Meadow project with 212 townhouses in Q2. Meanwhile, Vinhomes has partnered with Japan's Nomura to co-develop two phases within the Vinhomes Royal Island project, offering 821 low-rise units. In the resort sector, VCRE has launched 264 high-end apartments in Da Nang, collaborating with the renowned Nobu Hospitality brand.

In the commercial real estate sector, rising rental prices and limited space drive businesses to relocate from central areas. Ha Noi is projected to see 48% of new office space in emerging CBDs such as Ho Tay by 2025, while Ho Chi Minh City is witnessing a shift towards Thao Dien with new green-certified development projects.

Major M&A Transactions

• Kim Oanh Group (Viet Nam) has partnered with NTT Urban Development, Sumitomo Forestry, and Kumagai Gumi Co Ltd (Japan) to develop The One World, a 50-hectare residential complex in Binh Duong.

• Nishi Nippon Railroad (Japan) has acquired a 25% stake in the 45.5-hectare Paragon Dai Phuoc Project from Nam Long Group (Viet Nam) for approximately US$26 million.

• Tripod Technology Corporation has purchased an 18-hectare industrial land plot in Ba Ria - Vung Tau from Sonadezi Chau Duc.

Optimistic Outlook for CA-TBD Region in the Second Half of the Year

The forecast for 2024 GDP growth in the Asia-Pacific region has been revised to 3.9%, driven by strong economic performance in India and a robust export recovery. However, the resilient US economy has pushed back the Fed's interest rate cut timeline, and monetary policies are expected to remain unchanged across most major markets. The high-interest-rate environment will likely persist until year-end, except in Japan and China.

Despite a 28.1% decrease in preliminary investment volume compared to the same period last year, totalling US$26.3 billion (considering transactions over US$10 million, excluding development sites and pending deals), there are signs of more positive growth in the region.