M&A tendency in realty sector picking up

Mergers and acquisitions (M&A) is a normal operation to be able to bring profit as investors transfer projects but it doesn’t mean that the investor is fleeing from the project.

However, the market’s purchasing power decreasing along difficulties in raising capital have been testing the endurance of investors and developers of projects, and many of them feel exhausted and find ways to transfer their projects.

Notable amongst projects being transferred is Dat Xanh Real Estate Trading and Investment Joint Stock Co which purchased project of Ha Thuan Hung Co Ltd to develop a land area of over 3,700 square metre to build a 14-storey apartment building named Phu Gia Hung Apartment in Go Vap district, HCM City that will provide 234 apartments.

In another deal, Bitexco Nam Long Manufacturing and Investment Joint Stock Co also spent $8 million to own a 10-story building covering an area of 4,350 sqm in Vo Van Tan St, HCM City from Viet Technology Joint Stock Co (Vitek)

Indochina Co also made a $11.9 million buyback of land using right on a site of 2,700 sqm in South Saigon area from Hoa Binh Real Estate Construction and Trading JSC.

By last September, JSM Indochina Co, which specialises in investing in housing and retail sectors in Vietnam and Cambodia, has announced to spend $26 million to take two plots of land of apartment projects of Prince and Princess in Thao Dien ward, district 2, HCM City. These two plots of land were combined with the Peninsula project worth $19 million that the company bought earlier to establish a complex project including 600 luxury apartments for lease and sales.

A month later, according to the information publicised on the company’s website, JSM Indochina signed a memorandum of understanding (MoU) to spend $65 million to buyback two buildings including 180 apartments in District 2, HCM City.

However, in September 2010, JSM Indochina selected CBRE as an intermediary to seek investors to sell its two projects in HCM City’s district 2.

According to Marc Towsend, CBRE Vietnam’s executive director, during past time, there has been a lot of M&A deals for realty projects. But, most of these M&A deals were made by domestic firms or foreign firm transferred to domestic enterprises.

Most recently, Prudential Vietnam Investment Fund Management Co bought back the investment of Korea-based Vina Development Inc Co to invest in Blooming Park apartment project that has just been changed name to Imperia An Phu being built in An Phu ward, district 2, HCM City.

The over two hectare project will include four 24-28 storey buildings with about 700 apartments and retail area capitalised at about $120 million. Of which, Prudential holds 60 percent and the rest held by Kien A JSC (30 percent) and HCM City Service and Investment JSC (Invesco) (10 percent).

In addition, currently the market also sees that some investors are seeking partners to transfer their projects due to they can not bear hardships in the market.

Commenting on this trend, Tran Nhu Trung, director of market research and consulting department of Savills Vietnam Co, said that the scale of the realty market has grown considerably since 2007. In the expanding market trend, the playing yard also requires more professional, forcing the players in the yard as investors must think more in their investment activities.

“Therefore, the M&A deals of projects are inevitable in the market” Trung said.

Observers forecasted that the trend of M&A in real estate projects will be very exciting in 2011. – TBKTSG

Tags: vietnam real estate market