The Hanoitimes - Foreign direct investment (FDI) largely resulted in a number of merger and acquisition (M&A) deals in the real estate sector during 2018.
Foreign direct investment (FDI) was the key to Vietnam’s economic development in 2018, giving a boost to industrial real estate, Savills Vietnam said in a recent report.
With more than 50% of newly-registered FDI coming from the processing and manufacturing sector, the overseas capital inflows have fueled one of the world’s fastest growing economies with GDP growth of 7.08% in 2018.
FDI flows to Vietnam in 2018 (US$).
As a result, a number of merger and acquisition (M&A) deals in the real estate sector were inked during the year, mostly in the fourth (Q4) quarter, according to Savills Vietnam.
In November, Mapletree Logistics Trust announced their acquisition of a Unilever warehouse in Vietnam-Singapore Park I in the southern province of Binh Duong for approximately US$31 million. The warehouse will be leased back to Unilever for ten years.
In December, Amata Corporation, a Thailand-based industrial developer, commenced construction of Song Khoai Industrial Park, part of the mega project Amata City Ha Long in the northern province of Quang Ninh. The 714-hectare project is estimated to cost an investment capital of US$1.6 billion.
Residential players remained active while office continued to be one of the most exciting property sectors, Director Savills Hanoi Matthew Powell said.
VinaCapital Opportunity Fund Limited (VOF) transferred 34.18% interest in Green Park Estate, a 15.7-ha mixed-use development project in Tan Phu District, Ho Chi Minh City. VinaCapital fund’s Vinaland holds 63.47% interest in the project but plans to divest in the near future.
Meanwhile, Vinhomes, the reputable local developer, announced plans for two new township projects namely Vincity Ocean Park in Gia Lam District and Vincity Sportia in Nam Tu Liem District, Hanoi. These major projects will provide a comprehensive range of facilities and parks for health, education, entertainment, leisure and outdoor sports.
Office in Ho Chi Minh City enjoyed its best performance of the last five years, with average rents increasing 8% on year and a very high occupancy rate of 97%. Seeing great potential in the market, WeWork – a US-based co-working space provider – entered Vietnam with its first flagship site at E-Town Central in the city.
HCM City's office market in 2014-2018. Photo: Savills Vietnam
Hanoi recorded a 3% on year increase in average gross rent with improved Grade A performance in non-CBD areas.
Matthew Powell from Savills Hanoi said that more foreign investors are interested in the market. At the Savills Hanoi, Danang, and Ho Chi Minh offices, many investor groups come each day, mostly new entrants, who are keen to explore opportunities.
Director Savills Hanoi Matthew Powell. Photo: Savills Vietnam
The investors are mainly from Japan, Korea, China, Hong Kong, Singapore, the US, the Europe, and global funds. They pay interests in all commercial and residential sectors.
Meanwhile, a number of investor are looking to acquire operating cash-generating assets, office properties, retail malls, four- and five-star hotels.
In 2019, Savills said more deals on asset, portfolio, and corporate investment level would lead the market. With the promising prospect of many real estate sectors in Vietnam, it is expected that investment flows will be directed to a wider variety of sectors, including industrial and logistics properties, Matthew Powell noted.