Why is industrial real estate the ‘hottest’ in the M&A market?

Industrial real estate is still the most prominent M&A market sector, accounting for 35% of total transaction value with a number of active acquisitions.

Office and industrial real estate, as well as project development land, made up 39%, 35%, and 26%, respectively, of the total value of M&A acquisitions in the first six months of 2022.

That outcome is the result of the Vietnamese economy’s growth rate in the second quarter of 2022, which was 7.72 percent, the highest level in the previous 11 years. With 10.06 billion USD from foreign investors flowing into Vietnam in the first half of 2022, Vietnam set a new record. This is also the highest growth rate in the past 5 years. Real estate ranked second, accounting for 26% of total capital with leading investors from Singapore, Japan, Denmark, China, and Korea.

As recorded, in the first half of 2022, the real estate M&A market took place through a series of outstanding deals. For instance, the office real estate segment emerged with the acquisition of the Capital Place office building by Viva Land – a Grade A office building in the central area of ​​Hanoi for $550 million from CapitaLand Development. This high-class office project is two 37-floor office towers, selected to house the main offices of many multinational corporations in Hanoi.

Saigon One Tower was recently acquired by Viva Land and given the new name IFC One Saigon. The project lies in the heart of District 1, Ho Chi Minh City, a prominent location. Comprising a total floor area of more than 124,000 m2, Ho Chi Minh City was created as a commercial structure with offices, housing, and retail spaces.

Particularly in the housing segment, the market has also witnessed a series of “blockbuster” deals, typically Novaland Group acquired the Kenton Node project and changed its name to the Grand Sentosa luxury apartment project with more than 1,640 apartments in Phuoc Kien Commune, Nha Be District (Ho Chi Minh City from Tai Nguyen Construction Production Trading Co. Ltd).

Another notable deal is Masterise Homes’ acquisition of the Saigon Binh An project with the new name of The Global City. The project has a scale of 117 hectares, located next to the Saigon Sports City complex and adjacent to the Long Thanh – Dau Giay Highway.

Recently, the US investment fund Warburg Pincus has announced the pouring of investment capital of 250 million USD into Novaland, to increase the land fund and develop Novaland’s existing projects in strategic locations, taking advantage of the gradually improving infrastructure in the South. Two foreign-invested investment funds VinaCapital and Dragon Capital also announced the investment of USD 103 million in Hung Thinh Land Joint Stock Company.

Significantly, industrial real estate remains the “hottest” sector in the real estate M&A market, accounting for 35% of the total value of transactions with a number of active agreements in the first half of the year 2022.

The world’s top investment manager and business developer in the logistics industry, data infrastructure, and renewable energy, GLP, has announced the establishment of GLP Vietnam Development Partners I with a total investment of 1.1 billion USD in six logistics center projects with a total area of up to 900,000 m2, signaling the beginning of a busy year for Vietnam’s real estate market.

Next in February, BW Industrial Development Joint Stock Company, an industrial real estate developer co-founded by Warburg Pincus and Becamex IDC, announced the acquisition of about 74,000m2 of land in Bac Tien Phong industrial park in Quang Ninh province, developed by DEEP C of Rent-A-Port NV (Belgium).

During this time, CapitaLand Development also announced the signing of a memorandum of understanding on investment cooperation with the People’s Committee of Bac Giang province. The two sides will promote the development of an urban – industrial – logistics project with a total area of ​​more than 400 hectares across the province with an investment commitment of 1 billion USD (equivalent to 22,700 billion VND).

Among the recent notable transactions is Boustead Projects Co. Ltd’s acquisition of a 49% stake in KTG & Boustead Logistics Industry Joint Stock Company in Yen Phong industrial park in Bac Ninh province for 6.9 million USD.

In addition to traditional real estate models, in June, an investment in data center real estate was also announced by Hong Kong-based private investment organization Gaw Capital Partners with the project. Level 3 data center with an area of ​​6,056 m2 in the High-Tech Park of Ho Chi Minh City.

Commenting on the real estate M&A market, Ms. Trang Bui – General Director of Cushman & Wakefield – said: that Vietnam’s real estate market is receiving more and more strong streams of interest from foreign investors. especially for profitable projects.

The development of private equity funds has provided an abundant source of capital to carry out M&A deals. These investors are constantly looking for active properties or looking to enter into joint ventures with partners with a good reputation. For domestic investors, the purchase of land for project development will be given priority.

“It can be said that all segments of the market will be considered. However, we believe that the residential and industrial segments will attract the most attention from investors as well as developers in the HCMC market. Ho Chi Minh City, Hanoi, and neighboring provinces “– Ms. Trang Bui emphasized.

Experts say that a series of existing problems related to the real estate market such as investment activities, legal procedures as well as the relevant legal system is currently being gradually completed, to limit conflicts between investors. regulations in the legal system on investment. It will partially remove many of the current obstacles to real estate M&A this year.

In particular, the Central Executive Committee issued Resolution 18 with many important new guiding points on the requirement to increase marketability, transparency, and efficiency in state management of land recently. Accordingly, when it is institutionalized and implemented in practice, it is expected to bring a strong multifaceted impact to the Vietnamese real estate market in the coming time.

Source: Cong thuong