CITY OUTSKIRTS EMERGE AS REAL ESTATE HOTSPOTS

In the wake of the limiting land funds and rocketing prices in city centre locations, developers are expanding their interest in mergers and acquisitions towards satellite towns and other areas near Vietnam’s major cities.

According to Angus Liew, general director of Gamuda Land in Ho Chi Minh City, the company is considering expanding to satellite cities and broader areas of central business districts such as at ring roads of Hanoi and Ho Chi Minh City.

“We focus on township development, in which housing is only one component of urban areas. Urban areas, if fully developed, will meet the demand for both living and working. Even in difficult times, urban areas are still full of vitality,” Liew said at the Vietnam M&A Forum 2020 held by VIR last week in Ho Chi Minh City.

“When we look for M&A opportunities, we look at those both domestically and abroad, and AEON Mall is an example. What we are looking for is to continue to develop large-scale urban areas, and M&A is a good tool for project development,” he added.

Meanwhile Nguyen The Nhien, deputy CEO of Hung Thinh Land, also stressed that real estate in suburban areas is heating up due to changing customer behaviour.

Since the end of 2019, Hung Thinh Land has spent trillions of VND to conduct M&A deals in the central province of Binh Dinh. The company also has a land reserve of 1,000 hectares in the Central Highlands province of Lam Dong via M&A channel.

“We have worked with local authorities to implement projects in satellite provinces. However, the company is facing obstacles such as the prolonged licensing process as well as how to spur market demand. In addition, the satellite provinces do not have good infrastructure to connect with other provinces. Hung Thinh Land has many projects and land reserves so the company is ready to conduct M&A deals with foreign investors,” Nhien said.

Vu Minh Tien, board member at An Thinh Group, also stressed that including the growth motivation and competition among domestic businesses post-pandemic.

“It forces us to change ourselves and grow stronger. However, we also see some overlaps in legislation. It needs a lot of time to address the conflict between the laws on land and investment. There is a lack of transparency and takes a lot of time to deal with the problems. The response from regulatory bodies is too slow,” Tien said.

“Foreign investors need to review different channels. Some deals were nearing completion but have still failed due to legal issues. The integration post-pandemic is another problem. We must restructure to avoid confusion but it is necessary to change governance structures to ensure a smooth transition between buyers and sellers,” he added.

Novaland Group is another real estate developer which is leading in M&A with dozens of projects.

Senior director Nguyen Thai Phien said that the company two weeks ago successfully gained a project covering more than 286ha in the southern province of Dong Nai, neighbouring Ho Chi Minh City with a value of nearly $1 billion.

With the motto to develop eco-tourism property, Novaland has expanded its portfolio to a range of provinces such as Dong Nai, Phan Thiet, Ba Ria-Vung Tau, and more.

“M&A has been an active tool for the development strategy of Novaland,” Phien said. “With this, we are aiming at the three key values of increasing land fund and market share, increasing the company’s value, and creating a local community.”

Nam Long Group is another developer actively expanding its portfolios into satellite cities apart from Hanoi and Ho Chi Minh City.

Nam Long now owns around 700ha of cleared land fund stretching many provinces and cities such as Long An, Can Tho, Dong Nai, and Binh Duong in the south, and Haiphong in the north.

In 2020 particularly, Nam Long has implemented a range of projects such as Akari City, Waterpoint, Mizuki Park, and Waterfront.

According to Nguyen Xuan Quang, chairman of Nam Long Group, it has cooperated with McKinsey & Company to set up a long-term vision for the next ten years at least.

“We are tending towards becoming a sustainable real estate developer to meet the real demand of customers in different segments and in many localities nationwide,” Quang said.

Source: VIR