The development of the real estate market in 2022 and the coming time will continue to be a shining year, although there will also be many difficulties.
In the first three months of 2022, Vietnam's GDP grew by 5.03%. The registered capital of foreign direct investment (FDI) into Vietnam market reached 3.2 billion USD. Disbursed FDI amounted to 4.42 billion USD, this is the highest increase in half a decade and increased by 7.8% over the same period last year.
After the manufacturing and processing industry, real estate is currently the second largest FDI recipient in the past 10 years. Contrary to the expectations of some experts about the risk of a real estate "bubble", the real estate merger-and-acquisition (M&A) market in 2021 and the first quarter of 2022 is still active with many goods and services. In a series of big deals, real estate businesses continuously acquired more large land funds.
In early 2021, Vinhomes Joint Stock Company announced the acquisition of Dai An Urban Area in Hung Yen province, a satellite area east of Hanoi, the deal has an estimated value of 3,100 billion VND (equivalent to 134 million USD). In Dong Nai, Nam Long Investment Joint Stock Company (Stock Code: NLG) also completed the acquisition of 100% of the company that owns a 170-hectare project in Dong Nai from Keppel Land. After returning to Nam Long, the project has a new name, Izumi, developed by Nam Long and Japanese partner Hankyu Hanshin Properties with a total investment of VND 18,600 billion. In which, Nam Long owns 65.1% shares and Hankyu Hanshin owns 34.9% shares.
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In Dong Nai area, the Swan Bay project with an area of about 200 hectares will be further developed by Phu Long Real Estate Joint Stock Company.
In the first quarter of 2022, the market also witnessed a number of outstanding deals in Ho Chi Minh City. Ho Chi Minh City is like a "handshake" between Novaland and Tai Nguyen Trading Production Construction Co., Ltd. to restart the Grand Sentosa project (former name Kenton Node), an area of 11 hectares in Nha Be area. Similarly, in district 1, Saigon One Tower has been renamed IFC One Tower managed by VivaLand Investment and Development Joint Stock Company. In Dong Nai area, the Swan Bay project with an area of about 200ha will be further developed by Phu Long Real Estate Joint Stock Company.
The total value of M&A transactions in the first quarter of 2022 is higher than the total value of each year in 2019-2021. The office segment accounted for 58% of the total transaction value, while the industrial and residential segments accounted for 28% and 13% respectively. Notably, Hanoi has the largest total transaction volume in the country, thanks to the transfer of the Grade A office building Capital Place (Ba Dinh, Hanoi) from CapitaLand Development to Viva Land with a total value of $550 million. .
Ms. Trang Bui, General Director of Cushman & Wakefield Vietnam commented: “The total office supply in Ho Chi Minh City. Ho Chi Minh and Hanoi are only approximately equal to Bangkok, mainly consisting of Grade B and C buildings; Grade A assets, which are sought after by FDI enterprises, are very scarce. Therefore, as soon as employees are returned to the office after a long time of applying restrictions on movement, it has pushed office M&A transactions to the leading position.”
In the period from 2017 to the first quarter of 2022, investors' "taste" is still mainly focused on traditional asset classes including housing market, development land, industrial, office and residential market. retail. In which, 76% of housing transactions are concentrated in Ho Chi Minh City. Ho Chi Minh; while Bac Ninh, Dong Nai and Binh Duong account for more than 50% of industrial real estate investment; Hanoi owns 65% of hotel transactions.
According to Ms. Trang, in the process of working with domestic and foreign investors, Cushman & Wakefield noticed a significant interest in the development of real estate projects from apartment projects to real estate properties. industrial, commercial and real estate applications. The market will also witness a strong recovery story in the resort tourism and retail segments, which have been restrained in recent times thanks to the reopening of international routes. "The residential real estate market is also expected to be positive thanks to the $114 trillion infrastructure investment package approved by the National Assembly," Ms. Trang said.
Because the real estate market is currently "dominated" by "domestic" investors, many international investors still prefer to participate in the form of joint ventures with domestic partners. Most investors are involved in joint ventures and M&A deals rather than pure real estate transactions. The source of investment money is not lacking, but the difficulty lies in the opportunity. The biggest barrier is the scarcity of suitable land in big cities like Ho Chi Minh City. Ho Chi Minh City and Hanoi to develop the project.
One of the most important things for international investors, Ms. Trang added, is transparency. The more transparent the market is, the more interested foreign investors are. If the market is not transparent enough, there is not enough information and data, slow transactions and unclear land ownership – all of which pose challenges for foreign investors. Foreign investors have a lot of capital, waiting to be invested in real estate. They want to partner with local investors, but they need the transaction to happen quickly.
Recently, the Government has agreed to develop an amended Law on Housing and an amended Law on Real Estate Business, which will be submitted to the National Assembly at the Fourth Session, October 2022. At the same time, there is a proposal to submit to the National Assembly for comments and approval of the Land Law (amended) to create a legal basis for the business of land use rights. When passed, these laws will have a great impact on the real estate market: A series of problems exist related to the real estate market such as investment activities, legal procedures because of the legal system. The relevant regulations have been gradually completed, so there is no longer a contradiction between the provisions in the investment legal system. This will remove many existing barriers for real estate M&A activities this year.
Given the positive macroeconomic situation and the reopening of international flights, it is certain that the M&A market in 2022 will be even more exciting. Because "at risk", many businesses with strong financial strength have conducted assessments and long-term development plans after the pandemic. Typically Novaland with the strategy of building the Nova Group ecosystem; or Dat Xanh spent VND 1,040 billion to establish 4 subsidiaries in the fields of technology, finance and real estate.
According to Cushman & Wakefield, the market is growing and maturing at a faster rate than before. Market participants from project developers, investors, banks and state regulators are more cautious in each of their actions and roles. The development of the real estate market in the coming time, and specifically 2022 will continue to be a shining year despite many difficulties.
By Fiscal and monetary