Business
Companies turn to mergers to stave off gloomy real estate results
  • By Duy Anh | dtinews.vn | March 21, 2012 08:32 AM

Vietnamese electronics giant Hanel’s acquisition of the Hanoi Daewoo Hotel marks a bold move in the context of Vietnam’s current real estate sector.

 

Vietnam’s real estate market to set to see more M&A deals

Hanoi Electronics Corporation (Hanel) recently bought the entire stake in the formerly South Korean-owned hotel, but details of the deal’s value have yet to be made public.

The  Duc Khai Corporation and Phuong Trang Auto Real Estate Investment Joint Stock Company recent sold their New Pearl real estate project on HCM City’s Nam Ky Khoi Nghia Road to the Van Thinh Phat Investment Corp.

Developer Van Phat Hung handed over its stake in HCM City’s Tan Tao project in Tan Binh District to the Khang An Investment Real Estate Joint Stock Company for VND68 billion (USD3.25 million).

Phan Xuan Can, Chairman of M&A consultancy Sohovietnam Real Estate Consulting Joint Stock Company, said it was finalising procedures to take over around 80 real estate projects mainly located in HCM City, Hanoi and Danang worth hundreds of billions of dong.

According to Can, the fall in the real estate prices has pulled down mergers and acquisition prices in the industry, with average deals 30% cheaper than in 2010.

He estimated that a lot of real estate projects would be sold during this year due to investors facing financial difficulties.

“This year may see numerous real estate M&A deals if no solution is worked out to stir up the gloomy market,” he noted.

A recent report by CBRE Vietnam showed that real estate M&A deals in the first nine months of 2011 totalled USD251 million, ranking third after consumer goods and finance industries.

CBRE Vietnam forecast that the year 2012 may be a boisterous period for real estate M&A operations, as the sector attempts to heighten market liquidity and competitiveness.

The company explained that due to the lingering gloom hanging over the market in the past three years, together with tight monetary policies, many real estate companies have become unable to continue their projects and have been compelled to sell some of their projects to fund their operations.

Some others with better financial capacity have opted to sell some of their projects as they want to focus their investment in certain market segments.

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