The season when big guys spend hundreds of billions and thousands of billions of dong hunting for land

Expanding land resources through various means.

Having passed the "bottom" of the real estate market, many businesses are announcing plans to acquire projects and land use rights... in order to increase their land bank - one of the factors used to assess the intrinsic "strength" of a developer.

A representative from An Gia Real Estate Company stated that they still aim to expand their clean land reserves, prioritizing projects that have received investment approval, are suitable for affordable development, and have a quick implementation timeline.

The company is currently conducting in-depth appraisals of two potential land plots in District 8 and Thu Duc (Ho Chi Minh City), and expects that upon completion of the transaction, it could supply more than 4,000 products to the market amidst the increasing scarcity of land in the city.

Similarly, the Development Investment Construction Corporation (DIC Corp) also approved the acquisition of land use rights for Plot A2-1, Chi Linh Central Area, Vung Tau City from Construction Holdings Joint Stock Company.

The total acquisition value is nearly 290 billion VND with a transfer price of 50 million VND/m2 (excluding VAT). Construction Holdings Company is an affiliate of DIC Corp, and the project covers an area of nearly 100 hectares, with approximately 70% of the land already compensated.

An Duong Thao Dien Real Estate Investment and Trading Joint Stock Company has approved a plan to acquire land use rights for 8 plots of land, all located in Phuoc Long Ward, Thu Duc City, Ho Chi Minh City. The amount to be paid is over 294 billion VND.

In the northern region, Ecopark Group is in negotiations to acquire the entire Song Thao Company Limited - the investor of the Thanh Thuy Hot Spring Resort project in Thanh Thuy town (Thanh Thuy district, Phu Tho province).

At the same time, Ecopark Song Thao Company was allowed to propose adjustments and replanning of the Thanh Thuy hot spring resort project with a scale of 65 hectares, and complete the procedures for registering assets on the land in accordance with the law.

Mùa các ông lớn vung trăm, nghìn tỷ đồng đi săn đất - 1 — Many businesses are searching for new land plots (Photo: Quang Anh).

Opportunities intertwined with challenges.

The real estate market always offers opportunities to businesses with sufficient resources, even during difficult times. Evidence of this is that while some developers have to cut costs to survive, accepting the sale of projects and assets, many others have risen to the position of buyers – actively seeking land plots.

In 2023, the market witnessed a surge of foreign investors quick to seize opportunities, while Vietnamese businesses struggled to find capital and maintain operations. Asian investors from Singapore, Malaysia, and other countries were consistently present in the mergers and acquisitions (M&A) market.

Typical deals include Gamuda Land acquiring 100% of Tam Luc Real Estate Company to own a project in Thu Duc, Ho Chi Minh City; Keppel Land acquiring 49% of shares in two projects of Khang Dien Housing Company; Capital Land acquiring the Tan Thanh Binh Duong mixed-use urban residential project...

Vietnamese investors also participated in some smaller-scale deals, such as Saigonres Group, which carried out M&A procedures to acquire 90% of the shares of Duc Nhi Joint Stock Company, becoming the owner of a 7,700 m2 plot of land in Tan Phu District, Ho Chi Minh City.

For example, First Real Estate Company purchased a 22% stake in Bach Dang Trading and Service Joint Stock Company, the owner of a plot of land measuring nearly 7,000 square meters in Da Nang, for $8.2 million (approximately 200 billion VND).

The general director of a real estate company based in Ho Chi Minh City acknowledged that recently, the market has seen an "undercurrent" of land and asset acquisitions. Many projects have been quietly transferred at low prices due to the market hitting its "bottom," giving those with money an advantage. In 2024, the market will witness even more such ownership transfers.

However, in the race to acquire land, businesses must also carefully consider their finances. For example, An Duong Thao Dien Company needed to spend over 294 billion VND on the eight transactions mentioned above, while its cash reserves as of September 30th were only over 53 billion VND, covering approximately 18% of the transfer value. This transfer value is also greater than the total value of the investment properties (approximately 274 billion VND, including land use rights and buildings) at the end of Q3 2023.

Ms. Trang Bui, General Director of Cushman & Wakefield, stated that the firm's 2023 research data shows that foreign investors still account for the majority of real estate transactions, acquisitions, and investments; while domestic investors account for less than 10% of the total number of transactions.

According to her, domestic businesses are still facing many disadvantages such as the general economic difficulties, unresolved legal issues surrounding projects, shortcomings in corporate bonds, and limited access to capital.

Ms. Trang predicts that the M&A market will remain in the hands of foreign investors. This is also a suitable time for businesses to intensify acquisition or partnership activities, especially those with strong financial resources.

Source