Su Ngoc Khuong, associate director of investment at Savills Vietnam, told BizLIVE that Japanese investors are striving for a larger share in providing home products in Vietnam.
Over the past few years, especially in 2015, Japanese increased their involvement in sizable mergers and acquisitions (M&As) in the real estate sector in Vietnam. How do you assess this phenomenon?
According to Savills’ statistics, a number of Japanese investors participated in property projects or acquired shares in some projects owned by listed companies, aiming to develop middle-end products.
Besides the $1.2 billion Tokyo project in Binh Duong province, the middle-end segment has been the major target of M&A deals that have involved Japanese investors over the past two years.
This approach to the Vietnamese real estate market shows that they do not only aim at Japanese clients, but also Vietnamese ones.
Savills has worked with Japanese investors in acquiring a number of property projects in Vietnam and we expect several M&A deals to be closed this year.
What appetites do Japanese investors have?
Some Japanese real estate businesses with which Savills is working are well-known in not only Japan but also in Southeast Asia.
What I have observed is that most Japanese are interested in commercial center, office building and hotel projects that already exist and have generated cash flows.
They also partner with local businesses who are investors and developers at the same time. With this approach, they can obtain experience and develop residential projects by themselves in the future. Moreover, teaming up with large Vietnamese firms will help them build up their own market.
Regarding M&As, Japanese investors usually wholly acquire or purchase 80% of assets such as office buildings and hotels that already generated cash flows.
Meanwhile, they tend to team up with local developers of fresh residential and urban projects.
What agonizing property projects need to attract foreign investors?
What foreign investors need is legal clarity regarding site clearance, land use fee and zoning plan, in addition to the liability of the partners from whom they want to acquire the project.
If these factors meet their expectations, they would join local investors in reviving half-finished projects.
Thank you very much!