Property firms are
confident of the growth fundamentals in Vietnam.
Japanese real estate
companies are looking outside the domestic market for a potential investment
destination, and Vietnam is looking like an ideal candidate with annual returns
of up to 20-25 percent.
Japanese companies are
planning combined investment of up to $2 billion in the Southeast Asian
country, said Than Thanh Vu, president of a merger and acquisition consulting
company.
A large number of
Japanese groups, including Sumitomo, Sanyo Homes, Daiwa House, Aeon and Toshin,
are searching for large scale mixed-use developments comprising apartments,
serviced apartments, retail and office space in major cities like Hanoi and Ho
Chi Minh City, Vu said, citing the $100 million office building project funded
by Sumitomo as an example.
Investor interest is
being fueled by Vietnam’s economic growth, which has on average been above 5
percent since 1999, Vu continued.
There are other factors
driving the inflow of Japanese investment into Vietnam’s property
sector. Japanese investors want to tap into the potential of
Vietnam’s growing population which will lead to a rapidly expanding demand for
real estate. With their domestic market shrinking as population is aging
rapidly, Japanese companies are increasingly looking at Vietnam as a promising
market.
Japanese investors are
entering the local market through mergers and acquisitions, Vu said, explaining
that as long-term investors, Japanese companies prefer acquiring stakes in
local property developers gradually over time so that they can gain a better understanding
of the local market. Mergers and acquisitions also allow foreign investors to
quickly gain a foothold without going through the massive amount of complicated
paperwork involved in the real estate sector.
Industry experts
forecast a surge in mergers and acquisitions (M&As) in the real estate inHanoi and
Ho Chi Minh City.
“Japanese companies are
financially strong and vastly experienced in property developments, so it will
be easy for them to take the projects at some of the most sought-after
locations from local developers,” said Vu, adding that given extremely low
interest rates and limited economic growth in Japan, these investors are
sitting on huge cash piles and have little option but to invest overseas.
Japanese investors have
just laid their eyes on Vietnam’s real estate market,
said Masataka Sam Yoshida, chief executive of Tokyo-based Recof, which is
mainly involved in M&A consulting.
In the past, Japanese
companies were very cautious about making real estate deals in Vietnam due to
the high risk of speculation, lack of transparency and information, Masataka
explained.
But things have changed,
he said.
One of Japan's largest
builders, Kajima Corporation, has formed a joint venture with Indochina Capital
to channel funds worth $1 billion into property developments in Vietnam over
the next 10 years. The 50:50 partnership has plans to acquire several local
projects in the pipeline.
Vietnam is currently
viewed among the top markets in Asia for foreign direct investment, said
Keisuke Koshijima, market development executive at Kajima, adding that the
company has identified the Southeast Asian country as the next key driver for
its growing business in
the region.
ANT Consulting is here
to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist
market entrance, and ensure efficient business start-up operation. Our
services are as following:
We strive to save your
cost by guiding you towards economical solutions that comply with local
legislation and procedures. We support you through early logistic solutions and
carry you through as your business grows.
We aim to bridge the gap between international best practices and local
cultures and assist foreign companies and organizations entering Vietnam market
to overcome commercial and regulatory issues.
We could be reached at email: ant@antconsult.vn or tel: +848
3520 2779 . To learn more about us, please visit www.antconsult.vn
