M&A REAL ESTATE SURGICAL GROWTH FORECAST

According to experts, 2023-2024 may be a boom period in mergers and acquisitions (M&A) because many investors are thirsty for capital and need to sell assets to overcome difficulties.

From the end of last year to the beginning of this year, experts believe that M&A has kicked off and will be in a bustling season from the second quarter onwards when the capital needs become urgent and the debt maturity of businesses is approaching.

Mr. Neil MacGregor - Managing Director of Savills Vietnam - acknowledged that at present, domestic real estate developers are facing difficulties in capital sources, long investment and legal procedures. In this context, real estate businesses need to find new channels to access capital, so M&A activities promise to have the opportunity to heat up in 2023.

According to him, Vietnams real estate is facing many difficulties, but there is still a lot of potential to attract great attention from both foreign and domestic institutional investors. Particularly for foreign investors, this market has the opportunity to receive many foreign capital flows wishing to invest in both short and long-term, of which Japanese investors are a typical group looking for long-term investment.

Mr. Neil MacGregor added that Savills has received many consultation requests from local real estate developers on establishing deal structure and transaction valuation. With this development, he forecast that this year M&A activities will be promoted more than the same period last year.

Ms. Trang Bui, General Director of Cushman & Wakefield Vietnam, assessed that while many domestic real estate enterprises are facing difficulties in terms of both legal and capital sources, M&A activities can be a great opportunity for foreign investors to be proactive. cash flow. In particular, the group of Asian investors with the advantage of close geographical location and some cultural similarities, and already present in the Vietnamese market, will easily access M&A deals as soon as they are successful. Domestic real estate developers are more open in the bargaining and negotiation process.The newly released industry report of Bao Viet Securities Company (BSC) also assesses that real estate M&A activities may heat up in the period of 2023-2024 because the cheap money period has ended. Real estate businesses are experiencing a period of liquidity shortage when the sources of capital mobilization are more or less hindered.
The first is that sales are difficult because of the negative sentiment of the market, products have not met real needs, both businesses and homebuyers depend on loans. Secondly, credit to the real estate sector is still strictly controlled while other capital channels such as bonds and stocks are not favorable. Finally, interest rates are high and bond maturity falls are focused on 2023-2024.
Real estate businesses also find it difficult to mobilize capital from customers because of reduced confidence of homebuyers, unmet real demand, sharp decrease in investment demand and limited access to loans. This securities company said that, with the development of many challenges, real estate businesses will have to choose a merger and acquisition channel to solve difficulties.Speaking to VnExpress, Mr. Pham Lam, Chairman of DKRA Group, predicted that mergers and acquisitions could take place strongly from the middle of the second quarter of this year and is considered a fueling channel for businesses that are exhausted, losing liquidity, lacking in cash flows. money.
According to Mr. Lam, the focus of the M&A market will focus on land fund assets, projects in the initial investment stage but not yet ready to deploy resources. For organizations (enterprises) who are holding projects but are too overwhelmed, they will have to sell part or all of the project to exit goods and bring cash flow to rebuild the apparatus. In addition, projects with low potential and no longer suitable are also on the list of assets that need to be sold to reduce the cost burden.
Mr. Lam said that the three common forms of mergers and acquisitions in the near future are the sale of project shares or the sale of companies with existing projects or joint ventures (occurring when the domestic investor holds the projects land fund and still holds the projects land fund). foreign organizations or Vietnamese partners to inject capital for project development).However, CEO of Cushman & Wakefield Vietnam predicts that the process of implementing M&A deals may take place in the long run. Foreign investors often research and carefully survey the entire market, then delve into each potential segment. Once they had enough data, they shook hands with a number of partners who are investors in Vietnam who have the advantage of having available land funds and having local legal knowledge.
Sharing the same view, Pham Lam, Chairman of DKRA Group, said that although the level of interest and the wave of property hunting for mergers and acquisitions may increase this year, boosting the markets heat and closing an M&A deal. often not easy and take a lot of time to succeed.
According to him, the steps of legal inspection, price bargaining, appraisal of implementation capacity, sales readiness, and product segmentation may take many quarters of negotiation, or even longer, to be finalized. Therefore, the merger and acquisition market looks attractive as the excitement increases but the final outcome is difficult to predict.