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Hunt for fresh land banks taking off across key regions
A series of large real estate projects have been bought up by investors as they move towards assets in second-tier cities, with land availability limited in major urban areas.
This month, Malaysian property developer Gamuda Land announced that it has acquired a local company to develop a high-rise apartment building in Thu Duc city of Ho Chi Minh City.
A few months earlier, Gamuda Land Binh Duong announced that it had acquired a 56,000sq.m land plot in Binh Duong New City from Binh Duong Trade and Development JSC for developing townhouses, with a value of more than $53 million.
Angus Liew, chairman of Gamuda Land Vietnam, said the company saw plenty of opportunities in Vietnam where economic prospects were good with a steady flow of investment and job creation.
“Continuous expansion in Vietnam is an important strategic move for the group to achieve annual sales of $2 billion per year over our five-year expansion plan,” Liew said.
Capitaland Development (CLD), a real estate developer from Singapore, announced recent investments including the acquisition of a prime mixed-use site in Thu Duc city, with an estimated gross development value of about $720 million. The mixed-use project over eight hectares will comprise over 1,100 high-end residential units and shophouses to meet the residential demand of Thu Duc’s growing workforce.
Ronald Tay, CEO of CLD Vietnam, said that the company had been exploring opportunities to diversify its asset class involvement beyond the company’s traditional expertise to new classes like township developments, logistics, industrial and business parks, and data centres.
“The strategy to accelerate our growth and increase the scope of our business to reduce risk concentration in any single city or asset class and enhances the overall resilience of our portfolio,” added Tay.
Recent reports from market research consultants show that available land in big cities such as Ho Chi Minh City and Hanoi is increasingly scarce, especially in the central core areas. Many investors have moved to satellite cities or neighbouring provinces, which are considered replacements with potential.
According to BIDV Securities Company’s data, many giant developers are exclusively expanding to satellite areas, such as Vinhomes, Novaland, Hung Thinh, Nam Long, and many others. The provinces of Dong Nai, Binh Duong, and Long An are on the radar for many investors.
Nam Long Corporation has implemented the 355-hectare Waterpoint project in Long An, and Phu Dong Group and Samland are developing projects in Binh Duong.
Nguyen Thi Hong Hue, deputy director of MIK Home, said that apart from the Imperia Grand Plaza in Long An, it was mainly expanding its portfolio to the northern provinces of Vinh Phuc and Bac Ninh.
Hung Thinh Land, another developer, is expanding its portfolio to Quy Nhon with Hai Giang Merryland, Fiveseasons Homes in Vung Tau, and New Galaxy in Nha Trang.
Ngo Quang Phuc, general director of Phu Dong Group, said developers have quickly grasped the trend for new destinations. “Many real estate merger and acquisition (M&A) deals will be conducted in 2023 and the focus will be on the coastal provinces, the central coastal region, or even the Central Highlands,” Phuc said.
According to Phuc, the current M&A outlook in land is no different to hunting because there is much land but it is very difficult to successfully choose a good land plot to fit the developers’ targets.
Ha Van Thien, deputy general director of Tran Anh Group, said that during the last two years, real estate developers had actively hunted land in provinces neighbouring Ho Chi Minh City and Hanoi. “The race is constantly facing competition from stronger competitors in terms of finance, relationships, and project implementation experience. In the current situation, cash is king and the advantage belongs to developers with financial capacity,” Thien said.
Meanwhile, Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said that to achieve success in M&A strategies, the cash source was not the only problem. “If the investor does not have the capacity to develop the project, it is very difficult to carry out a deal. After completing M&A procedures if the project cannot be exploited and finished products for sale, the advantage of the land fund will turn into a burden of inventory and lead to buried capital,” said Chau.
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