CBRE Vietnam Real Estate Spotlight – W32 2019

Son Kim Land has closed another round of investment worth US$121 million from a consortium led by existing investors EXS Capital and ACA Investments, as well as new backer Credit Suisse. Joining the third equity financing for Son Kim Land is Skymont Capital, a real estate investment firm with a mandate in Asia and US markets. It is understood to be the first recorded investment by Skymont in Vietnam. 

Over the past 10 years, M&A activities in Vietnam have been growing strongly and become an indispensable part of the investment – business ecosystem in Vietnam. Total value of mergers and acquisitions (M&A) deals in Vietnam in 2018 hit US$10.2 billion, marking a big jump from just US$1.1 billion 10 years ago, leading to an accumulated value of US$55 billion in the past decade, according to Vu Dai Thang, vice minister of Planning and Investment.

There are 4,000 Vietnamese businesses operating in the logistics field but most of them are small-scale with weak human resource quality, the Ministry of Industry and Trade (MoIT) reported. According to the report, Vietnamese logistics enterprises are mainly operating on a small scale, with up to 90% of enterprises having capital of less than 10 billion VND (US$432,500) (lower than the average registered capital of the enterprises), 1% of firms have capital of over 100 billion VND, 1% have capital from 50 billion VND to 100 billion VND, 3% have capital of 20 to 50 billion VND, and 5% have capital of 10 to 20 billion VND.

Trần Quang Lâm, director of the Department of Transport told Sài Gòn Giải Phóng (Liberated Sài Gòn) newspaper that Huỳnh Tấn Phát and Lê Văn Lương streets in District 7 would be upgraded and Nguyễn Hữu Thọ Street would be widened from four lanes to six or eight. Three bridges would be built to replace the decrepit Rạch Đỉa, Long Kiển and Rạch Tôm bridges. This year the department plans to start construction of the Nguyễn Khoái Bridge over the Kênh Tẻ canal to connect districts 4 and 7. The kilometre-long bridge will cost VND1.2 trillion (US$51.8 million). According to the department, the People’s Committee has approved VND830 billion for building two tunnels at the Nguyễn Văn Linh-Nguyễn Hữu Thọ intersection. The tunnels will have a length of 480m and width of 13.7m.b

The domestic retail market is witnessing stiff competition among Vietnamese retailers (Saigon Co-op, Vinmart and Bach Hoa Xanh), and foreign retailers (Big C, Lotte Mart and Aeon Group Japan). The understanding of tastes and rapidly changing shopping behavior of Vietnamese consumers are the big changes for retailers. In addition, Vietnamese consumers' omni-channel shopping requires retailers to create different retail models to meet their needs. Consumers can seek information about products and then go to physical shops to buy products, or vice versa. Different groups of shoppers will choose retail models which allow them to have the best experience. Retailers need to have reasonable long-term business strategies, and diversify model chain models to approach as many consumers as possible.