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Taiwanese target M&A deals

Updated: 14/10/2013 | 10:57:28 AM
Vietnam’s real estate market has seen increasing interest from foreign investors in the first half of the year.

According to CBRE Vietnam, investment enquiries increased by 20 to 30 per cent over last year. Amongst these, old favourites Japan and Korea remained keen on Vietnam, while Taiwan was increasingly on the lookout for opportunities.

Large conglomerates from Japan and Korea have remained consistent in their interest in Vietnam throughout the downturn. Such groups are seeking to acquire existing assets, as well as development opportunities – particularly in the residential segment.

According to Marc Townsend, managing director of CBRE, there was a growing abundance of new capital beginning to again look at Vietnam. A range of investors were looking for both direct asset deals, taking secondary positions in existing joint ventures, or looking to establish new joint venture arrangements as the market enters a new cycle.

Meanwhile Taiwanese investors are another potential source of capital for the Vietnamese investment market.

“The opening of the Taiwanese insurance regulations has paved the way for real estate investment outside of Taiwan – where competition for assets, owing to growing amounts of cash, has pushed yields to historically low levels,” Townsend stressed in his latest market view on Vietnam’s capital market.

Ho Chi Minh City, according to Townsend, was one of six cities identified by the Taiwanese for outbound investment with several groups already stepping up their level of interest in the market.

Meanwhile according to Joseph Lin, managing director CBRE Taiwan, Taiwanese insurance companies which is managing more than $450 billion in capital had received permission for the first time to consider overseas real estate investments, opening up the possibility of forays into the global investment market as the insurers look to diversify from the overcrowded domestic market.

CBRE Taiwan highlighted Shanghai, Ho Chi Minh City, London, Frankfurt, New York, and Toronto as high priority destinations for those seeking initial overseas investment.

Neil Alexander MacGregor, managing director of Savills Vietnam also stated that the recent lifting of restrictions for Taiwanese insurers to invest in foreign property markets also offered new capital sources.

“Given that the market is only commencing its recovery now, it is fair to expect many more M&A transactions in the real estate sector,” MacGregor said.

He added that for international investors, the Vietnam property market still offered attractive yields compared to regional alternatives.

“The lasting turbulence in the European market and the slower-than-expected recovery in the US will potentially support further capital inflows,” he added.

Compared to other regional destinations, Vietnam still stands out for its political stability and demographics which support stable long term demand. However, the immature legal framework, low market transparency, complicated licensing procedures and differences in price expectations, according to experts, often lead to missed opportunities.

“This is where project owners who wish to align with foreign partners will need to study and present their projects with carefully considered projections supported by strong market comparables,” according to MacGregor.