In 2024, the Southern real estate market witnessed a "freeze" in mergers and acquisitions (M&A) activities.
Although many businesses have "announced" transfer deals, in reality, no transactions have been made.
A newly published report by the Ho Chi Minh City Department of Construction shows that in the first 11 months of 2024, Ho Chi Minh City had no real estate transactions or transfers in the city. Meanwhile, this is an activity that is expected to support the vitality of the market.
Statistics from KPMG Vietnam also show that from the first quarter to the third quarter of 2024, the market recorded very few large deals in the housing segment, especially in Ho Chi Minh City, no housing project conducted M&A transactions during this period.
The investor of a housing project in District 7 said that due to lack of finance to continue the project, he had to find a partner to sell. He has also met with many domestic investors or foreign investment funds and some partners have reached the final negotiation stage.
However, everything stopped because his project involved a small part of public land, so the calculation of land use fees has not yet had any results.
Meanwhile, the partners are very strict about legal matters and because they do not know when the land use fee will be calculated, the transfer is frozen.
According to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), the fact that no commercial housing projects were transferred throughout the past year is clear evidence of the congestion in M&A activities, although this is a very large actual demand of many investors.
Mr. Chau analyzed that the provisions in Clause 2, Article 7 of the Enterprise Law 2020 allow enterprises to freely conduct business, but Clause 3, Article 40 of the Real Estate Business Law 2023 requires investors to complete procedures such as land allocation, land lease, change of land use purpose and financial obligations before transferring the project.
Mr. Chau said that this limits the investor's right to transfer the project, and in fact these regulations are not really suitable for the needs and actual situation of the market.
In addition, the cause of congestion in M&A activities is based on changes in regulations between the 2014 Law on Real Estate Business and the 2023 Law on Real Estate Business.
According to Clause 2, Article 49 of the 2014 Law, the investor must have a land use right certificate for the entire or part of the transferred project.
However, Clause 3, Article 40 of Law 2023 requires investors to have a decision on land allocation, permission to change land use purpose and fulfill financial obligations, but does not require a land use right certificate.
Therefore, current projects often do not complete these requirements, because if businesses meet the legal conditions, they will deploy construction and sell future products instead of selling project land funds.
Dr. Nguyen Duy Phuong, Investment Director of DG Capital, said that M&A deals will help clear inventory faster, support financially capable businesses to continue implementing projects, thereby increasing real estate supply and reducing housing prices.
However, the lack of projects being bought, sold or merged in recent times has increased difficulties in restructuring businesses, raising capital and solving financial problems, seriously affecting the recovery and development of the real estate market.
