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Consumer products and real estates remain magnetically attractive to foreign investors

26/09/2016 • Markets

According to industry experts, Vietnam is attracting attention from many foreign investors, especially Japanese ones, in the fields of consummer products and real estate.

Consumer products and real estates remain magnetically attractive to foreign investors

Within the context of M&A Vietnam Forum 2016, which places an emphasis on “mergers and acquisitions in a more liberal context,” the second session witnessed many exciting and straightforward debates focusing on the stiff competition between enterprises, industries, and regional nations, in the context that Vietnam has become increasingly attractive in the eyes of foreign investors.

Consummer products and real estates are the magnetics

According to speakers, consummer products and real estate are magnetically attracting foreign investors.

Ms. Dinh Thi My Lan, Chairwoman of Vietnamese Retailers Association, said that recently local retailing industry is leaping in growth. Vietnam has a population of over 90 million people, most of which are young and dynamic. Therefore, retail is growing at a stable pace and its performance is proven better than other industries. That explains why foreign investors highly recommend Vietnamese retailing industry as an attractive gold-mine to cash in on.

Furthermore, urbanization process generates a bigger pie of share for all enterprises. In fact, there remains ample room for retailing growth in Vietnam, since the country’s occupancy rate of modern retailing in malls and convenient stores is quite modest (less than 30%)

Mr. Sam Yoshida, Senior Executive Director from Recof Corp said that investment deals to Vietnam accounts for 80 percent of their investment budget, even higher than that cashed in Japan. Owning to recent openness of local retail market and the diversity of retail channels, there are more and more investment packages from Japan, and increasing number of favorable investment policies

In real estate field, according to Ms. Nguyen Thi My Phuong, General Director of Tien Phuoc Real Estate Joint Stock Company, Vietnam market is highly appealing to investors because Vietnam has a stable political system, strong economic growth, enhanced middle-class income, and young population structure.  However, in terms of seniority, the market is still young compared to other counterparts; therefore, potentials are great, especially when it comes to cater gender-intensive needs and greater ROI compared to regional markets.

When interviewed about her personal M&A experience, Phuong said that Tien Phuoc would study and identify business intelligence to grasp a better understanding of partners before approaching a possible deal. It is critical to find out if partners are truly interested in a long-term cooperation and if they have the same voice with us.

“In order to reach agreement in terms of strategies, it is a big challenge for us. We would normally spend quite a lot of time to grasp a better understanding of international developers, their scopes of operation, and timing matter as well to ensure that each party can honestly share all details of projects and development tactics,” said Phuong.

A veteran in real estate industry, Mr. Marc Townsend, General Director of CBRE Vietnam, proposed that local real estate market is facing the toughest challenge and competition since August 2014, yet such competition is healthy because without it there will be no momentum for growth. Townsend said the main reason behind this trend of investment flow to Vietnam lies in the country’s more strategic location in the industry map, compared to other less appealing markets.

“Japanese investors will extend their investment not only in HCMC and Hanoi but also in Da Nang. Financiers will not only be big corps but also SMEs from Japan,” said Ms. Dinh Thi My Loan, Chairwoman of Vietnamese Retailers Association.

For the local M&A market to grow smoothly, speakers agreed that Vietnamese government must play their supportive role and commitment in the loop. Better overseas cashflow would pour into Vietnam, most likely to M&A field, as long as there are enhanced transparency and appropriate favorable legislations passed in timely manner. Hopefully, with the support from all stakeholders, more win-win merger and acquisition deals will be realised in Vietnam.