Japan firms invest in local property sector despite potential risks
VietNamNet Bridge – Many Japanese companies are aware of potential risks in the Vietnamese real estate sector but they have an increasing presence in this market, according to Tokyo-based Recof Corporation, a consultant on merger and acquisition (M&A) deals.
High-rise buildings are in HCMC. Many Japanese companies are aware of potential risks in the Vietnamese real estate sector but they have an increasing presence in this market.
Masataka Sam Yoshida, senior executive for the Vietnam market at Recof, told the Vietnam M&A Forum 2016 in HCMC last week that M&A deals involving Japan’s companies on the local market rose last year following a slowdown a year earlier.
He said with a golden population structure and rising incomes, Vietnam has emerged as an attractive destination for Japanese businesses in sectors like retail, consumer goods and finance, and that they are keen on indirect investments here.
Yoshida noted Japan’s M&A activities in Vietnam can now be found in the real estate sector, which Japanese companies ignored in the past, as they are ready to take risks.
“Japanese businesses were not interested in the housing sector around 20 years ago but things have changed. This sector is turning very attractive,” he said, adding that besides HCMC and Hanoi, Japanese firms are paying attention to the central region, particularly Danang City.
Japanese companies are normally prudent, so Vietnam’s real estate sector remains risky in terms of pricing, speculation and a lack of transparency.
Japan applies higher technical standards than Vietnam does and they are uncertain whether those standards can work in Vietnam or not. However, experts said Vietnam’s property market holds greater growth potential than some other markets as it has been recovering over the past three years.
This year, the real estate market is forecast to maintain strong growth momentum but experts said its growth is not sustainable.
In reality, Japanese enterprises and investment funds have participated in a couple of realty projects in Vietnam since last year.
According to Recof statistics, Vietnam ranked second in Southeast Asia in terms of Japanese involvement in M&A deals in 2015 and the first seven months of 2016.
The business environment is seen remaining positive this year and beyond while the Trans-Pacific Partnership (TPP) trade pact and the ASEAN Economic Community will generate more business opportunities in Vietnam. Besides, the amended Housing Law 2014, which took effect in early July 2015, allows foreigners to own properties in Vietnam.
Recof predicted more Japanese enterprises would come to Vietnam for investment in the domestic property market in the coming time.