CapitaLand Said Investing $1.5B to Acquire Projects From Vietnam’s VinGroup

Singaporean heavyweight CapitaLand Group is in talks to purchase Vietnamese real estate projects worth $1.5 billion from the country’s largest listed developer, Vinhomes JSC, according to an account by Reuters on Monday.

CapitaLand is in talks with the Hanoi-based firm to acquire and invest in projects including taking a slice of Vinhomes’ Ocean Park 3 – The Crown development near Hanoi, which has an estimated development cost of VND 32 trillion ($1.37 billion), according to anonymous sources familiar with the matter cited in the Reuters report.

“Vietnam is one of CapitaLand Development’s core markets,” a company representative from the group’s development arm told Mingtiandi that same day, declining to comment directly on the news report. “We constantly evaluate investment opportunities to grow our presence in the country.”

Real estate developers in Vietnam have been struggling to maintain liquidity in recent months after a bond scandal at real estate investment firm Van Thinh Phat was followed by a government halt on new credit to the sector, with Vinhomes and some of its major competitors having been forced to search for new sources of capital.

Vietnam’s Red Lines

The State Bank of Vietnam last November rolled out a ban on several types of new bonds after Van Thinh Phat founder Truong My Lan was arrested on charges of issuing financial instruments in November, cutting off a key source of funding for developers.

The credit restrictions, which have been likened to China’s “Three Red Lines” policy which triggered defaults at major mainland developers, have combined with the debt scandal to  spook home buyers who were already struggling to afford luxury condos given rapidly rising interest rates.

Just one month ago, Vinhomes’ largest rival, Novaland, announced that it was delaying repayment of a VND 1 trillion ($42 million) bond that had come due on 13 February, with the company this month announcing a share sale to raise around $1.24 billion in fresh capital.

Last month Vinhomes chairman Pham Thieu Hoa was reported to have called on the government to act promptly in addressing Vietnam’s real estate debt crisis and help alleviate the country’s property woes.

Vinhomes’ potential asset sale comes after the listed firm reported a 25 percent drop in consolidated, post-tax net profit income to VND 29 trillion in 2022 from its VND 39 trillion bottom line in 2021, based on its latest full-year financial results published on the Ho Chi Minh Stock Exchange earlier this year.

Deal Discussions

CapitaLand and Vinhomes, the real estate development arm of billionaire Pham Nhat Vuong’s Vingroup, have yet to agree on the value of the deal but negotiations have already reached advanced stage, according to the Reuters report, with major investment projects having been identified..

Apart from the Ocean Park 3 investment, the Singapore titan is said to be considering buying an unidentified project in the port city of Haiphong in northern Vietnam, with CapitaLand’s investment estimated to be one of the largest property transactions ever recorded in the country, should it be realised.

Vinhomes has been actively looking for partners to take over portions of Ocean Park 3, given the scale of the billion-dollar project, according to one market source who was not involved in the company’s reported discussions with CapitaLand.

Ocean Park 3 – The Crown is a resort-style residential complex in Hung Yen province’s Van Giang district that will combine villas, apartments and water amenities on a sprawling 294-hectare (726-acre) site.

The market source noted that the developer followed a similar strategy for the first phase of the Ocean Park project when it brought in Mitsubishi as a joint development partner through a memorandum on comprehensive strategic partnership announced towards the end of 2021.

CapitaLand has worked with VinGroup in the past, including acquiring the Capital Place office tower in Hanoi from the group in 2018. The Temasek Holdings-backed firm sold that project to property investment firm Viva Land last year for S$751 million (then $558 million).

Last July, CapitaLand Development acquired a mixed-use eight-hectare site in Ho Chi Minh City’s Thu Duc suburb where it plans to develop a S$1 billion residential project.