FOREIGN INVESTORS ARE BECOMING MORE CAUTIOUS ABOUT REAL ESTATE M&A ACTIVITIES

Rising capital costs, global economic uncertainties, and valuation gaps between buyers and sellers have prompted investors to prioritize projects with strong fundamentals rather than pursuing aggressive expansion.

1. FDI Remains Strong, but Real Estate Faces Greater Scrutiny

Recent data indicates that Vietnam continues to attract substantial foreign investment, reflecting confidence in the country's long-term economic prospects. However, a significant share of new investment has been directed toward manufacturing and processing industries, while the real estate sector accounts for a smaller proportion of total registered capital.

This trend suggests that international investors remain interested in Vietnam’s property market but are adopting a more cautious approach when selecting investment opportunities.

2. Investors Prioritize Quality Assets

Market analysts note that overseas investors are focusing on projects that offer:

• Clear and transparent legal status.

• Prime locations with strong infrastructure connectivity.

• Reliable cash-flow potential.

• Experienced and reputable developers.

• Sustainable long-term investment value.

Rather than investing in projects at an early development stage, many investors now prefer completed or nearly completed assets that can generate returns within a shorter period.

3. Investment Strategies Continue to Shift

The current investment environment has encouraged foreign funds to emphasize operational efficiency instead of relying solely on future price appreciation. Comprehensive due diligence has become increasingly important, with greater attention given to legal compliance, project quality, financial performance, and long-term profitability.

As a result, assets capable of producing stable income are attracting considerably more interest than speculative land holdings.

4. M&A Transactions Reflect the New Trend

The cautious investment strategy is also evident in recent M&A activity across Vietnam's real estate market. Transactions are increasingly concentrated on projects that already possess legal approvals or are well advanced in development.

Instead of acquiring undeveloped land with unresolved legal issues, investors are favoring:

• Residential projects with completed legal procedures.

• Commercial properties capable of generating immediate rental income.

• Industrial real estate supported by strong manufacturing demand.

• Hospitality assets with long-term operational potential.

Many large-scale transactions are also being structured through joint development agreements or partial equity transfers, allowing investors to better manage risks while maintaining exposure to future market growth.

5. Pricing Differences Remain a Major Challenge

Despite continued investor interest, one of the biggest obstacles to completing M&A transactions is the difference in valuation expectations.

Many property owners continue to price assets based on anticipated market recovery, whereas foreign investors tend to adopt more conservative valuation models due to higher financing costs and ongoing global economic uncertainty.

In addition, the remaining land-use term of projects has become an increasingly important consideration during investment evaluations.

6. Outlook for the Second Half of the Year

Industry experts expect Vietnam's real estate M&A market to remain active, although transactions are likely to remain highly selective. Capital is expected to continue flowing toward projects with:

• Transparent legal documentation.

• High-quality assets.

• Stable income-generating capability.

• Strong long-term development prospects.

As market conditions evolve, developers with legally compliant, well-positioned projects may have greater opportunities to attract international investment, while speculative assets could face increased difficulty in securing foreign capital.

Source: Compiled and adapted from market reports and publicly available industry informatio