CapitaLand’s wholly-owned subsidiary, CLV Investment 5, has acquired an additional 20 per cent interest in Vietnam-incorporated CapitaLand-Thien Duc Company (CTD) for a cash consideration of $17.9 million.
In a Monday announcement, the company disclosed the transaction, which follows acquisition from a party unrelated to CapitaLand that has rendered Vietnam-incorporated CTD a 50%-owned associated company of CapitaLand.
According to CapitaLand, this latest acquisition is aligned with a strategy of increasing its residential development portfolio in Vietnam.
CTD holds a mixed use development in Ho Chi Minh City known as Vista Verde, comprising 1152 residential units. Additionally, it holds two land plots in the vicinity of Vista Verde. These are currently undeveloped but there are plans to build landed shop houses and high-rise residential units.
According to CapitaLand, the acquisition is not expected to have any material impact on the net tangible assets or earnings per share of the group for the financial year ending 31 December 2017.
Vietnam is currently seeing a significant surge in new construction with a real estate market seeing strong performance.
Boosted by recovery from the housing bust of 2009-2013, a growing economy, and housing sector reforms, Vietnamese property prices have shown an upswing.
Vietnamese residents, who are foreigners, are now permitted to purchase dwelling houses and own them but cannot own the land on which it is built. They have the option to lease the land from the state.
Q3 2016 saw total housing unit sales in Ho Chi Minh City (HCMC) surge by 49 per cent from Q2 2016, and by 193 per cent when compared to Q3 2015, according to a research brief by Savills World Research.
With continued property price hikes predicted in both HCMC and Hanoi, stronger investment in HCMC is expected in the succeeding quarters, especially in the villa and townhouse sector.