Tiếng Việt
中文 (中国)
日本語
In recent years, M&A activities in the real estate sector have become increasingly active, particularly as the market faces liquidity pressures, tighter credit conditions, and the need to restructure investment portfolios. As many developers encounter cash flow difficulties, transferring all or part of a project has become a practical solution to recover capital, reduce financial burdens, and avoid prolonged project stagnation.
Project transfers in real estate M&A are not merely civil transactions between two enterprises but also serve as a market regulatory mechanism. Through this process, delayed projects have the opportunity to be taken over by investors with stronger financial capacity and better management experience. This contributes to “cleansing” the market by limiting land speculation or the retention of projects without implementation.
However, the distinctive feature of M&A in the real estate sector is its close connection with land use rights—a special type of property owned by the entire people and managed by the State as their representative. Therefore, every project transfer transaction must simultaneously satisfy the requirements of the laws governing real estate business, oversea investment, land, and construction. This overlap makes real estate project M&A one of the most legally complex areas.
Core Legal Obstacles in Real Estate Project M&A
One of the biggest bottlenecks is the requirement that a project must still be within its implementation period to be eligible for transfer. In practice, many projects technically remain “within the implementation period,” but the remaining time is too short to complete the approved works according to the prescribed schedule. This places the transferee at risk of having to apply for an extension or project adjustment immediately after completing the transaction.
In addition, the principle that a project’s objectives and planning must not be changed upon transfer is intended to ensure stability in state management. However, in the context of a rapidly changing market, many projects approved years ago have become outdated in terms of product structure or intended use. This rigid requirement reduces the flexibility of M&A transactions and diminishes their attractiveness.
Furthermore, the requirement that a project must not be mortgaged or that all land-related financial obligations must be fully fulfilled before the transfer can proceed also constitutes a significant obstacle. In practice, developers often seek to transfer projects precisely because they no longer have sufficient financial capacity to continue implementation. Requiring all financial obligations to be completed before permitting the transfer may eliminate opportunities for restructuring.
Foreign investors conducting business in Vietnam should consider consulting a Vietnam M&A Law Firm for tailored Legal Advice on Business oversea that addresses their specific commercial and operational requirements.
Overlap Among Specialized Laws
Real estate project M&A is simultaneously governed by the laws on real estate business, investment, land, construction, and planning. Although each law has its own regulatory purpose, their simultaneous application to a single transaction often creates overlaps and conflicts.
For example, the transfer conditions under the law on real estate business may differ from the requirements for project adjustment under investment law, while land law imposes separate criteria regarding land use rights, land use terms, and legal status. This lack of consistency results in different interpretations and applications by different regulatory authorities, prolonging the appraisal process and increasing transaction costs.
In particular, where only part of a project is transferred, the law has not clearly defined how rights and obligations should be allocated among the independent portions of the overall project. Determining what constitutes “a part of the project capable of independent operation” remains largely qualitative and depends heavily on the assessment of the competent authority. This is one of the persistent challenges that causes many M&A transactions to be prolonged or fail to be completed.
Difficulties Concerning Competence and Procedures for Project Transfers
One of the notable unresolved issues in real estate project M&A concerns the allocation of authority and administrative procedures. Although the current legal framework has introduced a certain degree of decentralization between central and local authorities, the practical process of appraising and approving project transfers remains relatively complex and requires the involvement of multiple regulatory authorities.
Under current regulations, the authority to approve a project transfer is determined based on the authority that originally approved the investment policy for foreign investment in Vietnam. For projects falling under the investment policy approval authority of the Prime Minister, transfer applications must undergo multiple stages of appraisal at the local level before being submitted to the central authorities for approval. By contrast, projects falling within the authority of the provincial People’s Committee are reviewed and approved directly by that authority.
In principle, this mechanism is intended to ensure state oversight of large-scale projects or projects with significant socio-economic impacts. However, in practice, coordination among regulatory authorities is not always consistent, resulting in prolonged processing times. In many cases, investors must simultaneously complete multiple related procedures, such as adjusting the investment policy, amending the investment project, updating land use right information, or revising detailed planning.
Moreover, because there is still no truly unified procedural mechanism among the relevant laws, the handling of project transfer applications often depends heavily on the interpretation and application adopted by individual local authorities. This makes the M&A process less predictable, increases compliance costs, and extends the time required to complete transactions. For investors, particularly foreign investors, the lack of clarity in administrative procedures may become a significant obstacle when considering participation in real estate M&A transactions.
Issues Concerning the Allocation of Rights and Obligations Between the Parties in Real Estate Project M&A Transactions
Another important aspect of real estate project transfers is the clear determination of the rights and obligations of the parties involved, including the transferring developer and the transferee developer. In principle, the law provides that the transferee succeeds to all rights and obligations of the previous foreign-invested developer in Vietnam relating to the project. This succession mechanism is intended to ensure that the change of project developer does not interrupt project implementation while protecting the interests of related parties such as customers, contractors, and credit institutions.
However, in the practical implementation of real estate project M&A, the application of this principle of succession is not always clear. For projects transferred in their entirety, the scope of rights and obligations can generally be determined with relative ease. By contrast, where only part of a project is transferred, allocating responsibilities between the former developer and the new developer becomes considerably more complicated, particularly where the project contains multiple construction components sharing interconnected technical infrastructure or financial obligations applicable to the project as a whole.
Furthermore, the current legal framework does not comprehensively regulate the treatment of civil obligations and contractual commitments arising before the transfer, such as construction contracts, oversea investment cooperation agreements in Vietnam, or commitments made to customers. In many cases, the transfer of these rights and obligations depends primarily on the agreement reached between the parties in the transfer contract, consulted by Vietnam M&A Legal Consultation, while still requiring the approval or confirmation of competent state authorities. This may create legal risks if the allocation of responsibilities is not clearly defined from the outset.
These challenges demonstrate that although the legal framework governing real estate project transfers has gradually been improved, many issues remain unresolved in real estate M&A practice. Clearly defining the rights and obligations of the parties not only helps minimize disputes but also establishes a stable legal foundation for the effective and sustainable development of M&A transactions in the real estate sector.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top tier M&A law firm in Vietnam. If you need any advice, please contact us for further information or collaboration.
