A deal of that size would mark one of the largest real estate transactions in Southeast Asia in the last few years.

The talks come as Vietnam's property sector is struggling with a cash crunch following an anti-graft campaign launched by the government last year.

Discussions between CapitaLand, majority owned by Singapore state investor Temasek Holdings, and Vinhomes, which has a market value of $8 billion - have taken place for some projects owned by Vinhomes, four sources told Reuters.

Vinhomes, Vietnam's biggest real estate developer by market capitalization, is part of Vingroup, the country's largest conglomerate.

One of the sources said CapitaLand is considering buying part of Vinhomes' Ocean Park 3 project, a 294-hectare resort city style development near the Vietnamese capital city of Hanoi, or another project in the northern city of Haiphong.

The value of the deal was still being negotiated, the person said, adding the talks reached advanced stage.

The sources declined to be identified due to the sensitivity of the matter.

When contacted by Reuters, CapitaLand Development did not directly comment on any potential deal with Vinhomes but said: "Vietnam is one of CapitaLand Development's core markets. We constantly evaluate investment opportunities to grow our presence in the country."

CapitaLand Development, part of CapitaLand Group - which has a presence in 40 countries - develops retail, office, residential, business parks and data centres among other businesses. It already has a portfolio of residential projects, including luxury condominiums, in four cities in Vietnam.

Vingroup declined to comment on any discussions with CapitaLand, but said that as a listed company it would disclose information if any transactions happen.

Vingroup, which is involved in real estate, automobiles and retail, is investing billions of dollars to develop VinFast, its fledgling electric vehicle car maker.

    Vinhomes develops and owns residential and commercial real estate projects in Vietnam, a country which has a population of 100 million and was Asia's fastest growing economy last year.

    The economy expanded by 8% last year, the fastest pace in 25 years, backed by strong retail sales and exports, but is facing headwinds from a global slowdown.

A property crisis that started last year, sparked by problems at one of the country's largest property groups No Va Land, has battered investor confidence as authorities arrested high-level individuals and overhauled the country's bond sector.

Vinhomes was spun off and listed on the local stock exchange in 2018.

Vinhomes' net profit dropped 26% to 29 trillion dong ($1.23 billion) in 2022 from a year earlier, while total revenue declined 27% to 62 trillion dong.

Shares of Vinhomes have lost 10% so far this year, after tumbling 40% in 2022 as the property crisis deepened.

($1 = 1.3489 Singapore dollars)

($1 = 23,580 dong)

(Reporting by Phuong Nguyen in Hanoi, Yantoultra Ngui and Anshuman Daga in Singapore; Editing by Kim Coghill)

By Yantoultra Ngui, Phuong Nguyen and Anshuman Daga