Vietnam’s property market remains fundamentally strong, buoyed by underlying owner-occupier demand which has been resilient despite the impact of covid-19 pandemic. The trends of continuing urbanization, rising income levels and migration of business activity from Greater China are expected to continue in the foreseeable future.
Vietnam is now widely seen as the next tourism property market hotspot, with a booming economy, coupled with laws that recently have made it easier for foreigners to purchase property. As a result, wealthy international investors and international manufacturers have been flocking to the country in recent years.
Vietnam Insider talks to Rahn Wood, a long-term expatriate in Vietnam about this. Rahn is an internationally experienced executive with over 30 years of achievements in Retail, Commercial & Digital Banking, Cards and Payments. He has performed executive roles at some of the most prestigious financial institutions including HSBC (Australia, Hong Kong & Singapore), Vietnam International Bank, Techcombank, Saudi British Bank, Macquarie Bank, MasterCard and ANZ Bank and recently the CEO of Mai Linh, the largest taxi firm in Vietnam.
Do you have any idea about why more and more international enterprises moving their business to Vietnam?
The trade dispute between the US and China has had a positive cascading effect on Vietnam. Vietnam has emerged as an alternative to China for investors benefiting from the China plus one strategy that involves investors shifting or expanding to other countries to secure market access.
Volvo, Adidas, and Zara are all European companies that have increased their investment in Vietnam in recent years. Analysts expect that trend to deepen after the Vietnam-European Union trade deal takes effect, particularly as companies seek to reduce their reliance on countries neighboring Vietnam.
Vietnam is one of only a handful of nations forecast to see continued economic growth this year amid the COVID-19 outbreak. Much of that growth results from foreign investment, including investment facilitated by the EVFTA.
But “ you can’t just shift your business to Vietnam and expect to find what you’re looking for” without carefully considering the sectors and regions within this market. As a result of the factors I mentioned, both commercial and industrial real estate developers are experiencing a very good period to exploit benefits from these trends whereas residential development has slowed and tourism is most heavily impacted by travel disruptions associated with the Covid-19 pandemic.
What have been the main trends in the real estate market?
According to market research reports from several real estate companies, the real estate market in Vietnam, specifically in Hanoi and Ho Chi Minh City (HCMC), Vietnam’s two biggest cities, experienced a year of growth for the overall condominium market, office market, commercial and industrial market.
Can we buy property as foreign investors in Vietnam?
The law on land ownership in Vietnam was recently amended, favoring an open real estate market. Now, Vietnamese citizens who live abroad, foreigners holding a visa, and foreign legal entities can purchase property in Vietnam, in much the same way as Vietnamese citizens.
Foreigners can now buy property in Vietnam. But ownership of this property is limited to 50 years, renewable once.
What kinds of properties can I acquire as a foreign investor in Vietnam?
The law on land ownership in Vietnam is valid for all types of property. A foreigner can purchase an apartment, house, villa.
However foreign individuals and foreign entities cannot hold more than 30% of the shares of a single building or more than 250 properties in the same district. The law on land ownership in Vietnam has therefore changed the opportunities for foreigners considerably, since previously a foreigner could not buy property in Vietnam.
Is there a difference between a foreign owner and a Vietnamese?
By law, all land in Vietnam belongs to the people who entrust its management to the state. So, private property does not really exist, and thus real estate is really only a right to use a property, belonging to the State, for a limited period.
The main distinction that persists between foreign owner and Vietnamese is the duration of the land use right. Indeed, although it is no longer necessary to have a work permit or to be married to a Vietnamese citizen to have the right to buy property, for a foreigner, the duration of property ownership is limited to 50 years whereas Vietnamese can generally expect to have an expiring property use certificate reissued.
However, foreigners married to a Vietnamese citizen or a Viet Kieu may own property almost indefinitely. Nevertheless, the law now provides the option to renew the deed for 50 more years by submitting an application to the People’s Committee of the province where the property is located.
How can we get assistance with real estate investment in Vietnam?
The first step to Vietnam property investment is doing market research and understanding your preferred real estate sector and region within Vietnam. And a great place to start is to connect with professionals in the Vietnamese property industry who can provide you with insightful feedback, ideas and introductions.
In the upcoming ‘Inside Out‘ webinar “Vietnam’s property market trends & economic conditions” that I will moderate, you can expect to hear a great deal about Vietnam property investment and how to deal with relevant legal procedures from industry insiders. The speakers will shed light on Vietnam’s situation during the COVID-19 period to support foreign investors dealing with a dynamic business, regulatory, legal and operational landscape.
If you are a foreign investor, expatriate or business partner, who is hungry for insights about Vietnamese business conditions, this is where you can hear directly from leaders across sectors!
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This interview was first posted on Vietnam Insider