Positive changes
Following positive changes effected by the Land Law in 2014, Vietnam has recently passed the new Housing Law and the Law on Real Estate Business which will come into effect from 1 July 2015.
Under the new laws, foreign developers, for the first time, would be able to acquire land practically on a “freehold” basis. Foreigners can now buy and own not only apartments but also houses in residential projects. The duration of the ownership rights for foreigners is still 50 years. However, such duration is now extendable and if married to a Vietnamese national, a foreign individual will be entitled to a permanent ownership right.
Another significant change introduced by the new laws is that foreigners can now buy properties for business purposes such as for leasing or using as their own office. The prohibition of sub-leasing by foreigners has also been lifted, allowing foreigners to lease residential houses, offices and facilities and then sub-lease them.
The legal capital required by those operating real estate businesses is, however, increased from VND6 billion (approximately USD 285,000) to VND20 billion (approximately USD 952,000). Additionally, the number of housing units to be owned by foreigners is restricted by a threshold of 30% of the condominiums in one block and 250 houses within a ward (i.e. the grassroots administrative unit in Vietnam).
From July 1st, following the changes to the law, foreigners and overseas Vietnamese need just a visa to buy and own property in Viet Nam. They can buy, lease out, gift and inherit property.
New trends
Right after the law changes, a high demand in the high-end segment is seen as a positive impact from the new law. In the second quarter, some 4,500 high-end apartments were sold in HCM city. The Ha Noi market is also picking up steam, with 30 percent of the 1,518 new apartments launched being in the luxury segment. This represents a three-fold rise from the previous quarter and is the highest level for the quarter since 2012.
Real estate experts and developers expect the revival to continue, especially after many buyers bought apartments to live in or as an investment following the amendments to the law. Buying apartments and houses has never been so simple for foreigners and overseas Vietnamese.
… and potential interests
Foreigners who have bought houses and apartments in the country uniformly believe that investment in the Vietnamese housing sector is lucrative. While prices are lower than that in neighbouring countries, returns are higher.
An example from Hong Kong real estate has shown that the investment cost in Viet Nam is lower than that in Hong Kong. The average return, however, is higher at about 7 percent. A research also showed that the housing market in Viet Nam is now stable meaning the risks are not high. That show clearly why many overseas Vietnamese and foreigners consider Viet Nam an ideal investment destination, and they all prefer the high-end segment.
