Following legal changes, foreigners will be allowed limited ownership of real estate in Vietnam from next July, but it may be some time before the market benefits, say experts
From next summer, foreigners will be allowed limited ownership of property in Vietnam, following changes in the law.
Vietnam has approved legislation, which comes into effect on 1 July 2015, allowing foreigners to own up to 30% in any apartment building, or 250 houses per ward in the country.
The law will allow foreigners with a valid visa and foreign companies and international organisations operating in Vietnam, to own houses and apartments. Previously, only foreigners married to Vietnamese nationals and those making contributions to the country were allowed to purchase property,
With the ASEAN Economic Community (AEC 2015) coming into force a year from now, it is hoped the move will bring about more foreign ownership law changes in the region, writes Andrew Batt, International Group Editor of PropertyGuru Group.
Among those who have been unable to buy real estate so far is Troy Griffiths, Deputy Executive Director of Savills Vietnam, who comes from Australia.
Even though he has lived in Vietnam for more than four years, Mr Griffiths has had to rent a house in Thao Dien ward, HCM City’s District 2 paying more than US$1,000 a month because he had not met the requirements for a foreigner to buy a property in Vietnam.
Le Hoang Chau, Chairman of the HCM City Real Estate Association (HoREA), says Vietnam needs to provide the best possible conditions for foreigners to buy property.
Although the new law is expected to lift demand for homes, the impact of the changes may not be felt in the market for some time.
“We don’t expect a huge boost for sales as Vietnam isn’t yet an attractive destination for foreign home buyers,” he says.
Vietnam’s National Assembly passed the amended Housing Law that includes the regulations on foreign ownership of properties in Vietnam.
The move follows a pilot project allowing foreigners buy property, which has seen only 126 out of 80,000 qualifying to purchase houses, mostly in Ho Chi Minh City and southern provinces, in the last five years.
CBRE Vietnam notes that all foreigners granted a visa to Vietnam will be allowed to buy residential properties, including condominiums villas and townhouses.
Properties owned by foreigners can be sub-leased, traded, inherited and collateralised, where previously the owner could only use the property occupying purposes.
CBRE Vietnam says, “The relaxation of foreign ownership restrictions is more significant than previously anticipated, and marks a strong step towards opening up the Vietnam real estate market to overseas investment.
“There are only two major restrictions imposed on foreigners, including a leasehold tenure of 50-years and a cap on the total number of units owned collectively by foreigners in one single condominium project or one administrative (or the equivalent of) ward.
“In addition, there is also no cap on the sizes of dwelling units or number of units a foreigner can buy, or additional tax.
“This recently passed Law makes the market more attractive to Vietnam-based expats seeking an investment in residential properties in Vietnam, and clears away the initial barriers to create a level playing field.”
Consumer confidence in Viet Nam gained further momentum in the third quarter, increasing by four points from Quarter 2 according to The Nielsen Global Survey of Consumer Confidence and
Spending Intentions reveals that for the first time since 2012 consumer confidence levels in Viet Nam exceeded 100 points to stand at 102 while globally consumer confidence remained steady at 98 points.
The survey, conducted from August–September, shows that while a majority of consumers across Southeast Asia have a positive outlook for the future, the economy and job security remain the top concerns.
It also indicates that five Southeast Asian markets — Vietnam, Thailand, Philippines, Malaysia, and Indonesia — rank in the top 10 globally in changing their spending habits to reduce household expenses.
The image of Vietnam is taken by Vanessa Fitzgerald.
By Adrian Bishop, Editor, OPP Connect