Many people contact me and ask for investment advice in Asia.
Not rarely, they’re interested in countries like Indonesia and Korea. Sure, Indonesia may have potentials over the long run, but ownership regulations are still not favorable to foreigners.
Korea doesn’t grow as much compared to many other countries in the region unless you plan to stay there for personal reasons, I’d look elsewhere.
One country that is currently one of the most interesting for property investments in Asia is undoubtedly Vietnam. I see a lot of potentials in Vietnam, even in the long run.
In this article, I present 9 reasons why Vietnam’s property market is becoming increasingly interesting.
1. Eased Foreign Ownership Regulations since 2015
District 1 in Ho Chi Minh City, a quickly developing area
Before 2015, it was difficult for foreigners to buy and profit from Vietnam’s real estate market. You were only allowed to own one condo unit, for self dwelling purposes.
However, with the new Law on Residential Housing (LRH) introduced in 2015, it’s become remarkably easier to buy property in Vietnam. Prior to that, people were eagerly standing on the sidelines, waiting for the market to open up.
Nowadays, you can buy property by simply having a tourist visa, and buy as many condo units as you want, as long as the number of units in a building is 70% owned by Vietnamese citizens.
You can rent out your units, with great yields, and you don’t need to be a resident in Vietnam to own property.
You’re also allowed to buy landed houses, and to lease the land up to 50 years, even if the government considers increasing the term to 99 years. There are many incentives that Vietnam is going in the right direction, easing foreign ownership regulations even more.
Below you can find the changes summarizes since 2015 and the introduction of the New Vietnam Housing Law:
- Foreigners subject to certain criteria and that have worked in Vietnam for > 1 year could buy property
- Foreigners could buy 1 condo (landed property, like houses, not allowed)
- Up to 50 years (leasehold with renewal possible upon expiration)
- No-sublease or rentals allowed for foreign owners
- Foreigners who are allowed to enter Vietnam can buy property
- Foreigners can buy 30% of the units in a condominium building and 10% of the houses in a single project
- 50 years lease with a possibility for renewal
- Foreigners can lease, mortgage, contribute as capital, bequest, exchange, and more, according to regulations
2. Vietnam’s Rapidly Growing Economy
Currently: Areas like Thu Thiem in Ho Chi Minh City are predicted to become new hubs, and skyscrapers will pop up like mushrooms within a near future
Vietnam’s economy, and especially Ho Chi Minh City’s, is one of the fastest-growing in the world, averaging at 6% – 7%.
More and more foreign corporations are turning their eyes to Vietnam, especially as manufacturing becomes more expensive in China.
Not only the top cities but also ‘smaller’ cities like Bien Hoa will gain from increased manufacturing and see an increased demand for real estate.
PWC’s Emerging Trends in Real Estate Asia Pacific also survey shows that Ho Chi Minh City is one of the best places to be right now.
3. Much Infrastructural Investment Planned
There are much infrastructural investment planned, above you can see the new Metro being built in Ho Chi Minh City, planned to be finished in the coming years. Unfortunately, the project has been postponed.
Things move fast in Vietnam, cities like Ho Chi Minh City are quickly developing and merging with other cities. If you ever visit Vietnam, you’ll see that there is much investment planned in residential projects, schools, hospitals, roads, and more.
District 2, 7, and 9 in Ho Chi Minh City are just a few examples of areas you should have a glimpse at.
At the same time, Hanoi will have its first Metro ready in the near future. This will inevitably have a positive impact on the real estate market.
Buying property where future infrastructure is planned (along the Metro lines, for example) can result in great yields and capital appreciations.
4. Vietnam’s Favorable Demographics
Vietnam is quickly urbanizing and the middle class is predicted to grow much
Vietnam is one of a few countries where the population will increase, from around 95 million to 120 million people until 2040.
Along with a growing middle class, urbanization, and 50% of the population being under 30 years old, there will naturally be a demand for more real estate, especially in the bigger cities like Ho Chi Minh City, Hanoi, and Da Nang.
5. High Yields
This 2 bedroom apartment, in Thao Dien (District 2), was bought for around USD 100,000 a couple of years ago, the tenant pays USD 800 a month. That equals to a rental yield of almost 10%
Vietnam is famous for having some of the best yields in the region, not rarely stretching between 6% – 8%.
Some developers even offer guaranteed incomes as high as 8% – 12% for condo-hotels and villas in places like Da Nang.
Just making a comparison, in Singapore investors normally experience yields of below 3%.
6. Booming Tourism
Vung Tau is located 1-2 hours away from Ho Chi Minh City and a popular weekend retreat
In comparison with Thailand, Vietnam’s tourism market is fairly new and not as mature. Having that said, more and more travelers choose Vietnam when going on a vacation.
Vietnam is still comparatively cheap, has great food, golf courses and an astonishing shoreline that’s 300 km long. The tourism increases steadily and beats previous years, time after time.
Popular places include Hoi An, Da Nang, Nha Trang, Ha Long, Phu Quoc, Phan Thiet, and more.
Even Cristiano Ronaldo has decided to buy property in Da Nang, for vacation purposes.
7. Vietnam Property is Comparatively Cheap
Even if property prices have increased in places like Ho Chi Minh City in the past years, the average prices are still well below those in places like Bangkok, Shanghai, Singapore, and Hong Kong.
For example, luxury property can be bought for as little as USD 3,000 – 6,000 per square meter while you have to pay USD 7,000 – 9,000 in Bangkok.
Prices have increased with double digits year-on-year and the city will further expand with the new MTR, opening up for even more investment opportunities.
8. New Free Trade Agreements
Vietnam signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that came in to effect in 2019. It’s a free trade agreement between the nation and Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore.
Besides, on February 12th, 2020, the EU ratified the EVFTA and the EVIPA agreements between Vietnam and the EU. The FTA will now need to be ratified by the Vietnam National Assembly. Thanks to the EVFTA, almost 99% of customs duties between the EU and Vietnam will be removed.
Cambodia, on the other hand, didn’t manage to get such a deal with the EU.
9. Investment Options
Vietnam has plenty of cities and islands where foreign investors seek to buy a property. Ho Chi Minh City, the financial center and the biggest city is undoubtedly the most popular option. That said, investors also target cities such as Hanoi, Da Nang, and Nha Trang.
Resort islands like Phu Quoc also receive increasingly more popular investors, something that will continue in the coming years most likely.
As Ho Chi Minh City will merge with surrounding manufacturing hubs like Dong Nai and Bien Hoa, we will also see more investment in other not so well-known cities.
Is Vietnam good for investment?
Vietnam is one of the fastest-growing countries in Asia and has recently signed various free trade agreements, including the EVFTA with the EU. Besides, it has preferable demographics, booming tourism, rapid urbanization, and is one of the most interesting countries for property investments.
Can foreigners buy real estate in Vietnam?
Yes, foreigners have no particular issues to buy condominiums and landed property (not the land) as long as you’re allowed to enter Vietnam. With that said, freehold property is not available but only leasehold property.
Can foreigners buy stocks in Vietnam?
Yes, foreigners have no issues to buy stocks in Vietnam since the market opened up in 2015. You only have to visit Vietnam to open a local bank account.