Foreigners buying apartments in Vietnam await price rises to profit

By Anh Tu   March 16, 2024 | 11:00 pm PT
Foreigners buying apartments in Vietnam await price rises to profit
Property projects in HCMC's Thu Duc City, February 2024. Photo by VnExpress/Quynh Tran
A majority of foreigners purchasing apartments in Vietnam, particularly in Hanoi and Ho Chi Minh City, are doing so with the anticipation of price increases, and only a few are renting out their properties, according to CBRE.

In its "Two Decades of Vietnam's Urban Development" report issued on March 8, CBRE Vietnam said 2015 saw the introduction of a new law permitting foreigners to purchase residential apartments, helping to diversify the buyer landscape.

The report cited data from Vietnam’s Ministry of Construction showing that 3,000 foreign buyers were recorded in Vietnam from 2015 to the third quarter of last year.

According to the report, 90% of them are condominium buyers and 75% came from Asian markets, including China, Hong Kong, South Korea, Taiwan, Singapore.

CBRE said "buying and holding for capital appreciation remains the most popular strategy for foreigners purchasing residential real estate in Vietnam. Some buyers may opt to let properties as a temporary options while they wait for sales prices to climb."

Starting in 2015, the government began removing barriers to foreigners' acquisition of real estate.

The Housing Law 2014, which came into effect in 2015, permitted any foreigner allowed to enter Vietnam to purchase residential properties in the country.

While there remains no limit on the number of individual units a foreigner can buy in Vietnam, there is a cap on the percentage of foreign ownership in an individual project. This is set at a maximum of 30% per residential building or no more than 250 landed properties in an administrative unit.

Leasehold tenures are set at 50 years and are extendable subject to applicable law but cannot exceed an additional 49 years or be converted to freehold tenure should the foreign owner have a Vietnamese spouse.

Following the easing of foreign property ownership laws, investors from certain regions have become predominant in Vietnam's housing market. This surge is attributed to several factors: geographical closeness to Vietnam, the established presence of major real estate developers from these areas within Vietnam, and the promising outlook for property value escalation in Vietnam compared to their domestic markets, which have previously seen significant price surges.

CBRE report said very few non-Vietnamese, mainly long-term residents, purchase residential real estate for self-use.

In terms of product type, foreign buyers have displayed strong demand for condominiums, especially units in high-end developments in big cities such as HCMC and Hanoi. Well-located and affordable condominiums with potential for strong price growth have also been the subject of interest from foreign investors, it said.

Savills also said in its Asia-Pacific Investment Quarterly report that Vietnam and its real estate market still saw growing interest from foreign investors in the fourth quarter of 2023.

It reported increasing attraction of Vietnam's real estate market to foreign investors, with rising interest from Indian, Hong Kong, and Singaporean clients.

It said many foreign investors are looking for more opportunities, focusing on the housing segment in Hanoi, HCMC and Da Nang.

These are markets with a variety of high-quality properties and attractive rental yields. Savills predicts that, when new laws are applied, information about investment opportunities will be more transparent, promoting greater FDI in real estate.

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