Live Chat by LivePerson

The Vietnam property market received an explosion of interest and activity in during 2007 due to the newly introduced laws liberalizing the guidelines for investment from foreign developers. However, in April 2008, after a stock market crash and a tightening of bank credit, the number of transactions in the Vietnam property market reduced by 30-40% compared to 2007. The following will help you determine whether the Vietnam property market should be part of your investment strategy:

Vietnam has undergone a period of growth with six consecutive years of GDP growth averaging at 8% per annum. BMI revised real GDP growth from 4.5% to 5.1% for 2009. GDP is expected to grow by 5.9% in 2010. Despite this, both the EIU and the International Monetary Fund (IMF) have similar forecasts for GDP growth, ranging from 2.0-5.9% over the following 4 years.

The issue of inflation is a focal point for the Vietnam Government. This key economic indicator had been in the double digits for seven consecutive months during 07/08 - reaching 25% in May 2008. Inflation can impact the property market as consumer buying power can be reduced due to a combination of increased cost of borrowing and rising living expenses such as food and fuel. Consumer prices rose 2.4% in September 2009 compared to following year. Inflation is expected to incline in 2010 due to stimulus impacts and possible rise in commodity prices; inflation is forecasted to be approximately 8.5% in 2010. Despite the inflation rate slowing down recently, Vietnam's General Statistics Office indicates the cost of housing and construction materials rose by close to 22%, compared to November 2007.

The prices for the residential segment of Vietnam property market are lower than the peak reached in early February, around the Vietnam New Year (Tet holiday). Due to the current global economic environment, buyer sentiment is negative. Approximately one hundred and ten condominium projects are currently in different stages of development with more than 60% of these in the mid-end range. The luxury end of the market has just eight condo's in development, all of which are by foreign developers.

For the commercial segment of the Vietnam property market, Hanoi office space vacancy rates are low, but take up of new supply has slowed. In the retail sector, there is shortage of quality retail space, especially in the CBD where shopping centres are fully occupied.

Foreigners are permitted to invest in the Vietnam property market. Foreigners residing in Vietnam can purchase a house but the land it sits on is leased from the government as foreigners are not able to own land in Vietnam. An international investor can also purchase Vietnamese property in the following three ways:

The Vietnam property market will see a new law come into effect on 1 January 2009. The new legislation (circular 13) will make it easier for foreign individuals living in Vietnam to buy property provided certain conditions are met. These conditions include: i) the individual already invests directly in Vietnam ii) the individual is married to a Vietnamese citizen iii) via a company. The purchases will be permitted only in approved developments with a 50-year lease, and the property owner must reside in the property, thereby making it unattractive for investors based outside Vietnam.

US$21 billion of foreign direct investment (FDI) was put into the the Vietnam property market during the first seven months 2008. This was 48% of the total newly-registered capital, according to the Ministry of Planning and Investment (MPI). Of this total investment, US$13 billion was for building luxury urban areas and buildings for office lease. One of the biggest projects is by the Canadian Asian Coastal Development Ltd. The Ho Tram Strip resort in southern coastal Ba Ria-Vung Tau province is a US$4 billion project.

Several highly influential factors have been improving in the Real Estate industry, namely, legal framework and greater transparency through a more mature foreign investment environment in the future which will assist the growth of Vietnamese real estate.

Healy Consultants independently assists international property investors efficiently manage all aspects related to buying Vietnam property or selling Vietnam property. Our firm draws on the latest market information to advise clients on Vietnam economic factors, current market sentiment, changes to legislation related to foreign investment and how it impacts on investing in the Vietnam property market.

Transactions in the Vietnam property market require payment of taxes. These taxes include rental income tax, business income tax, capital gains tax, withholding tax and transfer tax. Healy Consultants provides comprehensive accounting and taxation advice to investors regarding the taxation requirements associated with investing in the Vietnam property market.

Vietnam has some strong market fundamentals including a predominantly young population, growing middle class, rising in-flow of expatriates and rapid urbanization. With effect from January 2009, foreign individuals in Vietnam are allowed to own apartments which will add potential buyers to domestic demand.

For further information on Vietnam property market, please contact us at our Singapore office at (+65) 67350120 or email us at email@healyconsultants.com

Back to Home page.