The Vietnam Association of Realtors (VARS) has put forward a proposal to relax the existing limits on foreign ownership in Vietnam, a move that would mark a further opening of the real estate market to foreign investment.
According to VARS, the growth of the real estate industry is hampered by a 30-percent cap on foreign investment in apartment projects, making it difficult for developers to sell premium properties in Hanoi and Ho Chi Minh City. Under the Vietnamese law, foreigners are allowed to buy property other than land as long as it does not exceed 30 percent of an apartment project or a residential quarter and it is not located in a national security area.
With Vietnam widely seen as one of the fastest-developing economies in Southeast Asia, there has been a steady rise in demand for real estate among expats, especially from South Korea, Japan as well as among the Vietnamese diaspora around the world. Now is clearly a golden period for investment in Vietnam as premium apartments in Saigon and Hanoi can be purchased for 20-30 percent less than in other big cities in the region, such as Singapore or Hong Kong.
While there is widespread concern that foreign ownership could squeeze local investors out of the market, Tran Minh Hoang, deputy director of VARS, says that these fears are mostly unfounded. According to Hoang, most Vietnamese buyers are interested in affordable real estate while foreigners typically aim to purchase more luxurious properties – which, the official data confirms, are oversupplied these days. A number of apartment projects in Hanoi and Ho Chi Minh City have already hit the 30-percent foreign ownership cap and are struggling to sell the remaining apartments to domestic investors.
The government is yet to respond to the proposal but it follows from past comments of various officials that the government is aware of some of the issues bothering the real estate industry. Deputy Prime Minister Pham Binh Minh has been quoted as saying that “hundreds of Vietnamese companies are serving as proxies for foreigners” and that “foreigners are getting married to Vietnamese spouses to own real estate.”