Vietnam-sapa

Vietnam’s real estate market, like that in many industrializing nations, is closed to foreign investment. However, that is all set to change for residential properties on July 1st thanks to a new law passed on November 25th last year.

What is going to be allowed?

The law will permit Vietnamese branches and representative offices of overseas companies to own 50-year leaseholds on dwellings. Foreign entrepreneurs and employees in the country on visas may do the same, as can foreign banks and investment funds.

Foreign owners of residential units may now do more with their properties too: the dwellings may be leased out, leveraged and inherited, whereas the current rules allow only a single unit for the owner to use it as his or her primary residence. The types of residences available for foreigners has now been expanded to include houses as well as condominium units.

Are there limits?

Yes:

  • Freeholds are available only to foreigners married to Vietnamese nationals – all others are restricted to renewable 50-year leaseholds;
  • Foreign owners may not own more than 30% of an apartment complex;
  • There is a cap of 250 landed units (houses, villas, etc.) with foreign ownership per administrative area;
  • Commercial real estate such as office buildings and warehouses remains available only to local Vietnamese owners.

What will this mean for entrepreneurs in Vietnam?

The new rules allow foreign entrepreneurs to reinvest their profits more easily in the market that their businesses are helping to grow. This increase in potential exposure to the nation’s high growth can help to multiply their wealth, and being able to buy holiday homes opens up opportunities to cash in on the booming Vietnamese tourist trade.

The limits on foreign ownership should help to keep prices within the means of Vietnamese while increasing market liquidity and development incentives. The broadening of permitted activities with owned property is also expected to improve Vietnam’s letting market.

How does this compare to other south-east Asian countries?

Despite Vietnam loosening its control on the property market, many other nations in the region have more relaxed rules related to foreign real estate ownership. Thailand is the most similar with its geographic caps on foreign investment, but those rules permit a leasehold term of up to 90 years.

Malaysia, Singapore and Indonesia allow freehold purchases, while the Philippines allows ownership of condominium developments capped at 40%. We will view the relaxation of rules in Vietnam with interest and expect to see further deregulation in the future.

Learn more:

Photo Credit: JAY ZHANG CC BY-NC-SA 4.0