According to VTV , according to experts, each real estate segment of the Vietnamese market in 2024 will have its own investment highlights to attract foreign investors.
According to information from Dan Viet , according to a report by CBRE Vietnam, since 2015, the Government has begun to remove barriers for foreigners to own real estate in Vietnam. Since the home ownership policy for foreigners was relaxed, customers from Asia, including China, Hong Kong and Taiwan (China) have become major groups of investors in the Vietnamese housing market. In particular, the apartment real estate segment is popular.
Specifically, in terms of product types, CBRE said that 9 out of 10 customers are foreigners who choose to buy apartments, especially in the high-end apartment segment in Ho Chi Minh City and Hanoi . Projects with beautiful locations and suitable prices, with strong potential for price increases in the future, are also the investment preferences of many foreign investors.
Each real estate segment of the Vietnamese market in 2024 has its own investment highlights to attract foreign investors. Illustration photo from the internet
"Vietnam's residential real estate market has the potential to increase in price more strongly than other countries in the region. This is also the time when Vietnam's housing market increases in price similar to other countries before. Therefore, the reason why 60% of foreign customers buy real estate in Vietnam is for investment purposes, waiting for the price of the property to increase to make a profit. A few will rent out their apartments as a temporary solution while waiting for the selling price to increase. Not many foreigners, mainly those who plan to live long-term in Vietnam, will buy houses for their own use," said CBRE.
According to statistics from the Ministry of Construction , more than 3,000 foreigners have bought houses in Vietnam by the end of the third quarter of 2023, of which 90% bought apartment products. The majority of foreign customers come from countries such as China, Hong Kong, Taiwan, and South Korea. This is a large group of investors in the Vietnamese housing market, partly due to the geographical distance of these countries to Vietnam. In particular, foreign organizations and individuals have owned and bought houses in Vietnam, mainly concentrated in major provinces and cities such as Hanoi (1,765), Ho Chi Minh City (850), Bac Ninh (110), Binh Duong (210), Ba Ria - Vung Tau (50)...
According to current regulations, although there is no limit on the number of houses that a person can buy, the law also clearly stipulates the maximum number of foreigners allowed to own within a project, specifically at 30% of the total number of apartments for apartment projects and no more than 250 townhouses in a ward-level administrative unit.
The long-term lease term is stipulated as 50 years and can be extended according to current law but not exceeding 49 years or can be converted to long-term ownership if the foreigner marries a Vietnamese.
According to VTV , the office real estate segment also received much attention. The market witnessed increased demand from energy, manufacturing and consulting businesses, contributing to maintaining a stable occupancy rate.
Especially in big cities like Hanoi, Da Nang and Ho Chi Minh City, the office market trend opens up opportunities for foreign investors with the capacity to invest and position products that meet green standards such as LEED, WELL, BREEAM certificates...
Particularly in the Hanoi market, foreign investors have begun to expand their investment scope in developing areas of the city instead of concentrating in the central districts. This is also a move to catch up with the shifting trend of public and private administrative office groups, the development of the city's transport infrastructure and the trend of population concentration in some large urban projects surrounding the city.
In the retail sector, the entry of the "big guys" in the retail sector has demonstrated the prominence and attractiveness of the Vietnamese market. Major investors are actively seeking land funds to implement large-scale modern commercial real estate projects, focusing on the consumer experience.
Typically, in early February 2024, the retail real estate "tycoon" Central Pattana - a member of Thailand's leading retail group Central Group - was preparing to establish a legal entity in Vietnam to enter this vibrant retail market.
Or before that, THISO (a member group of THACO) after opening the 3rd Emart supermarket in Ho Chi Minh City showed its strategy to expand the 4th supermarket in the North by acquiring a 2.4-hectare land fund in Tay Ho Tay Urban Area.
The hotel market segment also shows signs of recovery. According to Savills Vietnam Market Report, hotel occupancy and rental rates in Hanoi and Ho Chi Minh City both recorded increases. Specifically, occupancy in Hanoi increased by 21% year-on-year with average nightly rental rates increasing by 28% year-on-year.
Similarly, hotel occupancy in Ho Chi Minh City increased by 18% year-on-year with the 5-star segment showing the strongest improvement, reaching 61%, and the average room rate increased by 14% year-on-year, reaching VND2.9 million/room/night.
The hotel segment’s performance has been continuously improving, many foreign investors highly appreciate the recovery potential of this segment and believe in the development potential of the hotel market in Vietnam. Many foreign investors believe that this is also the right time to enter the market.
With advantages from macro factors and attractiveness in most real estate segments, Vietnam is becoming a promising investment destination for foreign cash flow and investors. Especially when foreign investors are increasingly open to investment forms than before.
Expectations from Vietnamese investors
According to Saigon Economics, the 2024 Land Law has an important new point that overseas Vietnamese (people residing abroad, without Vietnamese nationality) can buy houses in the country more conveniently, and enjoy full rights to land and housing like domestic citizens and Vietnamese people residing abroad.
Specifically, Article 4 of the 2024 Land Law stipulates that land users are supplemented with a group of Vietnamese origin residing abroad but without Vietnamese nationality. This group will enjoy full rights to land and housing like domestic citizens and Vietnamese residing abroad (people who still have Vietnamese nationality).
Article 28 of this Law specifically stipulates that overseas Vietnamese who are permitted to enter Vietnam are allowed to buy or rent houses attached to land use rights, receive land use rights in housing development projects; inherit land use rights and other types of land on the same plot of land with houses.
Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam, said that this change will bring more investment opportunities for overseas Vietnamese real estate buyers. According to statistics from the State Committee for Overseas Vietnamese, the amount of remittances to Vietnam from 1993 (the first year of remittance statistics) to the end of 2022 reached over 190 billion USD, almost equal to the amount of FDI disbursed in the same period. In 2022 alone, the record remittance source of 19 billion USD has put Vietnam in the group of 10 countries receiving the largest remittances from abroad.
The demand for remittances in the real estate sector has been recognized. According to statistics from 2016 by the Central Institute for Economic Management, about 15-20% of that amount is invested directly in real estate. If we do a quick calculation, this figure alone can amount to about 10,000 apartments per year.
“The change in regulations creates great potential for the market thanks to direct investment capital from overseas Vietnamese. In the past, overseas Vietnamese who wanted to invest back in Vietnam had to go through relatives or family members, which led to some unnecessary disputes. The new law will solve this problem, creating more favorable conditions for investment and minimizing the possibility of risks between parties in the investment process,” said Mr. Troy Griffiths.
An expert said that the housing supply in Vietnam is focusing on the high-priced segment, accounting for a large proportion of high-end and luxury apartments. If real estate opens its doors to overseas Vietnamese, these segments will be strongly stimulated, solving the problem of supply exceeding demand. Along with other comprehensive solutions, the real estate market will soon balance the supply between product lines, narrowing the distance to the recovery cycle.
Dao Vu (T/h)
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