Vietnam's property market is showing signs of strong growth – and foreign spending is set to increase when overseas buyer regulations are relaxed from July, say agents.
Foreign real estate investment in Vietnam the first three months of 2015 reached US$203million, with most spent on the residential sector, according to data from the Foreign Investment Agency.
Property sales are up three-fold from January to March, says the Ministry of Construction with March sales in Hanoi up a quarter month-on-month and the real estate industry is growing, too. In Quarter 1, there were 19,000 newly-established firms with new property firms rising by half (49%).
In Ho Chi Minh City in the first three months of the year there were 5,150 apartments launched for sale in all segments, three times higher year on year, proving rising market confidence, says Duong Thuy Dung, Deputy Head of Research and Consultancy at CBRE Vietnam. In Hanoi, 4,879 new units were launched from 18 projects, up 82% year-on-year.
The most active segment for new launches is high-end property, with Hanoi launches up 60% quarter-on-quarter and 30% year-on-year.
Marc Townsend, Managing Director of CBRE Vietnam, says, "After many years of frozen realty market, people are starting to witness the strong return of property projects with larger scale and more complicated planning."
Around 800 overseas Vietnamese and foreigners own houses in Vietnam, says the Ministry of Natural Resources and Environment.
From 1 July, long-awaited legislative changes begin that allow foreigners with a valid visa, as well as overseas companies and international bodies in Vietnam, to own houses and apartments.
Foreigners can own up to 30% in any apartment building, or 250 houses per ward in the country, according to the amendment to the housing low, passed last November.
In Hanoi, by the end of 2015, 22 projects with approximately 14,000 units are expected to come online, says leading global agent, Savills. "According to the revised Housing Law, foreigners can purchase up to 30% of apartments in a project. The introduction of this law is expected to increase demand in the apartment market. Sales are expected to remain at a high level in 2015."
Neil MacGregor, Managing Director of Savills in Vietnam says, "This highly anticipated and long discussed amendment has had support from all levels of the government and throughout the Vietnamese property industry.
"Once adopted in July 2015, it will allow foreigners to lease and own a maximum of 30% of an apartment building or up to a maximum of 250 villas or townhouses. This effectively provides a registered 50-year leasehold title and gives foreigners the same rights as Vietnamese as they can now sub lease, mortgage, trade and inherit.
"Foreigners will have a more enforceable and 'useable' title now being able to; sub lease, mortgage, trade and inherit, thereby opening up a far deeper domestic purchaser pool. This will add greater liquidity to the residential market that is now showing signs of a modest recovery across the nation."
The residential housing market is effectively the 'engine room' of the economy. It provides a large store of the nation's wealth and drives labour markets and consumption, says Savills.
"Through monetary policy acting on interest rates the government can directly influence the economy. In turn foreign investment is important as it enables greater supply to be bought on to satisfy the increased foreign demand."
Importantly, the changes help the Vietnamese property market become more competitive within the region, he says.
The changes in the law also means that 'Golden Visas' property-for-residency investment options may be created in Vietnam, Savills believes.
"The 'valid entry' opens the potential for 'golden visas' that allow forms of permanent residency in return for minimum level of investment in residential property.
"Within the 'golden visa' framework there are usually other regulations that assist supply, such as; only new product can be purchased, resale within a stipulated period is prevented and domestic purchasers must have equal opportunity."
Source: http://www.opp.today
Key words: Vietnam, law, change, foreign property, investment
