Vietnam’s real estate market is relatively new to foreign investment. It was only in 2015 that the Vietnamese authorities officially allowed foreign developers and investors to build and buy real estate in this country.
Features of the real estate market in Vietnam
The pandemic period, global economic changes and Vietnam’s complex regulatory framework have delayed the period of popularity of the real estate market among foreign investors. In 2024, investments in residential and commercial facilities are just beginning to gain momentum.
At the same time, Vietnam’s tourism potential is one of the highest in Southeast Asia. In 2023, 12.6 million tourists visited the country, which is 4 times more than in 2022.
Vietnam is popular with tourists from Asian countries: China, South Korea, Japan, and from Western countries, especially France, Russia, the United States, Great Britain and Canada. The coastline of the country covers more than 3,000 km, which provides an excellent opportunity for the construction of resort condominiums, rental apartment complexes and villas. Today at Vietnam has every chance to repeat Thailand’s success in attracting foreign investment into the country’s real estate market.
Among the main features of the real estate market in Vietnam are the following:
- The country’s dynamically developing economy. Annual GDP growth is at the level of 6%.
- The growth in the value of real estate at the level of 10-16% per year.
- There is a high demand for residential and commercial real estate among the local population.
- There is a shortage of real estate supply from developers on the market and an increase in mortgage rates.
- Special forms of real estate ownership for foreign investors.
- Low cost per square meter (business class apartments from $2500-3000 per sq. m. meter).
Changes in legislation for foreigners
Since 1997, Vietnam has been officially open to international tourism, and since 2015, foreigners can purchase residential and commercial real estate in this country. However, there are still several basic rules on the basis of which developers can sell housing to foreign citizens:
- The land of Vietnam is a national treasure and belongs to the State;
- the developer does not purchase the land forever, but for 50 years with the possibility of extension;
- The land is acquired by the developer for a specific purpose: a residence, tourist apartments or a hotel.
Residences
It is assumed that there are schools and a hospital in the area of development, as well as a low workload of public infrastructure facilities. The residences are sold under the investor’s own residence, the transaction must officially pass through a notary. The developer has the right to sell no more than 30% of the apartments of the residences to foreign citizens.
Tourist apartments
Intended purpose of use: for doing business. The transaction takes place directly with the developer. You can live in the apartment on your own or rent it out, but it is forbidden to register a legal address for the apartment. Apartments are usually accompanied by security and a concierge, as well as a number of social rules that must be followed.
Hotel
It is supposed to rent rooms using The criminal code of a developer with a guaranteed income. The investor has the right to stay at the hotel for 15 days a year.
Dynamics of the real estate market after the crisis
In 2019-2021, Vietnam experienced a severe downturn in the real estate market. Many developers turned to the Vietnamese bond market, which led to a jump in the issuance of securities, most of which were related to the real estate market. This has led to fraud and manipulation in the stock market, as well as an increase in interest rates.
In 2022, Chin Van Kueta, chairman of the FLC development company, and Truong Mi Lan, head of the Van Thinh Phat construction company, were arrested and the corporate bond market was reformed:
- Investors must now be certified as “professional investors”.
- Credit ratings have become mandatory for the issuance of securities.
- Raising funds through bonds is possible only for a specific project and for debt restructuring.
All this has prepared the most favorable situation for foreign investment in the real estate market of Vietnam:
- local developers are interested in international partners and are ready to offer significant discounts to investors;
- local and foreign investors are interested in reliable international developers with a well-known name.
How much does real estate cost in Vietnam
The cost of real estate in Vietnam directly depends on:
- the location of the object;
- the surrounding infrastructure;
- proximity to the international airport;
- proximity to the beach line;
- view from the apartment window;
- a type of real estate.
Real estate with terraces facing the sea and the beach can be several times more expensive than the same apartments with a view in the opposite direction.
Prices for studios and apartments start from 70 thousand dollars, the cost of sq. m. The meter starts at $2,000. Small 2-bedroom apartments with panoramic terraces and within walking distance from the sea will cost 150-400 thousand dollars. The cost of an individual villa with a swimming pool and a private beach on the seashore starts from 750 thousand dollars.
Further prospects of the real estate market in Vietnam
According to research by CBRE, a leader in commercial real estate services and investments, Vietnam’s real estate market today ranks second among emerging destinations in Southeast Asia. The research highlights the potential of the Vietnamese economy and prospects for foreign investment.
Recently, the Fitch Ratings rating agency increased Vietnam’s credit rating from BB- before BB. In 2024, an influx of foreign investments in the real estate sector is expected, an increase in the total building area and the number of proposals from developers. It is expected that prices for already built housing will continue to rise.
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