1. Unstable currency
Vietnam Dong (VND) is the most unstable currency in the region right now due to the inflation rate of 5% (2017, World Bank). Saving VND in the bank isn’t the answer. With the current world economic and politic, people are losing their trust on currency and always looking for a place to keep their money safe.
With the high gold price, people now have trust in “digital money” like bitcoin or any other cryptocurrencies. But as we all know, their price is going crazy nowadays. 1 bitcoin worths nearly USD 10,000 at the time of this article, much more than 1 tale of real gold. Crypto now are rarely used for purchasing products but to trade only. The consequence is the cryptocurrency bubble.
Real estate, on the other hand, have “real” value. That’s why most Vietnamese keep their fortune by investing in dwellings.
2. Stable real estate market growth rate
In 2017, Vietnam reach the GDP growth rate of 6.8%, increased by 0.6% from last year. The increasing demand of property in all categories include residential developments, office, serviced apartment or hotel creates incentive for developers keep investing Vietnam real estate market.
In the apartment segment, sales was over 15.100 units in 4th Quarter, an increase of 32% QoQ and 44% YoY. A decrease in new supply for this segment is sign for balancing the market to fit with current demand, which is beneficial for investors of these apartment building. However, from 2018 to 2019, supply is expected in to be 68.000 units with 65 projects in Ho Chi Minh City (Savills Research), 45% of that is from District 2, creating huge investment opportunities for investors.
The highlight is on grade B and C apartment buildings, with relative cheap price from 20 to 40 mil VND per sqm, affordable for most investors, but have a high absorption rate (in comparison to grade A apartment). Real Estate investing in Vietnam now is not promised crazy return, but if you want a stable rate, it is an optimal solution.
3. Own a nice house with cheap price
District 2 and District 4 are two spotlights in Ho Chi Minh real estate market, tens of thousands new supply every year due to its relative close distance to the CBD. Investing in these location is not only beneficial to investors as a resident but also as a landlord, which create high yield of more than 8% a year.
These high-end to luxury apartment processes prime location, with abundant amenities such as gym, swimming pool, tennis court, etc. Below are some example of featured project. With only USD 1000 – 2000/ sqm for a high-end apartment building, the price is far more cheaper than Singapore or Japan.
Masteri Thao Dien apartment in District 2
Vinhomes Central Park apartment in Binh Thanh District
The GoldView apartment in District 4
4. Can foreigners invest in Vietnam real estate?
Applied from 01/07/2015, the Housing Law have several changes, which beneficial for expats who want to own a property in Vietnam
– Foreign individuals are allowed to enter Vietnam and are not entitled to diplomatic or consular privileges and immunities.
– Foreign-invested enterprises, branches, representative offices of foreign enterprises, foreign investment funds and foreign bank branches operating in Vietnam.
Type of housing: Apartment + Private house (Villa and townhouse) for commercial housing projects.
– Individuals: Having valid passports with the entry stamp of the entry and exit management agency of Vietnam.
– Organization: A valid Certificate of investment in Vietnam.
c) Number of dwellings owned
– Apartment: The total number of foreign individuals/organizations does not exceed 30% of an apartment building.
– Individuals: not more than 10% or 250 houses of a housing project.
d) Home ownership term
– Individuals: 50 years maximum + extension of the next 50 years.
– Foreign individuals married to Vietnamese citizens or overseas Vietnamese: long-term ownership.
– Organization: not exceeding the term of the investment certificate (Investment Certificate) + extension if the investment certificate is extended.
– Foreign individuals: permitted to sublease.
– Foreign organizations: not allowed.
5. Choose the right option
As mentioned above, there are 2 types of property that a foreigner can buy is apartment and private house from commercial housing project. There is a phenomenal that developer selling houses before the project completed. However, due to shortage in capital, many investor failed finish the project, making the investors lose their money. At MODOHO, we are working only with well-known and trusted developers and we recommend that expats should buy from them. Some example for your reference such as Keppel Land, Capital Land, Fraser, Novaland, Dat Xanh, etc.
Q2 Thao Dien apartment in District 2
Gem Riverside apartment in District 2
Charmington Iris apartment in District 4
Masteri Millennium apartment in District 4
6. Dealing with law
Vietnam doesn’t have common law like most Western countries, instead the government apply civil law. There is no law of contract, housing law in Vietnam is still on developing, which create huge restraint for foreigners living in Vietnam who want to invest in property. A person who live in Vietnam for a long time or Vietnamese can really understand how law works here. The process of transfer here in Vietnam is quite risky, however, there are still solutions.
The increasing demand for expats in living and number of arrival enhance this niche market. Real estate companies now train their employees to be expert in housing law and helpful to foreigners to understand their needs and concerns. At MODOHO, we have experienced management team with strong understanding of the market and our target customers, which are foreigners. We can offer you excellent service, in which you will fully clear about legal issue and options where should you invest your money in.
This article is summarized by Modoho – a trusted agency in Ho Chi Minh city. If you need any help from a local expertise with free searching services (only landlord have to pay) feel free to contact us. Here is some listing for you:
- Masteri Thao Dien for rent.
- Vinhomes Central Park for rent.
- Estella Heights for rent.
- Apartment for rent in District 2 (Thao Dien).