Vietnam has exponentially grown over the past decade, with an average of more than seven percent annual GDP growth in the 90s. The country is currently one of Asia’s most promising markets as it opens its doors to foreign investors. With its continuous economic rise, Vietnam’s real estate industry is unquestionably among the best places to put your money into.
Foreign buyers seek for new investment opportunities, as their domestic markets have become overly priced or stagnated. Vietnam has welcomed with open arms everyone, from tourists, expats and hungry investors to take advantage of the country’s booming economy. Because of the interest shown by foreign investors, the Vietnamese government has adjusted the rules of property ownership for forein entities.
Any individual with residence visa or a three-month tourist visa can now own a land on a 50-year, renewable lease. The government even put fewer restrictions to anyone buying a property. However, it is not quite as easy as it sounds, and there are also other rules, which will be further discussed below) you will need to keep in mind.
Can Foreigners Own a Property in Vietnam?
Just a few foreigners have invested in real estate properties in Saigon in the past, primarily because of Vietnam’s strict and unfavorable property regulations for foreign investors.
In July of 2015, however, the government introduced the Law on Residential Housing (LRH), making it remarkably easier for expats and foreign investors to buy and possess properties in Vietnam.
Previously, a foreigner can only own a maximum of one condo unit. When LRH was ratified, there have been significant changes in foreign ownership of properties, which includes the following key regulations:
- A foreigner can buy and own properties (yes, “properties” in plural form) by only having a tourist visa
- There is no maximum capacity of properties a foreigner can buy
- Foreigners cannot buy his own land, just like in any other Southeast Asians country. The land is owned by the people of Vietnam, but governed by the state
- Foreigners can buy no more than 250 houses or units in a given area or district in Vietnam
- Foreigners can only buy a maximum of 30 percent of the unit in condo buildings and can own a maximum of 10 percent of the properties in a landed project (e.g. detached houses, terraced houses, strata-landed houses, semi-detached houses).
Leasehold and Freehold of Land
Since foreigners can’t own land in the country, you will need to lease land in a period of 50 to 70 years. However, as of the writing of this article, the Vietnamese government is considering to extend leasehold period of land to 99 years.
Although the regulations are getting more favorable to foreign investors, and will likely to loosen up even more through the years you still need to be careful. You cannot guarantee that you will be able to renew a land’s leasehold period.
Ho Chi Minh’s Real Estate Market
While foreigners buy properties in neighboring countries for vacation purposes, in Saigon, investors and expats buy properties to seek price appreciation and find a cheaper alternative to high priced residential housing in their home countries.
Moreover, many international companies send their people as expats in Saigon to help them establish their business in the country and take advantage of low manufacturing costs. Since these expats will stay in Vietnam for long periods of time, they contribute to increased demand of property rental in Ho Chi Minh City.
It is not necessary for you to be a Vietnamese resident or someone who masters the ins and outs of the market to rent out your property. You can set your property for lease on your own or find a property management company to manage your property rental in Vietnam.
Rental Yields in Saigon
Expect great yields of rental, with rates that can stretch up to eight percent every year. This rate is higher compared to nearby countries like Thailand and Singapore.
Even if real estate prices have increased, Saigon still offers a great section of properties that you can buy at an affordable price, compared to properties available in Shanghai, Singapore and Hong Kong.
Saigon is said to open its metro line in 2020, so you can expect great price appreciation when you buy a property close to metro stations as early as now.
Where to Buy Apartment in HCMC?
Ho Chi Minh City is divided into numerous districts. Let’s take a look where the best districts are to buy property in Saigon.
- District 1
District 1, or also referred to as the central business district (CBD), is said to be the most active district of HCMC and, thus, the most expensive area to buy property in. It also hosts majority of Saigon’s attractions and government offices. Because of the many important establishments in this district, you will notice a great number of foreigners and expats in the area.
- District 2
This is one of the most preferred areas for Asian and even Western buyers, primarily because of its high-end and family-friendly environment. District 2 also houses many of Saigon’s popular international schools. For investment opportunities, find properties nearby soon to open malls and around the new metro line that’s currently under development.
- District 3
Perhaps, you are thinking that District 3 is farther from CBD than District 2, but that isn’t the case. While D1 hosts a great number of attractions, a lot of young expats and travelers prefer to find a place in D3. While D2 has some of the newest infrastructures, malls and embassies, abundance of coffee shops and bars have made the D3 a hit area for the youngsters.
Vietnam is on the rise in the recent years. Take advantage of its booming economy and consider looking into investment opportunities you can take advantage of in Ho Chi Minh City.