Lawmakers approved a measure which will remove barriers on foreign property ownership in Vietnam. The move aims to raise investment from both businesses and individuals, while bolstering the country’s economy which has underperformed since 2011.
Foreigners with a valid visa, companies with operations in Vietnam, and foreign investment funds can now own houses and apartments outright. Previously, foreign property ownership was only possible on a long-term leasehold of up to 50 years.
However, the law still prohibits foreign property ownership of more than 30% of floor space in a condominium. Furthermore, non-Vietnamese nationals can only buy 250 houses in a single neighborhood or ward.
All land in Vietnam technically belongs to the state. While business and individuals can fully own structures, the land it sits on must still be leased from the government.
Foreign Property Ownership: Vietnam is Opening Up
Analysts say that investors from China, Singapore, and Japan are most likely to take advantage of the new law. This is because of property bubble concerns and falling rental yields in their home countries. REITs (real estate investment trusts), along with operators of retail space and office buildings are also likely to benefit.
Participants in the Vietnam property market welcome the new change. Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, expects the amendment to raise the demand for real estate.
She also believes it will help developers reduce their inventory and give banks a chance clean up their bad debt. “However, we don’t expect a huge boost for sales as Vietnam isn’t yet an attractive destination for foreign home buyers,” added Chau.
The change will also probably help Vietnam become more competitive in time for the ASEAN Economic Community (AEC 2015), according to Andrew Batt, International Group Editor of PropertyGuru.
AEC’s goal is to transform all of Southeast Asia into a single economic union. It came into effect at the end of 2015.
Want to invest in Vietnam property? You might want to see our Ultimate Guide to buying real estate in the country.
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