Many people contact me and ask for investment advice in Asia. Not rarely, they’re interested in countries like Indonesia and Korea. Sure, Indonesia may have potentials over the long run, but ownership regulations are still not favorable to foreigners.
Korea doesn’t grow much compared to many other countries in the region, unless you plan to stay there for personal reasons, I’d look elsewhere.
One of my favorite countries is undoubtedly Vietnam. I see a lot of potentials in Vietnam, even in the long run. In this article, I present 6 reasons why Vietnam’s property market is becoming increasingly interesting.
1. Eased ownership regulations since 2015
District 1 in Ho Chi Minh City, a quickly developing area
Prior to 2015, it was virtually impossible for foreigners to buy and profit from Vietnam’s real estate market. You were only allowed to own one condo unit, for self dwelling purposes.
However, with the new Law on Residential Housing (LRH) introduced in 2015, it’s become remarkably easier to buy property in Vietnam. Prior to that, people were eagerly standing on the sidelines, waiting for the market to open up.
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Nowadays, you can buy property by simply having a tourist visa, and buy as many condo units as you want, as long as the amount of units in a building are 70% owned by Vietnamese citizens.
You can rent out your units, with great yields, and you don’t need to be a resident in Vietnam to own property.
You’re also allowed to buy landed houses, and to lease the land up to 50 years, even if the government considers to increase the term to 99 years. There are many incentives that Vietnam is going in the right direction, easing foreign ownership regulations even more.
2. Rapidly growing economy
Currently: Areas like Thu Thiem in Ho Chi Minh City are predicted to become new hubs, and skyscrapers will pop up like mushrooms within a near future
Vietnam’s economy, and especially Ho Chi Minh City’s, is one of the fastest growing in the world, averaging at 6-7%.
More and more foreign corporations are turning their eyes towards Vietnam, as manufacturing becomes more expensive in China.
Not only the top cities, but also ‘smaller’ cities like Bien Hoa will gain from increased manufacturing, and see an increased demand for real estate.
PWC’s Emerging Trends in Real Estate Asia Pacific 2018 survey shows that Ho Chi Minh City is the place to be right now.
3. Much infrastructural investment planned
There are much infrastructural investment planned, above you can see the new Metro being built in Ho Chi Minh City, planned to be finished in 2020
Things are happening fast in Vietnam, cities like Ho Chi Minh City are quickly developing and merging with other cities. If you ever visit Vietnam, you’ll see that there are much investment planned in residential properties, schools, hospitals, roads, and more.
District 2, 7 and 9 in Ho Chi Minh City are just a few examples of areas you should have a glimpse at.
Hanoi will have its first Metro ready in 2018, and Ho Chi Minh City will follow shortly behind, with its first Metro up and running in 2020.
Buying property where future infrastructure is planned (along the Metro lines, for example) can result in great yields and capital appreciations.
Vietnam is quickly urbanizing and the middle class is predicted to grow much
Vietnam is one of a few countries where the population will actually increase, from around 95 million to 120 million people until 2040.
Along with a growing middle class, urbanization, and 50% of the population being under 30 years old, there will naturally be a demand for more real estate, especially in the bigger cities like Ho Chi Minh City, Hanoi and Da Nang.
5. High yields
This 2 bedroom apartment, in Thao Dien (District 2), was bought for around USD 100,000 a couple of years ago, the tenant pays USD 800 a month. That equals to a rental yield of almost 10%
Vietnam is famous for having some of the best yields in the region, not rarely stretching between 6-8%.
Some developers even offer guaranteed incomes as high as 8-12% for condo-hotels and villas in places like Da Nang.
Just making a comparison, in Singapore investors normally experience yields of below 3%.
6. Booming tourism
Vung Tau is located 1-2 hours away from Ho Chi Minh City and a popular weekend retreat
In comparison with Thailand, Vietnam’s tourism market is fairly new and not as mature. Having that said, more and more travelers choose Vietnam when going for a vacation.
Vietnam is still comparatively cheap, has great food, golf courses and an astonishing shoreline that’s 300 km long. The tourism increases steadily and beats previous years, time after time. Even Cristiano Ronaldo has decided to buy property in Da Nang, for vacation purposes.
Popular places include: Hoi An, Da Nang, Nha Trang, Ha Long, Phu Quoc, Phan Thiet, and more.