2017-06-14
4 Reasons You Shouldn't Overlook Real Estate in Vietnam
- Advice
Vietnam is a country located in Southeast Asia on the South China Sea. Vietnam is well known for its beaches, exquisite Vietnamese cuisine, low costs of living, breathtaking landscape and friendly locals. In recent years, Vietnam has been rising as one of the most attractive foreign investment destination and here are the four reasons why you should not overlook the real estate market in Vietnam.
1. Stable economic growth
Vietnam has been experiencing stable economic growth in recent years and it is one of the fastest growing country in the world since 1990. According to Trading Economics, the gross domestic product (GDP) growth rate in Vietnam averaged 6.19% from 2000 to 2016. In the first quarter of 2017, the GDP growth rate reached 5.10%. The core driver of growth is from the manufacturing sector in Vietnam.
Source: World Bank
In addition, the poverty rate has fallen with the increase in economic growth. According to World Bank, the poverty rate has fallen to 3% today and at least 40 million people did not have to suffer from poverty anymore in the past two decades.
Moreover, Vietnamese government is in the continuous efforts to reform the nation. The government emphasized on the need to speed up the reforms due to the acknowledgement of the slow progress through the Socio-Economic Development Plan (SEDP), 2016 - 2020, which is approved in April 2016. The economic rise boosts up the confidence of foreign investors and Vietnamese real estate are possibly one of the best investments in Vietnam.
2. Favourable demographics
Based on the data from Worldometers, the population in Vietnam has increased from 88.35 million in 2010 to approximately 95 million today. It is predicted that the population will be in an increasing trend and will reach 120 million by 2040.
Source: Worldometers
Furthermore, the Vietnamese population are getting more educated and healthier today due to the advances of the nation made by the government. Life expectancy at birth has improved from 71 years in 1993 to 76 years for now. Therefore, the people in Vietnam has higher expectations for the quality of their lifestyle, which increases the demand for Vietnam properties.
3. Affordability of properties
According to a study done by the Japan Real Estate Institute in 2015, the price of the newly built high-end residential properties in Ho Chi Minh City has great affordability. They come with comprehensive facilities, strategic location and convenient accessibility, but are still much cheaper compares to other regional cities like Kuala Lumpur and Bangkok.
In a meanwhile, property developers who have been focusing on high-end market are now shifting their attention to low-income homebuyers. There is an imbalance with the supply and demand of the affordable housing in recent years because of the fast rising of demand on housing in Vietnam. Even though there were more products hitting the market since the economic reforms, they are far less affordable by the low-income households.
In order to meet the expected demand for low-cost housing, many property developers in Vietnam are now targeting affordable home. One of the giant property developers, Vingroup has revealed its new project, Vincity that targets low-income homebuyers. The property’s price ranges from US$30,800 to US$44,000. The plan involves 200,000 to 300,000 units of affordable apartments over the next five years.
4. Low barrier to entry
Starting from 1 July 2015, the Vietnamese government has loosen the property ownership legislation for foreign investors. This allows the foreigners to buy residential properties without the need to reside or work in Vietnam Foreign individuals will be entitled to house ownerships and use rights as same as to the Vietnamese citizens except for two restrictions, which are land tenure and purchase limit.
Land can only be leased up to 50 years with possible extension for foreign individuals. This means that foreign individuals own the ownership of the house or structure built, but not the land. However, if a foreign individual is married to a Vietnamese citizen, then he/she will be entitled to freehold land tenure.
In addition, there are a few purchase limits applied on foreign buyers. Firstly, foreign buyers are only allowed to own up to 30% of the total units within single condominium complex. Secondly, foreign buyers may only own 250 houses at maximum within an administrative ward. Thirdly, only up to 10% of the total separate landed homes within one residential compound is allowed to be owned by foreign buyers.
Despite of the restrictions above, buying real estate in Vietnam for foreigners is now much easier compares to the years before 2015.
In conclusion, it is now a right time to invest in Vietnam properties because of the stable economic growth in the nation, favourable demographics, greater affordability of Vietnam properties and relaxed property ownership law. For more information regarding the real estate in Vietnam, please consult us.
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