Foreign buyers not lifesavers for Vietnam’s struggling property market: expert

Foreign investment inflows provide only a temporary boost to Vietnam’s property market in the doldrums and should not be considered a long-term lifesaver, said real estate expert Nguyen Hoang.

Hoang was referring to the implementation of the new 2023 Housing Law, which came into effect on August 1 and introduced more open and flexible regulations for foreigners looking to purchase property in Vietnam.

Currently, the real estate ownership of foreign organizations and individuals in Vietnam is restricted in areas critical to national defense and security. Foreigners may buy or own no more than 30% of the apartments within a single building.

For private houses in an area with a population equivalent to a ward, foreigners are limited to buying or owning a maximum of 250 houses.

If a foreigner is gifted or inherits a house that falls outside the prescribed cases, exceeds the allowed number of houses, or is located in an area designated for national defense and security, they will only be entitled to the monetary value of the house.

The ownership period is limited to 50 years from the date of issuance of certificates of house ownership and residential land use rights, aka "pink book" for its cover color. Foreigners may extend their ownership once for an additional period of up to 50 years or may obtain permanent ownership if they marry a Vietnamese citizen.

The new law is expected to diversify customer bases for developers, stimulate the real estate market, and attract foreign capital, Hoang noted. Furthermore, projects will benefit from higher-quality investments, increased transparency, and more effective management

Hoang emphasized the need for more detailed guidance about foreign ownership of properties in Vietnam, including issues related to land use rights, ownership forms and duration, financing sources, tax obligations, purchase rates, and penalties for violations, if any, among others.

He suggested that regulations about the purchase of resort real estate by foreigners need further development.

While foreigners purchasing real estate can stimulate a more vibrant and growing market, it would not be a means to rescue the market during the tough time, Hoang stressed, citing the 2014-2016 period as an example.

Huge demand from foreigners for property in Vietnam.

According to Ministry of Construction statistics, since the 2014 Housing Law took effect, there have been 3,035 foreign homebuyers in Vietnam to date, mostly apartments at commercial residential projects.

Foreign organizations and individuals have predominantly bought and owned properties in Hanoi (1,765), Ho Chi Minh City (850), the northern province of Bac Ninh (110), the southern province of Binh Duong (210), and the southern province of Ba Ria-Vung Tau (50). Buyers come from South Korea, China, Singapore, the U.S., Australia, Japan, and Malaysia.

However, the number of foreign homebuyers in Vietnam remains very low compared to the potential demand.

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors (VARS), noted that from 2018 to 2022, housing bought by foreigners accounted for only 0.53% of the total nationwide. He estimated that around 4 million people, including foreigners and overseas Vietnamese, may want to purchase property in Vietnam in the near future.