Legal hitches, limited land availability hinder foreign investors' property market entry: expert

Foreign investors face challenges entering the real estate markets in Hanoi and Ho Chi Minh City due to legal barriers and a limited supply of land, says an expert.

Despite recognizing the significant investment potential in these major cities, they encounter these obstacles, said Su Ngoc Khuong, senior director of Investment at Savills Vietnam, during a real estate workshop on Thursday.

The market for foreign investors is vast but difficult to access, especially in Hanoi and HCMC, except for long-established projects that either completed legal procedures five to seven years ago or involve domestic developers, he noted.

Khuong cited an example that the residential real estate segment is generating new cash flow with an average return of 15%.

Overseas investors’ taste for mergers and acquisitions (M&A) in Vietnam remains focused on the residential real estate segment, although the number of transactions is quite limited, he stated, anticipating few new M&A deals in the rest of this year.

A bright spot in the market is the southern key economic region, particularly industrial parks and seaports, making it a highly attractive area for foreign investors. Recently, foreign investors have been keen on the development of data centers.

“Foreign investors who previously concentrated on the residential real estate sector are gradually shifting their focus to industrial real estate and office buildings for lease,” the expert said.

He added that new real estate laws will take time to significantly impact the property industry, with potential breakthrough changes in the market expected to occur by mid-2025.