Vietnam - Narrowing the Gap of Property Development

Compare to the nearby ASEAN countries such as Thailand and Malaysia, Vietnam’s property market is far behind with less domestic demand and fewer international investors.  The foreign property ownership regulations are the major reasons that limited the development of Vietnam’s market.  The loosening of the regulation and the trend of hospitality real estate help to close the gap in the property market of its regional neighbors.

Starting from July 2015, foreigners are allowed to propose Vietnam property of holding 50-year leasehold ownership but not freehold ownership.  Current laws state that foreign buyers cannot hold more than 30% of the units in a single residential building and can only purchase properties from other international buyers.  Thailand and the Philippines allow for 49% and 40% of foreign unit ownership per building respectively.  With a relatively strict regulation, the growth of the property market has been restricted.   

Tourism has significantly increased during the past five years of having 18 million international visitors in 2019.  COVID-19 cause a recession in the short term, but long-term tourism development remains positive.  Vietnam property developers are encouraging the loosening of the regulation to attract foreign investors.  From Nguyen Hoang, Director of the R&D Department at DKRA Vietnam, the Ministry of Construction proposed that foreigners be allowed to buy hospitality properties such as beachfront villas, townhouses, and condotels.  Also, reputable developers of hospitality real estate including Vingroup, BIM Group, CEO Group, and Sun Group launched a significant number of hospitality-focused projects from 2015 to 2019. 

With the hope of easing the regulation and the trend of hospitality real estate, both demand, and supply increase remarkably.  It does not only boost the hospitality property sector but also increase the competitiveness of the Vietnam real estate industry as a whole.  The gap between Vietnam and other ASEAN countries on the property market will be narrowed by the development of tourism and the change of law regulation.