The recently approved law allowing for far more flexible foreign ownership of property is now in place, and the Vietnamese government expects a two-fold benefit.
The first will be to boost the country’s sluggish real-estate market and secondly its intention is to accelerate the country’s economic growth.
The government is targeting a 5.8 percent growth in the economy this year and has prioritized the clearance of bad debts related to the country’s financial system, some of which are tied to property.
This new ruling follows a housing stimulus program and a low-cost home loan package and will allow foreigners with valid visa’s, foreign companies and international organizations currently operating in Vietnam, to purchase apartments and houses.
Previously such ownership was restricted to foreigners married to Vietnamese citizens and those foreigners deemed to make significant contributions to the nation’s development.
The National Assembly’s vice chairman, Uong Chu Luu is on record as stating the new law will expand the criteria for people to buy and own houses in Vietnam by creating favorable conditions to attract foreign investment.
This move has also been seen by many business professionals as a positive step as it will open up the real estate market to foreigners as well as those Vietnamese citizens currently living overseas. The expectation is that the law will project an image of the country opening up its economy to foreign capital, and that this initiative could well have the positive knock-on effect of helping with the current bad debt problem.
An attractive measure for Vietnam’s expat community
This measure should make the housing market an attractive proposition for expats based in Vietnam who are looking to buy property in the country.
Although a World Bank report last July commented that the Vietnamese real estate market remained frozen, and that sections of it were unlikely to recover any time soon, the latter part of the year saw the residential market slowly improving, and this newly added group of potential property purchasers sanctioned by the law should help matters further.
No shortage of choice
One thing is for sure, potential buyers should not be short of choice. According to the construction ministry the country’s property inventories dropped by around 13% to $ 3.85 billion (82.3 trillion Dong) between August 2013 and August 2014, but this still left the nationwide number of unsold apartments at around 17,000.
The new rule allows for 30 pct maximum foreign ownership in any apartment building, or 250 houses in a ward.
In terms of land ownership it is written in the country’s constitution that all land belongs to the state, but for real-estate purchases a land-lease certificate is granted. These certificates are valid for a maximum of 50 years.
Only time will tell how successful this government initiative is, but foreign investors and International companies operating in the country will certainly be looking at the potential benefits it offers.