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Foreign ownership of Vietnamese property - Overview and the Complete Guide

  • 21/05/2021

→  Why should you invest in property in Vietnam ?

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Foreign ownership of Vietnamese property - Overview and the Complete Guide 

Vietnam is the most promising market for economic growth. Investment in the real estate sector is flowing into the country from all over the world.

As a foreign investor interested in the Vietnamese real estate market, you first need to understand how real estate works in Vietnam. Vietnamese law also has many regulations on the foreign ownership of Vietnamese property. This article provides basic information on easing the restrictions on foreign property purchases and the legal rights of foreigners to purchase property in Vietnam.

Why should you invest in property in Vietnam ?

Vietnam's property market is booming. For example, in Ho Chi Minh City alone, apartment sales reached 30,972 units in 2016, up from 47,163 units in 2017, a growth of 52%. More Detailed Reasons Vietnam is the best country to buy property.

Accelerates direct investment

The continued inflow of foreign direct investment has stimulated strong economic growth in Vietnam.

The flow of foreign direct investment into Vietnam is increasing rapidly

Data from Vietnam's Ministry of Planning and Investment shows that FDI inflows in 2017 reached US $ 9.05 billion in the first seven months of the year. This amount increased by 5.8% per annum. In terms of registered foreign direct investment, it reached a total of US $ 21.93 billion, an increase of 52% per annum.

Rapid economic growth

The stable inflation index in Vietnam is 4%-5%, creating a favorable economic environment and growth opportunities for real estate investors. From 2010 to 2016, Vietnam achieved GDP growth per capita of 8.4%, lagging behind other Southeast Asian countries such as India, Cambodia, and the Philippines.

Furthermore, high-income households in Vietnam are forecast to more than double by 2020, while middle-income households are forecast to grow by a staggering 52.8%.

Population

By 2040, Vietnam's population will reach 120 million, an increase of 25 million compared to a population of 95 million. Therefore, population growth will certainly increase the demand for housing and property in Vietnam.

Real estate prices soar in Vietnam

The main demand for new and improved housing is from wealthy families . They are considered to be the main drivers of Vietnam's real estate growth. Housing prices have always been high, especially in Ho Chi Minh City, where Vietnam's real estate is very affordable compared to other ASEAN countries, such as Singapore and Hong Kong.

Ho Chi Minh City is the largest property market in Vietnam

Which property market is the most worth investing in for foreign investors?

Many areas in Vietnam provide favorable conditions for foreigners to buy real estate. However, geographical location Infrastructure; We recommend the following attractive cities to invest in your property in Vietnam, depending on size and weather.

Ho Chi Minh City

Ho Chi Minh City is the largest city in Vietnam and has attracted the largest city and locals in the past. More apartments are needed to grow the population rapidly. According to CBRE, 60,000 apartments were completed in 2018, with 66% of all apartment buyers actually investing.

Ha Noi

It is the cultural and industrial center of Vietnam with the highest Human Development Index. PwC considers it one of the fastest-growing cities in the world, with an average purchase of a high-end apartment at 3,000 / sqm.

As Vietnam has opened its doors to international markets,  hundreds of foreign companies have selected Hanoi  for business and investment opportunities.

Tourism and finance are slowly becoming priorities. Industrial production is still strong here, with 13 large industrial parks and 16 smaller industrial clusters. The agricultural sector, which was once the backbone of Hanoi's economy, is also being developed. Renewed farming techniques are used and other plants and animals are introduced.

Nha Trang city

Nha Trang, off the coast of central Vietnam, is booming as tourism grows. At the same time, demand for real estate is growing.

Da Nang city

Da Nang is the fourth largest city in Vietnam with an airport that can handle 6 million passengers a year, and Da Nang is ready for foreign investment. High-quality resorts for foreign investors in Da Nang; Hotels and beachfront properties.

The Vietnamese government has relaxed regulations on property trading for foreign investors

Overview of Vietnamese law ownership property for foreigners

It was difficult for foreigners to own real estate in Vietnam. Now, in 2015, the Vietnamese government's efforts to attract more foreign direct investment under the Vietnam Housing Law (LRH) make it easier for foreigners to buy real estate in Vietnam.

Prior to 2015, a foreigner could only own one of the largest condominium units. At present, foreigners can buy as many units as they want as there are no restrictions on the purchase of assets. However, there are still some limitations.

Here are some important details that foreigners should keep in mind.

  • The number of units of ownership in a foreign-owned administrative office is limited. Only 250 items are allowed in a given ward or district.

  • A foreigner can only buy 30% of the maximum condominium units and does not allow more than 10% ownership of the land project.

Foreigners are not allowed to buy land in Vietnam. However, thanks to Vietnam's Land Use Rights (LUR) (as a title deed), foreigners have the right to use and control leased land for 50 to 70 years. Rents are renewed.

Keep in mind that foreigners are not allowed to own free property unless they are married to a Vietnamese citizen. As an explanation, you may not own the land as a foreigner, but you can still own the property built on the land.

Guide to invest property in Vietnam

The best way to buy real estate in Vietnam is to start your own company.

Choices of popular legal entities 100% foreign-owned company

Establishing a 100% foreign-owned company in Vietnam is the best option to allow you to buy real estate in your country. You can buy houses and apartments for a fixed term on behalf of your foreign company.

Invest in a business that helps foreigners own certain property assets

Registering a foreign-owned company in Vietnam is easy and convenient. It may take 4 to 6 weeks. During the production period, you will receive an investment registration license and a business registration certificate.

Once your company has a lease agreement in Vietnam, your investment license, which is valid for 10 years, will expire. You could also sell your company property to someone else. All in all, the best way to buy a house in Vietnam is to start your own company.

Joint venture company

Another way to buy real estate in Vietnam is to partner with a Vietnamese national and a local company.

You and your Vietnamese shareholders can buy real estate through this local company. You can be involved in buying and renting real estate and buying buildings for the entire real estate project. If the company decides to terminate its holdings, the ownership of the local joint venture will end.

Foreigners in Vietnam can only buy houses to live in without a company. As a foreigner, you are not allowed to rent it to third parties.

The Latest tips for buying real estate in Vietnam

In case you want to sublease your real estate. Currently, the Vietnamese government has not previously set rents for rent. In any case, You should notify your local real estate authority before renting your property. You may need the help of a real estate agent to find guests and draw up a lease. Your potential customers should give you an amount equal to one to three months' rent, or on average (two months on average). You can save that amount of money if they leave home before the contract is signed.

Investing in property in Vietnam brings a lot of development potential for investors

Vietnam is an amazing developing country, so the cost is still low here. In the meantime, it may not be as attractive as the main areas of China or Singapore. But in the near future, Vietnam has great potential. Therefore, If you have a vision for the long term, you should invest soon. Foreign investors are pouring their money into cities like Ho Chi Minh City and Ha Noi. However, Quang Ninh Other places like Nha Trang and Da Nang are on the rise. Pricing and other factors need to be carefully considered before making any important decisions. Finally, with the information from the guide above, I hope you can be foreign ownership of Vietnamese property.

LHD Law Firm Services

We offer a portfolio of Vietnam business services and Vietnam market entry solutions covering every aspect of these processes. Our expertise encompasses a wide-portfolio of services and advice relating to Vietnam market entry, typically leading to the establishment of:

  • A Representative Office in Vietnam
  • A Vietnamese investment company with total or part foreign ownership
  • A Joint Venture in Vietnam
  • A Special Purchase Vehicle using a Hong Kong or a low or zero tax company (“offshore”)

Additionally, LHD law Firm Worldwide offers:

  • Bespoke Vietnam Business Services relating to the identification of suitable tax advisers, lawyers, local partners, premises, factories, management, staff and expatriate housing.
  • Professional corporate administration services. We have the capacity to deliver a turn-key back office function for an operation in Vietnam.

Whilst our Vietnam Business Services and Vietnam market entry solutions are broad, many of our clients utilise our services selectively, and this approach is welcomed.

Our clients are diverse. They include major US corporations, international companies and both owner managed business and entrepreneurs.

So, if you are an executive tasked with investigating your company's Vietnam market entry, you should contact us by clicking on the button below:

Hotline: +8497996249 or Email: all@lhdfirm.com

Contract us

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