Vietnam has a population of 95 million where 50% are aged below 30, and with a rapidly growing middle class. The country also faces a deficit of housing unit, creating a bigger demand for low-end as well as high-end residential units.
a. Housing Law and Law on Real Estate Business (Introduced in 2015)
b. Law on Sell and Transfer of Real Properties (Introduced in 2015)
According to the country’s housing development strategy, the average housing area of the nation will reach 25 square metres per capita by 2020. To achieve this goal, 100 million sq.m of new housing will be built each year, 70% of which will be in urban areas.
In Ho Chi Minh City, 65 projects with the total of more than 22,600 units and over 1,000 low-rise buildings were launched to the market in 2019. Of these, affordable housing occupy more than 4,500 units, or 19% of the total. The high-end housing has shown the first sign of oversupply with more than 11,700 units, or 31.3%.
2018 was basically a good year for rental office. HCMC’s occupancy rate is up to 96-97% while vacancy rate is 2 to 3%. CBRE’s data shows that Ho Chi Minh City is lack of office space supply. Thus, the average office rent in HCMC increases by 12-17%. Meanwhile, stable supply has kept price increase at just 1 to 4%.
For tourism real estate, supply is relatively large in the past three years. In the next two years, supply in Da Nang and Nha Trang remains high, at roughly 34,000 units, while in Ha Long and Phu Quoc is about 14,000 to 15,000 units. In terms of founding capital, what used to be only 20 billion VND is now amounting to 60-70 billion VND, proving that private capital flows into real estate have increased significantly. In the first 11 months of 2018, FDI were about 6.5 billion USD, doubled from to the same period last year. Real estate registration accounts for about 33% of new registered capital, ranked second of all sector. In addition, many enterprises have actively issued bonds to lessen their dependency on the credit system in times of capital shortage. And this is a good sign.
More foreign property buyers
Vietnam attracts more foreigners, especially from Hong Kong, Mainland China, Taiwan, and Singapore. It’s not strange as the average house prices in Vietnam are significantly lower compared to prices in Hong Kong, Singapore, and major cities in China.
For example, a luxury apartment in a prime location in HCMC costs around USD 5,000 per square meter, while the same apartment can cost four times more in Singapore and Hong Kong.
As foreigners can easily buy property with a renewable leasehold period of 50 years, there’s been a sharp rise of overseas investors. According to CBRE Vietnam, there was a 21% increase of buyers from mainland China, Hong Kong, and Taiwan in 2017 compared to 2016.
For the first quarter of 2018, there was a 300% increase in the demand from Chinese buyers compared to the first quarter of 2017.
Vietnam Real Estate Association.
Housing and Property Development Division under the Ho Chi Minh City Construction Department