Authored by the expert who managed and guided the team behind the Vietnam Property Pack
Everything you need to know before buying real estate is included in our Vietnam Property Pack
Are you considering investing in Vietnam's real estate market? Wondering how to navigate the legal landscape as a foreign buyer? Curious about the best locations and potential pitfalls?
We will lay down recent insights, ensuring you have the most up-to-date information. Here, no guesswork; we rely only on solid data.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Vietnam Property Pack
1) You must check the 30% foreign ownership limit in condos before buying in Vietnam
In Vietnam, foreigners can only own up to 30% of the units in a condominium building.
This rule, part of the Housing Law of 2014 and Decree No. 99/2015/ND-CP, is a cornerstone of the Vietnamese property market. Real estate agencies frequently stress this 30% cap because it's a big deal for foreign investors. If you're eyeing a condo in Vietnam, make sure to check the foreign ownership quota before diving in.
InvestAsian, a well-known real estate agency, points out that foreign ownership can't exceed 30% of the floor space in any one condo. This is a hot topic among real estate pros and potential buyers, so it's something you'll hear a lot about if you're in the market.
In 2024, Decree 95/ND-CP came into play, reaffirming the 30% limit and showing the Vietnamese government's commitment to managing foreign investment in real estate. This decree is part of a broader strategy to keep the property market balanced and fair.
For those considering a purchase, it's crucial to understand these regulations. They are not just numbers but a reflection of Vietnam's approach to foreign investment. Knowing the rules can save you from potential headaches down the line.
So, if you're thinking about buying property in Vietnam, keep this 30% rule in mind. It's a key piece of the puzzle in navigating the Vietnamese real estate landscape.
Sources: InvestAsian, ASLGATE
2) You cannot own land in Vietnam but you can lease it for up to 50 years with extensions
In Vietnam, foreigners can't own land, but they can lease it for up to 50 years with a chance to extend.
While many countries allow foreigners to buy land outright, Vietnam's rules are different. The 2014 law on land ownership makes it clear that foreigners can only lease land. This regulation continues under the new Housing Law 2023, effective from January 1, 2025. So, you can own a house or apartment, but the land must be leased from the government.
Real estate agencies in Vietnam often explain that foreigners can only purchase land through a long-term leasehold of up to 50 years. This might seem unusual if you're used to countries where buying land is straightforward for everyone. In Vietnam, freehold titles are not an option for foreigners.
Interestingly, this leasing system doesn't deter foreign investors. Many see it as a way to enjoy the benefits of property ownership without the full commitment of buying land. The lease terms are often flexible, and extensions are usually granted, making it a viable option for long-term investment.
Moreover, the Vietnamese government has been known to encourage foreign investment in real estate, offering various incentives and support. This approach has led to a thriving property market, especially in urban areas like Ho Chi Minh City and Hanoi, where foreign interest is particularly high.
So, while the idea of leasing rather than owning might be new to some, it opens up opportunities to invest in a growing market. With the right guidance, navigating these regulations can be straightforward, allowing you to enjoy the vibrant culture and dynamic economy of Vietnam.
Sources: Vietnamese Attorney, Vietnam Briefing
Everything you need to know is included in our Property Pack for Vietnam
3) You may invest in properties in rapidly growing cities like Da Nang and Nha Trang to leverage urbanization
Investing in cities like Da Nang and Nha Trang is a smart move because they're growing fast.
Da Nang's population hit 1,253,000 in 2024, showing a 2.62% increase from 2023. This city is outpacing the national urbanization rate, which hovers around 1% to 1.2%. It's not just about numbers; Da Nang is buzzing with new infrastructure projects. A massive 450-hectare deep-sea port is being built in Lien Chieu District, with the first phase set to wrap up by 2025. This project has caught the eye of big investors, like India's Adani Group, which is pouring in $10 billion.
Da Nang's real estate market is on fire. Nearly 50% of new apartments were snapped up in the third quarter of 2024. The city sold about 1,060 units during this time, driven by new residential and commercial projects. One standout is the Làng Vân Integrated Resort, which is pulling in both locals and investors.
Sources: Macrotrends, Wikipedia, CVR
4) You benefit from Vietnam's government support for foreign investment creating favorable conditions for property investors
The Vietnamese government is making it easier for foreigners to invest in property.
In 2023, foreign direct investment (FDI) in Vietnam hit $23.2 billion, a noticeable jump from the previous year. This upward trend continued into 2024, with FDI increasing by 38.6% in the early months, totaling over $4.29 billion compared to the same period in 2023. The government has been rolling out policies to make the business environment more welcoming, which is a big draw for investors.
These policies include efforts to improve infrastructure and urban development, making Vietnam a hotspot for foreign investors. The 2014 Housing Law also plays a role, allowing foreigners to buy property, though there are some restrictions. This has led to a rise in foreign-owned properties, with many buyers hailing from South Korea, China, and the U.S.
Vietnam's real estate market is booming, fueled by both local and international investments. The government’s push for foreign investment is part of a broader strategy to boost economic growth. This includes enhancing the business climate and launching infrastructure projects, which are key factors in attracting foreign capital.
For those considering buying property in Vietnam, it's worth noting that the market is becoming increasingly competitive. The influx of foreign buyers is driving demand, particularly in urban areas where development projects are underway. This trend is expected to continue as more investors recognize the potential of Vietnam's growing economy.
Sources: Statista, The Investor, Vietnam Briefing
5) You must avoid buying properties in flood-prone areas in Vietnam due to natural disaster risks
When buying property in Vietnam, be cautious of flood-prone areas.
In 2023, Vietnam faced over 1,100 natural disasters, including severe floods that wreaked havoc across many regions. These disasters not only resulted in tragic loss of life but also caused significant property damage, making potential buyers think twice.
Take August 2023, for example, when some areas were hit with nearly 400mm of rainfall, leading to devastating floods. Such extreme weather can scare off investors, as they worry about the decrease in property values due to these risks.
Adding to the concern is the low penetration rate of flood insurance in Vietnam. Many property owners find themselves unprepared for flood-related damages, which can further drive down property values and have a substantial economic impact on local communities.
Despite efforts by the National Steering Committee for Natural Disaster Prevention and Control to mitigate these effects, the risks remain significant. Government reports and expert analyses continue to highlight the extensive damage caused by these natural disasters.
Sources: ReliefWeb, ReliefWeb, Bao Chinh Phu
Get to know the market before you buy a property in Vietnam
Better information leads to better decisions. Get all the data you need before investing a large amount of money. Download our guide.
6) You must avoid properties with unclear land use rights to prevent legal issues in Vietnam
Buying property in Vietnam can be tricky, especially if the land use rights are unclear.
The 2024 Land Law changes sound good for foreign investors, but they’ve actually made things more complicated. Now, foreign-invested enterprises face more complex land procedures, which can lead to legal headaches.
Many foreign investors have shared stories about the legal challenges they face because they don’t own the land outright. This makes it tough to transfer land use rights or make changes to their properties.
The Vietnamese government has warned about the risks of unclear land use rights. They remind everyone that land is public property managed by the state, which can cause disputes if not properly understood.
Even without specific data on fraud, the complicated land procedures suggest these issues might be common. Real estate agencies stress the importance of verifying land use rights to avoid legal troubles.
Experts say that while new rules let foreign enterprises acquire land use rights, careful management is crucial to avoid pitfalls.
Sources: Law Asia, ASL Gate, Vietnam Law Magazine
7) You gain an edge by partnering with a local Vietnamese citizen to navigate legal and cultural complexities
Partnering with a local Vietnamese citizen can give you a significant advantage when navigating Vietnam's property market.
In recent years, foreign property ownership in Vietnam has been tricky. For example, foreigners can own up to 30% of residential apartments in a building, but this is capped per block in multi-block complexes. These rules can be a maze without local help.
Take a cue from Warburg Pincus's partnership with Vingroup. This collaboration not only involved a significant equity stake but also boosted Vietnam's real estate sector. Local partners are key to understanding and complying with these regulations, making the investment process smoother.
Cultural understanding is crucial in Vietnam. The market has its own quirks and trends, which can be tough for outsiders. Local partners can bridge these gaps, ensuring that foreign investments align with local market trends and preferences.
This cultural insight is invaluable for making informed business decisions. It helps avoid potential pitfalls and ensures that investments are in tune with what the Vietnamese market wants.
In short, having a local partner can be your secret weapon in Vietnam's property market. They help you navigate legal complexities and cultural nuances, giving you a competitive edge.
Sources: VnEconomy, Vietnam News, Kadence
8) You must invest in serviced apartments for high demand and lucrative rental yields from expatriates
Thinking about buying property in Vietnam? Consider serviced apartments—they're hot right now.
In bustling cities like Ho Chi Minh City and Hanoi, rental prices for serviced apartments jumped by up to 8% in 2023. This surge is largely due to the influx of foreign professionals who are flocking to Vietnam for work. These expats are driving up demand, making serviced apartments a smart investment choice.
Vietnam is becoming a top destination for expatriates, ranking 14th among the best places for expats in 2023. Many of these expats are high-level managers and executives who prefer the convenience and amenities of serviced apartments. This preference is pushing the demand even higher, ensuring that these properties remain a lucrative option.
Serviced apartments are not just popular; they offer promising rental yields. While exact comparisons with traditional rentals aren't available, the high occupancy rates and demand suggest that returns are strong. In Hanoi, for example, rental prices for serviced apartments have remained stable, with a slight year-on-year increase.
The Vietnamese government is also playing a supportive role. New real estate laws are set to attract more foreign investors, making the market more transparent and efficient. This is great news for the serviced apartment sector, which is also benefiting from the booming hospitality industry fueled by corporate stays.
Experts are optimistic about the future of serviced apartments in Vietnam. According to Savills, the market is expected to recover thanks to FDI growth and infrastructure improvements. With limited new supply in major cities, demand is likely to continue outpacing supply, leading to even higher rental yields.
Sources: Vietnam News, Bao Chinh Phu, Vietnam News, Precedence Research, VnEconomy
Everything you need to know is included in our Pack for Vietnam
9) You maximize profit by investing in properties near new infrastructure projects as these areas appreciate significantly
Investing in properties near upcoming infrastructure projects can be a smart move for maximizing profits.
When new infrastructure like highways or railways is built, it often leads to a rise in property values in the surrounding areas. This is because improved infrastructure makes these areas more accessible and attractive to both businesses and residents. For instance, in Vietnam, the North-South Expressway connects major cities like Ho Chi Minh and Hanoi, boosting property values along its route.
Energy projects, such as those expanding wind and solar power, not only enhance the local economy but also draw more people to the area, further driving up property values. These developments make the region more appealing, and as more people move in, the demand for properties increases. This trend is particularly noticeable in areas with new infrastructure, where property values have seen significant appreciation.
Urban development plans, including smart city solutions in places like Ho Chi Minh City and Danang, are set to transform these areas. As these projects progress, they improve the quality of life and connectivity, which in turn increases demand for properties nearby. This kind of development tends to boost property values, making it a lucrative opportunity for investors.
In Vietnam, significant investments in transport infrastructure are underway, with projects like the North-South Expressway and energy initiatives expanding wind and solar power. These projects not only enhance the local economy but also draw more people to the area, further driving up property values. This trend has been observed in the past, where areas with new infrastructure saw significant appreciation in property values.
Investing in properties near these developments can be a smart move for maximizing profits. As these projects progress, they improve the quality of life and connectivity, which in turn increases demand for properties nearby. This trend has been observed in the past, where areas with new infrastructure saw significant appreciation in property values.
Sources: Trade.gov, Viettonkin Consulting, Deloitte, Source of Asia
10) You must navigate a slow bureaucratic process with patience and persistence to close a real estate deal
Buying property in Vietnam requires patience and persistence due to its slow and bureaucratic legal process.
When you submit a registration dossier, the registry aims to process it within the same working day, but if it's late, it might roll over to the next day. In some cases, it can take up to three working days if there are valid reasons for delay.
In 2024, Ho Chi Minh City only approved 12 new housing projects, and no land was allocated for new developments, illustrating the sluggish pace of property transactions. This slow approval process can significantly impact the availability of new properties.
Foreign investors and expatriates often face delays too. From 2015 to 2023, only 52 out of 138 approved real estate projects in Ho Chi Minh City were launched, leaving many units in limbo. This situation underscores the importance of being patient when navigating Vietnam's property market.
These bureaucratic hurdles can be frustrating, but understanding the process helps. Knowing that the legal process can be slow and bureaucratic, patience and persistence are key when closing a deal.
Sources: Vietnam Briefing, BLawyers Vietnam, The Investor
11) You must know Vietnam's real estate market is cash-based so expect non-traditional financing transactions
In Vietnam, real estate deals are mostly done in cash, even with new rules pushing for bank transactions.
There's a deep-rooted cultural habit of using cash in property sales, which means cash is still king in the market. Many expats and local agents will tell you that cash is the go-to method for buying property here.
Real estate agencies often point out that cash transactions are the norm. Arcadia Consulting, for instance, highlights how the property sector is growing faster than credit, showing a clear preference for cash over loans.
Getting a traditional loan can be tough, which is why many buyers stick to cash. Surveys and expert opinions back this up, noting the hurdles in securing financing through banks.
So, if you're thinking about buying property in Vietnam, be ready to deal in cash. It's a unique aspect of the market that you won't find in many other places.
Understanding this cash-based system is crucial, as it shapes how deals are made and what you can expect when entering the market.
Sources: Allen & Gledhill, The Investor, Arcadia Consulting
Buying real estate in Vietnam can be risky
An increasing number of foreign investors are showing interest in Vietnam. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
12) You may invest in off-plan properties as Vietnamese people prefer new developments
Investing in off-plan properties in Vietnam can be a smart move because Vietnamese buyers often prefer new developments.
In 2023, there was a surge in demand for new apartments, especially among foreign buyers who chose off-plan purchases for better deals. This trend is driven by the appeal of securing properties at favorable prices before they are completed.
Modern amenities are a big draw for these new developments. Many residential complexes come with features like swimming pools, gyms, and playgrounds. For example, Vinhomes Central Park in Ho Chi Minh City offers top-notch services, including a private marina and shopping malls, making it a popular choice.
The Vietnamese government is also playing a role in this trend by supporting new developments. They've invested in road infrastructure, which makes it easier for foreigners to buy property. These efforts are part of broader policies to encourage the growth of new housing projects.
Credit incentives for social housing are another factor boosting new developments. These incentives are expected to continue, further supporting the construction of modern residential areas. This means more opportunities for investors looking to tap into the growing market.
Sources: Vietnam Real Estate, Vietnam Real Estate FAQ, The Investor
13) You should prioritize properties with good feng shui as they are more desirable and valuable in Vietnam
In Vietnam, properties with good feng shui are becoming increasingly popular.
As we look ahead to 2025, there's a buzz around the real estate market, especially from the second to fourth quarters. Demand for feng shui-friendly properties is expected to surge, driven by their investment potential and the promise of price appreciation. This makes land and villas with favorable feng shui features particularly attractive to buyers.
Why the higher price tags? It's all about the perceived value. Homes with auspicious energy flow often command premium prices because many believe they bring good luck and prosperity. Buyers are willing to pay more for that extra bit of fortune.
When browsing real estate listings in Vietnam, you'll notice a common theme: feng shui attributes are front and center. Details like house orientation, room layouts, and auspicious elements such as indoor plants and specific color schemes are highlighted. This isn't just marketing fluff; surveys show that Vietnamese homebuyers have a strong preference for homes that align with feng shui principles.
It's interesting to note that Vietnamese culture places a strong emphasis on feng shui, so properties with good feng shui can be more desirable and valuable. This cultural aspect plays a significant role in shaping the real estate market.
Sources: Xinhua News, Vietlist, VOV World
14) You should always negotiate property prices in Vietnam to secure a better deal
In Vietnam, property prices are often negotiable, so don't hesitate to bargain for a better deal.
Back in 2023 and 2024, the Vietnamese real estate market was quite dynamic, with frequent fluctuations in property prices. These changes were largely due to shifts in government policies and the economic climate, which opened up opportunities for savvy buyers to negotiate.
Real estate agents in Vietnam are well-versed in the art of negotiation. They have a keen understanding of the local market, including current property trends and pricing. This expertise allows them to guide buyers in securing favorable terms, a practice that was widely reported in surveys and reports from that period.
Many property listings in Vietnam come with "negotiable" prices, signaling that buyers can often secure a better deal through bargaining. This reflects a cultural norm in Vietnam, where negotiation is a key part of business dealings, and maintaining a respectful demeanor is essential.
In Vietnam, building relationships is crucial during negotiations. This cultural aspect means that buyers who engage respectfully often find themselves in a better position to negotiate terms that suit them.
So, if you're considering buying property in Vietnam, remember that negotiation is not just accepted but expected. This approach can lead to significant savings and a more favorable purchase.
Sources: Savills Industrial, RUSSIN & VECCHI
Everything you need to know is included in our Property Investment Pack for Vietnam
15) You must know property deals in Vietnam require a "pink book" for land use and house ownership rights
You might be surprised that property transactions often involve a "pink book," which is the certificate of land use rights and ownership of residential houses.
In Vietnam, owning property isn't as straightforward as in some other countries. Foreigners can own up to 30% of apartments in a condominium complex and up to 10% of houses in residential projects. This regulation ensures that local ownership remains predominant, a policy that might catch newcomers off guard.
Over the years, the process of getting a "Pink Book" has become more user-friendly. Real estate developers now help foreign buyers navigate the application process, making it easier for them to secure this essential document. This change reflects Vietnam's growing openness to foreign investment, even if the need for such a document might still seem unusual to outsiders.
Despite these improvements, the "Pink Book" remains a unique aspect of Vietnamese property law. It highlights the country's commitment to regulating property ownership, ensuring that all transactions are transparent and legal. This level of regulation is not something you see everywhere, and it underscores the importance of understanding local laws before diving into the market.
For those used to different systems, the "Pink Book" might seem like an extra step. However, it provides a sense of security and clarity in property transactions, which can be reassuring for both local and foreign buyers. Knowing you have a legal document that confirms your ownership rights is invaluable in any real estate market.
So, if you're considering buying property in Vietnam, familiarize yourself with the "Pink Book" process. It's a crucial part of the journey, and understanding it can make your experience much smoother. Being prepared with the right knowledge can save you time and potential headaches in the long run.
Sources: LQ Ltd, Grant Thornton Vietnam, Savills Vietnam
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.