Real estate industry groups advocate legal reforms to attract foreign investors

The Vietnam Real Estate Association (VNREA) is lobbying on behalf of property firms for changes to policies in the field of land, construction and real estate in special administrative-economic zones (SEZs).

One specific adjustment they have advocated is clause (5) of Article 16 in the Draft law on SEZs, which stipulates that eligible foreigners are entitled to receive, transfer, purchase and sell houses in projects in SEZs.

VNREA said that the draft law should be amended to allow foreigners to buy both residential and resort real estate in SEZs, except for certain locations impacting security and national defense. VNREA believes the policy changes would stimulate the real estate market in Phu Quoc, Van Don and Bac Van Phong SEZs in particular and in Vietnam in general.

Opportunities to attract huge capital inflows

Phu Quoc, Van Don and Bac Van Phong SEZs mainly focus on tourism development. If that regulation is put into practice, it will facilitate the development of resort real estate projects, contributing to the development of the local tourism industry.

“I totally support this regulation,” said Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, saying that the regulation would increase the supply of capital to the sector, which has been a challenge for the development of resorts in Vietnam.

He highlighted that the government should apply in the three abovementioned SEZs first before gradually applying the regulation nationwide.

The development of the resort property segment is quite new compared to other countries in the region like Thailand and Philippines. However, by neglecting to open this sector to foreigners, Vietnam could be missing an opportunity. Nguyen Hoai An, Deputy Director of commercial real estate services firm CBRE Vietnam says current laws don’t allow foreigners to own resort property even though this segment probably has more potential. She reasons that regular residential property may have limited appeal to foreigners because they do not reside in Vietnam permanently.

Nguyen Hoai An, Deputy Director of commercial real estate services firm CBRE Vietnam 

In addition, Vietnam has many beautiful places with natural scenery in which foreigners can purchase housing real estate as their second home.

An said foreign investors can significantly contribute to the real estate market’s development, but they will not be a dominant force.

Foreigners have more experience in buying real estates; therefore, allowing them to own resort real estate will partly enhance the quality of the projects sold. It will also boost the international arrivals to Vietnam, significantly contributing to the development of Vietnam economy.

An said that the current Housing Law in Vietnam allows foreigners to own a house in Vietnam for 50 years. This regulation not only facilitates foreigners to buy houses in Vietnam but also helps Vietnamese government to effectively manage them, differentiating them with Vietnamese residents. The similar regulation should be applied to resort real estates in order to both ensure the right of domestic customers and create opportunities for foreign investors. Vietnam may also have some regulations to limit the number of properties that foreigners can own in an area.