Vietnam has quickly become the hottest real estate market in Asia to Hongkong and Chinese investors with the price hitting new records.
Owning to Vietnam’s rapid economic growth, supporting policies of the government and low invested capital, house prices in Hanoi and Ho Chi Minh city have increased dramatically in recent years. However, according to Alex Shen, a Hongkong financial worker, they are still quite low compared to Hongkong and China, which is a huge opportunity to gain benefit.
The high-end buildings in Ho Chi Minh city cost US$3,000-5,000 per square meter, US$4,000 lower than in Bangkok and 95% lower than the price of houses in Hongkong. While, according to VinaCapital, one of Vietnam's leading investment management and real estate development firms, the profit to rent high-end apartments in Vietnam’s big cities is 1.5-2.5% higher than that of Hongkong, Bangkok and Singapore.
Vietnam has opened its real estate market for foreign investors since 2015, later than Thailand and Malaysia; and developers have been permitted to sell 30 per cent of apartments. However, according to the Ho Chi Minh City Real Estate Association (HoREA), the market has witnessed a quick growth since July 2015 with 700 foreigners investing in the city’s real estate within just one year.
Many foreign investors are finding opportunities in Vietnam, Asian’s fastest growing economy, thanks to the improvements in infrastructure, especially the construction of Ho Chi Minh city’s first metro line which would be finished by 2020 and Hanoi's first elevated railway line that would be completed in 2018.
River City building project in Ho Chi Minh city (Source: livereal.vn)
The quick increase in house prices
According to statistics provided by Jones Lang LaSalle (JLL), an American professional services and investment management company specializing in real estate, house prices in Ho Chi Minh city have increased by 6.9 per cent in Ho Chi Minh city and 7.3 per cent in Hanoi. Stephen Wyatt, Country Head of JLL, said that foreign investors tend to buy houses in the new districts like District 2 and District 7 of Ho Chi Minh city and coastal areas in Da Nang.
However, experts said that investors should recognize the risks before deciding to invest in a newly emerging market. Specifically, all land in Vietnam is managed by the state and the permitted time for foreigners to rent houses is 50 years while the dong (VND) has been devaluated 4 per cent within last two years.
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