Vietnam could soon become the new property hotspot in the Asia Pacific region, challenging the likes of Bangkok and Singapore for investment dollars. Channel News Asia reported that the country’s growing middle class along with new rules relaxing the regulations on foreign ownership could help the property market grow by leaps and bounds in the near future.
At the moment, Vietnam’s economic outlook is healthy which is one reason people are starting to take note of the country’s property market. Channel News Asia stated that a six to seven percent growth annually is estimated between now and 2020 and this is driven by foreign investment and a slew of free trade deals including the Trans-Pacific Partnership.
The market itself has also seen quite a bit of action over the last couple of years. According to Channel News Asia, unsold real estate inventory in November for all of Vietnam was worth USD2.4 billion. This figure is nearly 50 percent less than what it was in early 2013.
A new law that was passed by the country’s government in July has made it possible for foreign buyers to purchase property in Vietnam; however, these investors have yet to materialize. While local confidence in the property market is high, rental yields in the country are still proving to be an issue which is keeping foreign investors at bay. For example, Hanoi averages five percent yields for apartments, and around three to four percent for villas, Channel News Asia added.
“The problem we’ve got here is rental yield. The rents are too low – still too low compared with the purchase price of property. So we have to use special techniques to make it work,”
Welsh multi-millionaire property investor Kevin Green said.
And this is just one issue facing Vietnam before it can start seriously challenging places like Thailand for foreign real estate investment. There are also some issues with taxes that will need to be worked out before the country’s property market can truly take off.
“Like how you transfer money from other countries into Vietnam. For example, after a few years if you want to sell the property how do you take out the profits and money back to your country? We need some guidelines from the State Bank of Vietnam,” Pham Thanh Hung of Cen Group Holdings told the news outlet.
