Vietnam has appeared as an attractive destination for global property investors thanks to the government’s more tolerance in housing ownership, favorable policies including recently significant investment in smart cities, and geographic advantages.
Part of Ho Chi Minh City. File photo
A number of laws on amendments including Land Law, Construction Law, and Law on Urban Planning (all in forve) draw a picture of the government’s master plan and its supportive policies in real estate sector that enables investors to oversee their profit margins.
Foreign housing ownership
The Law on Housing, which took effect in 2015, grants more rights to foreigners who wish to own a residential property in Vietnam with the ownership up to 50 years.
A luxury resort. File photo
Statistics by CBRE Vietnam have shown that foreign homebuyers, particularly Chinese buyers, are paying greater attention to high-end and luxury segments of the condominium market in the economic metropolis of Ho Chi Minh City in the first nine months 2018. Chinese people made up to 31% of home transactions through CBRE in the city during the nine-month period, followed by Vietnamese people with 24%, and South Koreans 19%
Foreign buyers include people who currently work and live in Vietnam and investors who have never set foot in the country. These new buyers are interested in projects with prices as high as US$9,000 per square meter.
One of the main reasons for this trend is the investors' belief that Ho Chi Minh City’s real estate market now is on pace to be comparable to Shanghai’s during the last 30 years, an era where real estate prices have increased substantially.
Momentous investment in smart cities
Vietnam has approved a sustainable smart city development plan until 2025 and with vision toward 2030 with an aim to enhance the quality and performance of urban services such as energy, transportation, and utilities in order to reduce resource consumption, wastage, and overall costs.
Under the plan, four chains of smart cities will be formed centering on Hanoi, Danang, Ho Chi Minh City and Can Tho in order to utilize local potentials to raise living standards of local residents and increase competitiveness.
By 2020, Vietnam hopes to complete the legal foundation for smart city development, set up pilot projects in a number of cities, and by 2025, the first phase of the pilot project on smart city development will be implemented.
The plan, accordingly, has cought significant attention from foreign investors. At the ASEAN Summit last November, Japan affirmed its support for the construction of eco-friendly “smart cities” in 26 pilot locations in ASEAN member states. Three cities in Vietnam have been listed as pilot cities in the ASEAN Smart Cities Network.
Ten ASEAN member states have drafted a framework for the development of these smart cities and the details of the project are expected to be discussed further as early as this October in Japan.
Through participation in the smart cities program, Vietnam aims to acquire technical assistance and training to design and run a traffic control system in Hanoi that can help direct emergency responses by firefighters, ambulances, and police.
In addition, with the adding of high-quality tourism and service activities, and multi-purpose entertainment complex to the national’s master plan, the building of culture and sports stations including horse racing venues is expected to draw more investment.
(To be continued)