Vietnam has come a long way since the real estate bubble burst a few years back.
Now people are scooping up condos again, especially since a law this year opened up the market to foreigners. Lien Hoang reports from Ho Chi Minh City.
Vietnam is hoping to see a lot more people like Haig Conolly. The Australian and his wife became the first foreigners to buy real estate in Vietnam under a new property law that took effect this summer.
Policymakers pushed the law as a way to attract foreigners and increase demand in the property market.
“We were enormously assisted everywhere that we went,” he says, “As I mentioned earlier, the quality of the product is increasingly of international standard.
But that doesn’t mean the transaction is complete. It’s been several months since foreigners could officially take advantage of the law.
Yet as Conolly describes it, buyers are still confused about the details of contracts, whether titles will really get transferred to them, and banks’ willingness to approve mortgages.
“I think the challenges and frustrations are part and parcel of life in emerging markets, so you tend not to see them as challenges and frustrations, you just go with the flow,” he says, “This is a fundamental part of the whole thing. If challenges and frustrations concern you, then to an extent you’re in the wrong place. That’s just a reality.”
Many foreigners are taking Conolly’s approach -- they are working through the difficulty of investing in Vietnam, because they think it’ll pay off eventually.
One of the biggest difficulties foreigners complain about is that Vietnam doesn’t have guidelines on how to use the new property law.
Chau Ta, legal counsel at SC Capital, which invests in real estate, says that creates confusion when buyers submit paperwork to local governments.
“There are laws out there that allow foreign ownership, for example. But implementing decrees aren’t out yet. So that’s a good and a bad, right? Good in the sense, it gives the local authorities, it empowers them to translate, interpret how it should be, to apply it to their district,” she explains, “Bad is, you do get the other side, where they make it more troublesome for the investors, the paperwork, the cumbersome, the running around, the unforeseen problems.”
David Lim, a property lawyer with ZICOlaw, believes these difficulties will be sorted out, because foreigners have long been interested in Vietnam’s real estate market.
“I think there’s a lot of pent up demand. You know that foreigners were only allowed to buy from 1 July 2015. And also at the same time, I think we’re just coming out of the financial crisis from before,” he says, “So I think with the loosening of the law and the opening of the market, you start to see more transactions.”
Foreigners are buying property for personal use, but also as large-scale investments.
Vietnam looks like a stable place to invest, compared with the political changes in Thailand and Myanmar, and the currency volatility in Malaysia and Indonesia. Here’s Lim again.
“It may be political, it may be economic, but there are things which are happening in the region right now which are destabilizing and perhaps creating some head winds for a few of our ASEAN neighbors,” he says, “However, we’re seeing right now suddenly with the changes in the law to make Vietnam more attractive to foreign investment.”
To really take advantage of this foreign interest, Vietnam should simplify the transaction process, says Tran Nguyen, CEO of Jen Capital investors.
“My suggestion would be to have a one-stop shop for all the foreigners who want to buy a unit in Vietnam,” he says, “With a clear roadmap of what they’ve got to do, so they can decide even before they buy, OK, I need to have certain documents.”
Nguyen added that if Vietnam could make buying easier, it could be a very “exciting” place to invest.