Cheap real estate in Vietnam draws scores of Chinese buyers

Vietnam has become an up and coming property investment destination among Chinese and Hong Kong buyers with real estate prices lower than in other Southeast Asian countries.

Demand for properties in Vietnam among Chinese buyers surged 300 percent year-on-year in the first quarter of 2018, Chief Executive Carrie Law of Juwai, one of the biggest international property portal in China said.

“Many investors from mainland China are hoping to see these cities [Ho Chi Minh City, Hanoi] replicate the same growth as Beijing and Shanghai,” said Stephen Wyatt, the country head of JLL Vietnam.

Buyers from mainland China, Taiwan and Hong Kong last year accounted for 25 per cent of the Southeast Asian nation’s total transactions by foreign buyers, up from 21 per cent in 2016, according to data from real estate company CBRE Vietnam.

Analysts say relatively low prices in Vietnam, one of world’s fastest growing economies, and the desire for Chinese buyers to diversify their portfolios given their limited assets overseas, make markets like Ho Chi Minh City, Hanoi particularly attractive.

A high end property in central Ho Chi Minh City costs $3,000 to $6,000 per square meter. However, its equivalent in Bangkok costs around $7,000 to $9,000 per square meter, and still less than 10 percent of the value of Hong Kong properties.

Vietnam’s relaxed restrictions on foreign property ownership are also believed to have facilitated the surge in Chinese and Hong Kong buyers, but to a lesser extent because bureaucracy remains a strong barrier.

The 2015 Housing Law allows foreign investment funds, foreigners with valid visas, international firms with operations in Vietnam and overseas Vietnamese to buy residential properties with leaseholds of 50 years.

And developers are allowed to sell only 30 percent of the units in each building to foreigners, meaning eligible apartments need to be advertised.

However, analysts warned about the possibility of a real estate bubble in Vietnam, which is similar to the historic one in 2008.

Eight out of 10 signs of a real estate bubble have been identified in the Vietnamese market, said Tran Kim Chung, deputy director of the Central Institute for Economic Management (CIEM) at a conference last week.

Local residents and real estate agents said the price doubled last year’s, and has climbed a further 30-50 percent so far this year.