Looking for a good investment opportunity with attractive long-term prospects? Consider Vietnam’s real estate market, which has revitalised over the past few years and is ripe for foreign investment.
Since the Vietnamese government relaxed its rules in July 2015 to allow foreign companies and foreigners with valid residential visas to own property in the country, financial advisors have been pointing to its real estate market as a golden investment opportunity.
Ho Chi Minh City, in particular, has caught the eye of experts, with the non-profit, United States-based Urban Land Institute and global consultancy firm PricewaterhouseCoopers declaring it the fifth most attractive investment opportunity in Asia Pacific in 2016, behind Tokyo, Sydney, Melbourne and Osaka.
Population sweet spot
Part of Vietnam’s investment appeal lies in its young population and burgeoning economy. Unlike other Asia Pacific countries that are more developed and have ageing populations, the median age in Vietnam is just 30, and its middle class is expected to almost triple in size from 12 million people in 2014 to 33 million people in 2020.
Experts believe that these economic and demographic trends point to an upcoming surge in demand for housing in the country, especially as more young Vietnamese move from the country’s rural areas to its cities in search of a better life.
Another selling point is the affordability of Vietnamese properties. In an October 2015 report, real estate consultancy firm VinaCapital noted that, “compared to its regional peers, Vietnam still offers bargains, being generally less expensive across all segments”.
Real estate prices in Hanoi and Ho Chi Minh City, for instance, are lower than those in Phnom Penh, Manila, Jakarta and Bangkok, according to property consultancy firm CBRE. Even luxury properties in central Ho Chi Minh City cost just US$4,000 to US$5,000 per square meter (S$5,551 to S$6,939), compared to up to US$9,375 per square meter in Bangkok.
Investors in Vietnam’s real estate market can also expect to reap attractive returns of 6% to 7% for residential properties and 9% to 11% for commercial ones, depending on the property’s location and age, according to Mr Stephen Wyatt, the country head for real estate services firm Jones Lang LaSelle (JLL) Vietnam.
“The market is developing and maturing at a faster rate than previously seen,” he told The Hanoi Times in April 2016.
Homework is key
Still, investors should do their due diligence. If you’re considering buying property in Vietnam, stick with developers with a strong track record, such as Keppel Land, one of Vietnam’s pioneer and largest real estate investors with a diverse portfolio of properties in the country, including The View at Riviera Point, and Estella Heights in Ho Chi Minh City.
Apart from seeking established developers, you should also find out more about the property’s location and the neighbourhood’s growth prospects.