According to the latest report from Vietnam’s General Statistics Office (GSO), during the first five months of this year, $806.5 million USD poured into Vietnam’s real estate market. This includes Foreign Direct Investment (FDI) into real estate projects; the registered capital for projects that have been previously licensed; and $623.3 million USD in registered capital for newly licensed real estate projects.
The majority of investment for new Vietnamese investments is in the high-end real estate segment where investors have the strongest advantage in receiving significant returns on their investments. According to a variety of reports, the high-end real estate market is especially attractive to international developers who have experience in design, development, marketing, sales and day-to-day operations of projects.
The Vietnamese real estate market attractive to foreign investors because of the country’s high economic growth, the expansion of both middle-income and high-income markets and the safety and profitability for developments in the country. In recent years, the Vietnamese government has also implemented policies for foreigners who want to own homes in Vietnam and has provided incentives for foreign investors.
Su Ngoc Khuong, investment director at property services firm Savills Vietnam, said the presence of foreign investors is a important and positive trend for the Vietnamese real estate market since these investors bring in vast experience in project development and are raising the quality of services provided in real estate developments. These also help to improve business activities, increase market competitiveness and product performance in the market, which is bringing positive benefits to consumers.
During the January through May period, there were 2,600 new real estate enterprises established in Vietnam and on average, there are 17 new real estate enterprises established each day. Real Estate industry experts evaluate the growth in the investment capital in the market along with the profit of developments as the key driving forces for the growth of real estate companies. Companies have aggressively entered the market in order to gain market share, especially in land acquisition and the development of resorts as “red-hot” sectors.
Tran Kim Chung, Deputy Director of the Central Institute of Economic Management, said the profits from real estate business are very high. "If they spend one Vietnamese dong in the real estate market, they will get one and one-half to two dong in returns.”
As long as real estate returns remain at this level, both domestic and international developers will continue to enter and expand in the market. For the individual buyer, there are “experts” who say that although real estate in Vietnam is in a upward spiral its still a good time to buy property and judging by the number of real estate ads that are seen on mass media channels, outdoor promotions and on social media platforms there seem to be new developments opening everyday.
Other experts stress that buyers should be cautious since many areas are in a growth “bubble” that can not be sustained, and that as always, bubbles can burst and leave investors with losses. Most real estate experts also point out that the most important factor for the individual investor to consider is whether their investment is for the short-term or long-term and that as always, location and quality will be the most important factors in any purchase decision.