Everything You Need to Know About Real Estate in HCMC

By: Patrick Gaveau

We sat down with property experts Mauro Gasparotti and Rudolf Hever from Alternaty (Alternaty.com) for a deep exploration of Ho Chi Minh City’s real estate scene.

Mauro GasparottiMauro Gasparotti

Do you think Vietnamese people as a whole have a different perception on land value?

Mauro: Yes. Valuation is probably the most important and sensitive subject for Vietnamese. I think the true definition of value, which is what a willing buyer and seller would pay for is not applicable. It’s more of what the people are asking for next door.

The other thing that affects the value is the process of the acquisition of land, the years of pain of getting the land from a certain status to a much more sellable status. From a valuation point of view, foreigners don’t consider this when they come in. You could spend years on relationships and a lot of money to get this land, so there is a mismatch to what a normal developed country would perceive as value and what the Vietnamese think of it. Vietnamese want to get paid for this process, and that’s why a lot of development comes at such a high prices, because this would make the project feasible.

The Vietnamese also put a future value into the asking price. They put what the value will be in 5-10 years time, they try to put the growth of the country as a factor. It’s a long exercise to understand value from both sides. For Vietnamese it’s what has been the history they needed to go through to get to this point where they can sell the land; for foreigners it’s what the price is that would make their project feasible on this land.

There’s no transparency. That’s why the big guys like Vincom who get the land easier can also move the process along faster than the single developer who has spent 10 years trying to get the approval and now he wants to get paid for this 10 years.

Photo by Pullman Saigon Centre

Is there in your experience any other country that is similar to Vietnam in the market’s disregard to value?

Mauro: Myanmar. We have been asked to open an office there. I clearly saw the dynamic of the market when I was there. Nobody can tell the real value of the land, everybody is relying on the future value it, as well as how easy it is to build on it, how clean it is - also a lot of corruption in the back. That’s when you see speculation, you see a bubble, you see overpriced land, and not many transactions. And now you see an oversupply in the hotel business; two years ago there was an undersupply. Vietnam is past this stage now and much better than before.

Cambodia is different. It’s easier to get the land process approval. You know exactly how much it will cost you, so Cambodia is an easier market to do business with, and they rely on foreign business as well.

Is the average land value in the primary streets in HCMC overvalued?

Mauro: Yes, but if you asked me this question five years ago I would have said yes as well, and now the value is 30% more, so I was wrong then. I could be wrong now. The reality is that if I run a cash flow model on any commercial property, and I pick US$20,000 per square metre of land, there’s no way I’ll recover from that.

However, because of this barrier of entry, it will always keep your commercial property high in terminal value. If you look at the hotel business for example they badly need 3 and 4 star international branding. But then you look at the land price and it’s not very feasible to pay US$20,000 per sq m if your room rate is US$70.

But you're more likely to sell your end product for a premium. So you pass this high price on this land to the high price on your building. The whole system works somehow on this high land value, high barrier of entry in District 1, and then high value on the completed building. So somehow, I am sure, there are certain projects that are actually feasible.

Then you go outside a bit of District 1 - District 3, near the airport - the land price drops a lot, but still pretty high, but it’s feasible. Noise is another story [laughs].

Photo by Tri Nguyen

Do you think this system is sustainable?

Rudolf: I look at it in a more optimistic way. It is what it is, but it is changing, the market is developing, there are more laws being passed encouraging foreign investment, and you can see this in the statistics of FDI [Foreign Direct Investment]. I think over time, in terms of the big picture, we are an emerging marketing. We are going the right way, although it’s a rollercoaster, but over the long term it’s getting more developed and transparent.

FDI is increasing? By how much?

Rudolf: I don’t know off hand but real estate is usually the second or third largest recipient after manufacturing. Real estate is one of the major benefactors of FDI.

How important is the real estate market for the Vietnamese economy?

Mauro: [Pause] I think it’s crucial, I think [the Vietnamese] look at it closely as an indication of how strong the economy is itself. They are very attached to the land as core value, and I think it’s a good way to move the money out of the stock market, which seems very risky at the moment.

A lot of the big guys I mentioned before will change the dynamic of the market, whether there is a huge bubble of oversupply I cannot answer now but the belief is that they are building because there is demand and they believe people will invest. I think this is sustainable at a level that the bank will need to come in with more support. The market is a long way from being developed but it’s good news that we’re talking about something that can always improve and get better.

If you see the whole District 2 it’s a beautiful example of a new satellite city. So there is a lot of good news out there, I wouldn’t be too worried. And being here for eight years I passed two big bubbles: 2008-2009, and then 2011-2012, so I am very realistic about the market, but I see a lot more educated buyers and developers now.

Photo by Huy Nguyen

Is local financing still too weak to support real estate development?

Mauro: I think yes, I think there are banks that rush into something when they are asked, and then they step out as quick as they rush in. There is really no long term strategy for the bank itself, and they only support a certain level of buyer, which is the mid- to high-end buyer that has easier access to the bank, while the people that really need it, it’s much more difficult for them.

We were doing a project in Cambodia one year ago, a satellite city with a townhouse. We were amazed to see the amount of support the low-income buyers got from the banks to buy these low-cost townhouses. There was a whole structure of payment set up according to the salary the people had and there was a lot of cooperation from the developers and banks coming together to help this structure. I don’t think Vietnam is there yet. I think it’s more based on the personal relationship between the buyer and his bank, than a sustainable, clear structure. As a foreigner living in Vietnam, or as a foreign company, it’s not an easy structure - so there’s a lot of improvement to be done at that level.

Rudolf: I think we all know that bank financing and debt financing is a big mystery to most people in Vietnam, and very few have access to it. But on the level that there is access, I don’t think there is a shortage, just simply looking at the amount of activity going on in HCMC and Phu Quoc. But as Mauro said, once we go down to the middle tier and lower tier enterprises, then it’s quite difficult. There are also sources of financing overseas. A few big players like Vincom and Novaland are using offshore bonds. Then you have other groups Singapore’s CapitalLand, who obviously get funding from Singapore from the head office. And then you have groups such as SonKim Land, who are mid tier developers who are locally based, but who are partnering with foreign investors who then bring cash either at the corporate or project level, which can be private equity or listed funds.

The government recently issued new regulation that facilitates the purchase of property for foreign residents. Can you tell me more about that?

Rudolf: I think there is growing interest from offshore to invest in Vietnam. But in reality the number of actual groups and projects that are viable and are able to handle a foreign partner are very small.

Photo by Tri Nguyen

Legally speaking is that easy for them to do?

Rudolf: In terms of individual buyers, there are less restrictions. There is interest, people are definitely curious about Vietnam. You see more articles on Bloomberg, Newswire, these big news outlets, are now running good stories about Vietnam. But it’s still not an easy decision making process to commit to buying. Over time it will get easier, and the laws have improved dramatically, but there are still grey areas in terms of exactly what you can and cannot do and the mechanics of a purchase and sell. But we’ve come such a long way, and there will be more interest. You will see more and more developers going overseas with a broker to sell property. You see a lot of properties in Thailand, Australia and U.S. sold offshore. Vietnam is now getting into that group. It’s still seen as an emerging, a more risky case, but I think it’s an incredibly huge market to get into.

Mauro: If you buy property here and rent it, it’s actually a decent yield compared to other countries. With some properties you get 7-9% return on your initial investment, which is pretty attractive for people. But the problem is how do I get my money out of the country. The foreign buyers are those who are familiar with the country. It’s not just overseas people who put the money in, there is usually a wife, girlfriend or whatever who is familiar with the country. Thailand has a proven track record of enter and exit. Foreigners are more keen and safe there. Vietnam has just opened to foreigners, so I think there will be a couple of rounds of track records to be proven to the market, and I think this will be seen over the next couple of years as some properties are developed, such as Estella Heights.

In terms of the number of projects, there is no match. I think there are more projects in Ko Samui than in the whole of Vietnam. So that’s just in terms of volume. I think Vietnam has a lot of room for what Phuket and Bali have a lot of - these villas, second home projects that are decently built. Usually [in Vietnam] it’s either a US$1 million beachfront property or the township project with no real design. Vietnam needs a mid-type of prical structure with a managemental top, not much branded management, just something nice enough to show that there is value here. This is missing in Vietnam.

Which real estate sector suffers the most in HCMC today?

Mauro: To me it’s malls. This sector is still not truly developed. The demand is not there on the Vietnamese side. The mixed tenants are not there. Usually there is the same type of tenants. You don’t see what you get in Thailand: where people can spend all day at a mall, where there is a large variety of shops and a large food court, with everything from low-priced items to the branded level. I don’t think malls in Vietnam are a sound market yet - land is too expensive for the amount of land retail needs. Considering the land price you need to go high-rise to make your money. I think the only mall that has proven to be nice is AEON Mall. I think that was a good shot. But it took a long time to be executed.

Malls are popping up everywhere. Is there an oversupply?

Mauro: I don’t think there is an oversupply, I think there is a lack of demand and even the right design. There is no mall where I want to spend more than two hours at, as opposed to in Thailand. In Vietnam the feeling of a mall is still just a box where you can buy something and get out. There is a lot of room for further development, even open malls where it’s outside and there’s bars and clubs and something where you make the whole place more than just a shopping location. I think retail, and more specifically the malls sector, is the most difficult to make work, but there is a lot of potential.

I think office passed its bad period. I think it’s doing well and will do well. Residential - that’s where there might be a problem. Residential is still being supported by sales. But that’s a market where you want to keep selling and moving. That’s the riskiest market at the moment. People don’t know if it can be a huge success or disaster in the next two years. Apartments for rent need to be much more developed, a nice rental structure, where developers actually help the tenants rent the space for a decent price, and decent management. The rental market is actually very small. There is a lot of room for improvement here.

Hotels - I think there is a big need for 3 and 4 star hotels, mixed-use hotels, limited service hotels. I think these have the most potential in the non 5 star area; 5 star hotels we have all the property we will need to have for the next three years, that’s it.

What is your opinion on Vincom’s Landmark 81 project?

Mauro: I saw the pictures as everybody else. I think there is a need for Landmark 81. Did you see Bitexco? Again, from a feasibility standpoint it’s not a good return on investment, but it does give somehow a stronger character to the whole city. So I think this is something we should give it credit for. Vincom is different, because they are able to get the money on everything surrounding the Landmark 81 development. That’s the strategy: they’re going to spend money on something that’s not making any money itself, but this value is then going to be passed to every surrounding development they are going to have. I like the area, I think there is a lot of potential. There are a lot of critics on Vincom’s design and choices, but there is respect for them in that they actually deliver.

For a land lease for foreign companies, you are given 50 years. What happens after 50 years?

Rudolf: There are a few different issues. First of all, let’s go down to the other side, which is a developer selling projects to individual investors. There’s new rules and regulations, so yes, a foreigner can buy, but as an individual buyer foreigners can lease only 50-70 years renewable for a freehold area, but the renewable part is the grey area. In terms of talking about a development project, a local or foreign joint venture company can build the project; it just depends on the actual land and area, if its leasehold or freehold. But even a foreign developer, or a joint venture partner with local participation, can buy and sell for freehold some projects. For example a typical case is SonKim Land for The Nassim project. SonKim Land is local, but they joint ventured this with Hongkong Land. It’s freehold for locals, but foreigners can only buy it with a 50 year lease. Same thing with Estella. It’s actually now a 100% foreign-developed project but they can still sell as freehold.

Mauro: It’s funny because as a foreigner you buy leasehold, but if you sell to locals it converts to freehold. This structure makes the whole system open to hope that you never really lose the value even if you are foreign investor. So within 50 years you have a likely chance to sell it.

Imagine the prime minister of Vietnam approaches you and asks you to give three actions to take in order to boost the real estate market?

Rudolf: One is continue along the transparency route. Transparency is a key and risk factor for foreign investors. It has improved over five years but it still has a ways to improve to encourage development.

Mauro: I still think education for the real estate players is important. So my suggestion would be start to really work with developers, architects, PMs, everybody around real estate to educate them what the future of Vietnam is set to be and get everybody on the same page. Once you get a developer who knows what they are doing the project get smoother and the structure is better for the long-term value for the country. Same with architects, get them to a more professional level.

Education goes from the normal public structure all the way to certificates the government requires for the real estate professionals. 70% of the brokers selling homes are random people that are requested to call other people to try and sell it. This to me is wrong because there is a lack of information, a lot of confusion.

More regulation, more help and support. Having people run real estate as a profession. I’m not sure what are the requirements now for an architect to be considered a professional. If you see them make a mistake, you would withdraw the license that they have. A lot of Vietnamese developers - and I won’t mention any names... if you go to Nha Trang, there are a lot of structures that are dangerous in the way they are structured. A lot of property management companies have no real regulations in the way the work needs to be performed, just financial regulation to what they can charge to the developer. Yes there is a certificate to be a broker, but it’s just an easy month course. All of this is missing from the country. The fact that the professionals here are not guided to maintain a certain level of professionalism.

The other suggestion would be for local authorities to work much more with developers. There is a lack of international flights to Phu Quoc, one of the reasons is that local authorities and developers are not sitting down to develop the destination in the right way. Hotels don’t have a small marketing fund to promote destinations. I think if this coordination between local authorities and private investors was there, it would benefit everybody. Danang was able to be seen as an international destination within three to four years of development, because a lot of international brand hotels came on board, and because local authorities were much more open to foreign investors and players. I’m still surprised we receive the Danang newsletter from local authorities every two months. This to me is a huge step ahead. They understand what foreigners need, they listen to them, work with them on promoting the destination. I think this will give a lot of value to Phu Quoc, Mui Ne, Ho Tram, Nha Trang, all the destination that need more coordination. They should sit down with investors and consultants and make a master plan not just from the land value point of view but a 20 year planning for the whole city.

Photo by Tri Nguyen

Do you think it’s a bit naive to think that the Vietnamese can change to work for the benefit of the group?

Mauro: It’s a big step forward. But Danang did it, and it’s a good example of how it can be done.

Would you recommend a foreign friend to buy now in Vietnam?

Mauro: I would recommend to buy. Not everything. To me the right land is not the prime land, it’s the right development, the right spot that can be developed well, if the design is right, if many other things are right. It’s not just about having the prime land, but the land that makes the most sense. For the residential, yes - we bought a unit at Estella. I will buy some Novaland property. There are some products that have opportunities, but not which many people look at because of land prices.

Rudolf: Both of us have been here eight years. I myself would have never thought of buying anything until six months ago because of the future and pricing, but everything now converged to make sense. This time around there seems to be more real demand, I think the years of 2012-2015, where we worked through all the excess and the foundations again, gave me confidence that we went through that period of consolidation and that now we have much more solid footing. And now the economy - I follow it quite closely and all the indicators are looking positive; FDI, interest rates, foreign trade, everything is looking quite solid. Last quarter we had a little bit of a down, but everything for last 2 years has been building solidly. All our regional peers are suffering. So Singapore, Hong Kong, Thailand, Malaysia - usually they’re always looking good and Vietnam is the black sheep. Now it’s actually the reverse.

Photo by David Sawyer

Many economical factors are looking very bleak on a global scale. Is the Vietnamese economy dependant on these factors?

Rudolf: Yes and no. But I always look at myself, why I am based in Asia and why I am based in Vietnam. Because globally it can be a good place to be. Putting all the factors together, in the next 5-10 years Asia, specifically Southeast Asia and Vietnam, is a good place in terms of balance.

So you don’t think we’re in a real estate bubble now?

Rudolf: Globally it’s been risky for the past five years. But if you keep saying there is a crisis every day, in five years you’re going to be right at some point. There are always cycles, but I think the gloom and doom scenario is possible but highly unlikely.

Mauro: I don’t see a bubble like I saw a few years ago. I don’t see that scary situation where you say, oh my god, if that bank or whoever stops doing this, everything will collapse. I’ve seen much more growth from private investors. There are probably two sectors where you may say there is a lot of supply coming but demand is uncertain: one is residential, which is what probably everybody is looking at. I receive a message every day that somebody is building a condo somewhere in HCMC, so that’s probably the part that is most scary. The second home market is the other. Some planned projects are fine. But a lot of not well-planned products we will see selling only 15-20% at launch, and that’s it. This is the scary situation where there is no buyer.


Ibis Saigon Airport: A New Flagship for AccorHotels in Vietnam

By: Arik Jahn

The First International Brand to Open an Airport Hotel in Ho Chi Minh City

HO CHI MINH CITY, Vietnam — With an electrifying event, ibis Saigon Airport, AccorHotels’ brand-new hotel sitting right next to Ho Chi Minh City’s Tan Son Nhat International Airport, celebrated its grand opening on 24 March 2017. Ibis Saigon Airport is the latest addition to AccorHotels’ vast hospitality network in Vietnam.

Ibis hotel

Over a hundred guests, including Ho Chi Minh City officials, representatives from AccorHotels and the hotel’s owner company Hado Group attended the event, which paid tribute to ibis Saigon Airport with an opulent buffet, contemporary dance performances and a rooftop party.

“A Milestone for the ibis Brand”

The ibis Saigon Airport’s major asset is its strategic position: a mere 500 metres from Tan Son Nhat International Airport, the gateway to Ho Chi Minh City and all of Vietnam. Xavier Cappelut, Accor’s regional Director of Operations for Middle Scale & Economic Brand Hotels, praised the hotel as “a significant milestone for the ibis brand” thanks to its one-of-a-kind location.

Ibis Saigon Airport is a haven of hospitality tailored to corporate travellers and all those looking for “Value for Money”. With its functional and stylish travel-themed design and an outstanding 24-hour food and beverage service at the in-house Oopen restaurant, this hotel truly honours ibis’ slogan, “Well-being at the best price”.

ibis

As the first international airport hotel in Ho Chi Minh City, ibis Saigon Airport goes beyond the usual amenities of the economy sector. Its room typology – standard rooms, family rooms, studios, as well as one and two-bedroom apartments – is unrivalled in the budget segment, catering to the individual needs of each and every guest, from corporate clients to travelling families, from short-stay to long-stay visitors.

INTERVIEW WITH ORESTE TRAETTO, GENERAL MANAGER, IBIS SAIGON AIRPORT

Question: What makes ibis Saigon Airport the first choice for business travellers in Ho Chi Minh City?

Mr. Traetto: Our hotel is strategically tailored to business travellers. Our Oopen restaurant is open 24 hours and we are the only international hotel chain offering a breakfast service from 4 o’clock in the morning until 12 o’clock [in the afternoon]. So if you have an early flight to catch, you will be able to grab some food, get a coffee, hop on our free shuttle to the airport and you’ll be there in five minutes.

ibis oopen

Or imagine you are a businessperson, and had a hard working day. At ibis Saigon Airport, we provide you with all the facilities to truly reenergise you. What is very important to us is the ibis ‘sweet bed’ that can give you a really good rest. We have incredibly good feedback from our clients about it. And all that, I believe, shows how we really cater to the customers’ needs.

Question: You are very proud of ibis Saigon Airport’s in-house venues. Can you tell me a bit more about them?

Mr. Traetto: Today, travellers, even though they stay for a short amount of time, they want to optimise their stay. Now, with The Hub, ibis Saigon Airport has the only rooftop bar in  Tan Binh District. When you finish your work, you go upstairs, get a beer and enjoy the view of landing airplanes. We have a pool, we have a steam bath, we have a sauna, we have a gym – this is definitely what gives us the opportunity to attract a specific segment of clients. We provide our guests with a place to relax.

We are, if I may say so, part of the new generation of ibis hotels.

ibis hotel view

INTERVIEW WITH XAVIER CAPPELUT, DIRECTOR OF OPERATIONS FOR MIDDLE SCALE & ECONOMIC BRAND HOTELS, ACCORHOTELS

Question: AccorHotels is home to many brands. Why did you choose the ibis brand for this particular project?

Mr. Cappelut: I think this is a very unique location. The guests who choose to stay close to the airport have very specific needs. They might be in transit for a few hours, they might be spending their last night in Vietnam after a trip. We believe the level of comfort provided by ibis is just the right amount for these specific customers.

And the beauty of a brand like ibis is: you can travel anywhere in the world, you will find the same layout, the same service, the same comfort. Guests choose ibis because they know exactly what they can expect. That’s a guarantee that we provide to our customers. And they appreciate it.

Question: Vietnam is a country with an immense potential for tourism. How does ibis Saigon Airport serve this very particular market?

Mr. Cappelut: Vietnam is very important to us as a group. We, AccorHotels, have been in Vietnam since 1991. Back then, we were the only international hospitality company in Vietnam. That shows how committed we are to Vietnam as a business location.

And today, this country is developing at a dizzying pace. Last year, there was a 26% increase of international visitors and a 9% growth in the domestic market in Vietnam.These are incredible numbers.

And of course, we try to attract Vietnam’s domestic guests. The ibis brand perfectly caters to them because it is a functional, but full-service product that offers “Value for Money”.

Ibis Saigon Airport is quite simply the right product in the right place at the right time. And it is highly visible. In fact, we couldn’t be more visible than here at the airport. In that sense, ibis Saigon Airport is Accor’s flagship in Vietnam.

ibis hotel room

AccorHotels’ journey in Vietnam is far from over. In the next two years, the group plans to open another 12 hotels all over the country, which will bring its total portfolio to 36. But thanks to its eminent location next to one of Vietnam’s most important travel hubs and its many amenities, ibis Saigon Airport is undoubtedly a go-to for all Ho Chi Minh City-bound travellers.

 


Hong Kong and Singapore Investors Seek Opportunities in Vietnam

By: Timo Schmidt

Vietnam’s new laws for foreigners, released in July 2015, have already had great impact on the local housing market in the country.

Particularly, investors from within the region are amongst the first ones to actively seek investment opportunities in the country. Savills Vietnam has seen great interest and real demand from foreign buyers based in Singapore and Hong Kong. To better understand the reasons for their aggressive moves it is important to look at the local housing market in these respective countries.

Property markets in Singapore and Hong Kong have been heating up over the last decade due to ever-increasing demand from local and foreign investors. While Singapore is a preferred investment destination for buyers from Malaysia, Indonesia and mainland China, the market in Hong Kong has seen tremendous investment from the latter.

“Property markets in Singapore and Hong Kong have been heating up over the last decade”

To react to the social problems caused by the price increases - such as lack of affordability for first-home buyers - governments in both destinations have put cooling measures in place. These are now showing effect with a considerable drop in transactions, and prices are expected to drop in both countries.

In Singapore and Hong Kong the governments reacted as early as 2009 with a variety of cooling measures, which included:

  • Increase of Buyer’s Stamp Duty (BSD) for purchases of multiple properties of up to 15% in Singapore and 8.5% in Hong Kong respectively, particularly for non-resident foreigners and entities.
  • Seller’s Stamp Duty (SSD) on resale of properties with short holding periods in Singapore for periods of less than one year, which was later increased to three years. And in Hong Kong from two to three years.
  • Limits on loan-to-value for multiple unit purchases, meaning that buyers could not leverage purchases by using bank loans. Especially relative to foreign buyers or those who purchased multiple units.

These measures were specifically introduced to curb property investment and speculation - particularly by foreign investors - rather than preventing irsthome buyers from purchasing units. The effects are finally starting to show with transactions and prices decreasing in both markets, and talks of a property market crises making the rounds. More importantly, the yield potential in these markets has declined due to the additional purchasing costs.

Photo by: Tri Nguyen

Taking into consideration that Hong Kong and Singapore investors are amongst the most active in the region, Vietnam is seen as one of the most attractive destinations for property investment in Southeast Asia. With excellent yield potential and prices at a fraction of those in Hong Kong and Singapore, investors can purchase multiple units at the value of one property in their home markets.

“Vietnam is seen as one of the most attractive destinations for property investment in Southeast Asia”

Savills Vietnam was among the first real estate agencies to take advantage of this by creating an international sales department to actively promote Vietnam’s properties in these key markets; in collaboration with Savills regional offices.

“We have seen great interest of local developers to market their projects abroad, and have scheduled a series of sales events in Hong Kong and Singapore over the year 2016. Our offices in both countries are excited to promote Vietnam’s properties given that the easing of restrictions allows foreign investors to take advantage of low prices and excellent yields in comparison to their local markets,” says the head of International Residential Sales for Savills Vietnam. “Since inception of the department we’ve transacted nearly US$20 million in sales to foreigners without bringing projects abroad. We are confident that this number will increase dramatically over the coming months.”

The opening of the Vietnamese property market to foreign investors is expected to draw more foreign investment into Vietnam from private and institutional investors.


Buying Property in Vietnam

By: City Pass Guide

Vietnam property ownership for expats is a dilemma that has been here as long as the expats themselves. You come to Vietnam, fall in love with the country and settle down. But where will you live? Is it going to be rental property forever? You don’t intend on leaving so why not buy? It may surprise quite a few to realise that it is not as fraught with danger as you may think. It is certainly easier than in Thailand, and there is a lot less chance of you losing your hard earned money.

Vietnam Property Law Changes

The government changed the rules in July 2015, enabling foreigners to buy their dream home here, provided they match a few criteria. Anyone buying property here now has a lease of 50 years, with the ability to sell-on and transfer the lease.

Conic Residental Building in Binh Chanh (Photo by Đức-Huy)

According to the new law, foreigners and foreign entities will only be allowed to buy or take ownership of apartments and houses in commercial projects. They will still not be allowed to buy in areas that limit or ban foreigners. A maximum of 30% of apartments within a given block and 250 houses in a given ward will be available to expats. The 50 year lease will be able to be extended in the future, although details of exactly how this will be done will change over time.

People may think that not being able to buy the land and only the building upon it is unfair, but this is the same for the local population. The government maintains ownership of the land here. Since the announcement, a property market that was already heating up has really opened up and enabled foreigners to join the Vietnam property ladder. The country already had a strong economy and a very strong and vibrant middle class.

These new rules also apply to long term Vietnamese who, living abroad, have kept up their Vietnamese citizenship. With 4.2 million Vietnamese living overseas and about 30,000 high earning foreign executives working and living here (CNBC), the potential for local real estate companies is huge.

Big Changes for Ho Chi Minh City

The drive to modernise the city has meant that developments are springing up everywhere. The new prestigious tower being built in District 1 by Vinhomes is seen as a symbol of the future. At 461 metres, the Landmark 81 tower will be the tallest building in Southeast Asia.

Photo by Vinhomes 

Vietnam’s economy has a steady growth rate of over 5-7% per year. Almost 42,000 apartments were launched in 2015 with a record 36,000 of them being sold (Vietnambreakingnews.com). Vietnam does certainly look like a great place in which to invest. In Ho Chi Minh City, The top end properties are priced at $3,000 to $5,000 per square metre. This is way below the $9,375 per square metre you would have to cough up in Bangkok (Financial Times). And yet, rental yields here are 1.5-2.5% higher than those in Bangkok, Hong Kong and even Singapore, according to VinaCapital.


How to Buy a House or Land in Vietnam?

By: City Pass Guide

Foreigners who are living in Vietnam may purchase houses for the expressed purpose of dwelling in it. By Vietnamese law, land is a national good, so you can only own the structure built on a property, not the land that it is on. You can enjoy a “land use right” for up to 50 years. This duration can be renewed. Also note that if you’re married to a Vietnamese citizen or a Việt kiều, you will have the same ownership rights as Vietnamese citizens.

Seek professional advice to ensure that all steps are properly taken to ensure a troublefree property transfer.

Alternatively, according to Vietnam’s Housing Law, every foreigner who has a Vietnamese visa stamp on their passport can buy a property in Vietnam. However, if you enjoy diplomatic or consular immunities and privileges, this does not apply.

Besides individuals, foreign companies, branches, representative offices of foreign companies, foreign investment funds and branches of foreign banks that are operating in Vietnam are also entitled to purchase property of residential projects.


A serviced apartment in Diamond Island Luxury Residences

What are the limits of foreigners’ rights on residential property in Vietnam?

The law states that foreign individuals and entities may only buy, receive or inherit apartments and houses in commercial projects and not in areas that limit or ban foreigners.

Although the limit of one property per foreigner has been repelled, the new Housing Law sets a limit on the proportion of foreigners who may live in a determined area: the total number of units owned by all foreign buyers must not exceed 30% of the units in one apartment building, or 250 landed property units in one ward.

The duration of the tenure is supposed to be equal to the land use right owned by the developer, most likely 50 years, with an option to extend the land use right at the end of it. The exact conditions for the extension are still unclear and will be detailed in further regulations.


Crescent Residences in D7, HCMC

An expatriate may lease his/her property for any purpose that is not banned by law, but he/she must inform the provincial house management agency before leasing the property. In this case, he/she is subject to Vietnam’s property taxes. If you are an overseas Vietnamese or if you are married to a Vietnamese citizen, you are entitled to a freehold tenure on the property.

If you bought it, you could of course decide to live in the house but also lease it or pass it through inheritance to someone else without any difficulties. To lease it, you will need an administrative authorisation from the Housing Department of the People’s Committee where your property is located.

Can foreign-invested enterprises purchase residential properties in Vietnam?

Foreign-invested enterprises that operate in Vietnam under the investment law but are not engaged in real estate, can purchase residential houses for their employees. They must possess investment certificates or written certifications of investment activities as appropriate to investment forms specified by the investment law granted by a competent Vietnamese state agency. They can buy properties to house their employees, but are not able to use them for leasing or other purposes.

HCMC properties
Housing in Ho Chi Minh City. Photo: GettyImage

What are the steps to purchase a house in Vietnam?

1. Once you have chosen the property, you will have to sign a reservation agreement.

This legally links the buyer and seller and may include paying a deposit to the seller. Examine closely the reservation agreement before paying the deposit. It prescribes that if the buyer changes his mind, he will lose the deposit, and if the seller changes his mind, he will have to pay twice. You’re well advised to notarise this document to protect your interest.

2. Due diligence is the next step.

You will check the reliability of the seller by examining their ID or registration certificate along with the property’s certificates (for example the ownership certificate). You should also ask for a bank guarantee or insurance to ensure the seller is trustworthy.

3. Once due diligence has been satisfied by both parties, they confirm their engagement and interest by signing the housing contract.

An annex related to facilities that go with the apartment is advised. Make sure the agreement is signed by all related parties and if not, then by the representative who is mandated by the related persons. The contract on residential house purchase and sale must be in Vietnamese, so you will need a Vietnamese translator to help examine its content. Although many developers provide a bilingual version of the contract for a better understanding by all parties involved, only the Vietnamese version is valid under Vietnamese regulations. To help you with the complications involved with the contract, we list some details to look for before signing:

- Is it stated that the seller has the ownership certificate of the apartment and does he give a guarantee over this ownership?
- Is the apartment also a security for a loan?
- What are the responsibilities of the seller in case of dispute over the apartment ownership due to his fault?
- Methods used for payment?
- What are the responsibilities for tax and fees?
- What is the delivery time?

4. Paying taxes and fees.

Normally, if there is no other agreement between parties, the buyer pays the registration fee and the seller pays income tax. The payment shall be made at the tax department of the district where the house is located.

5. The last step is to apply for an ownership certificate.

Both parties can agree on how to handle issuance of the new certificate, although it is most likely that a buyer will have to take it up.


Co-Working Your Way Towards Success

By: CBRE and Arik Jahn

First things first: what is a co-working space?

A co-working space is a work environment that several occupiers, often from different industries, share.

The point is that rather than renting an office, you pay for a membership that allows you and your fellow co-workers to use the working space and the on-site facilities such as coffee machines (that’s an important one), Wi-Fi, printers, meeting rooms, etc.

Who uses it? This real-estate model caters to freelancers and start-ups as they are full of ideas and motivation but short of money, and in need of flexible office solutions as well as a networking-friendly environment.

coworking spaceImage source: coworker.imgix.net

Co-working spaces provide them with just that. Since memberships are typically monthly, leasing costs considerably lower and their networking options sit right at their table.

In Ho Chi Minh City, choosing a co-working space over a traditional office can save up to 25 percent of leasing costs, and that doesn’t even include the extra money needed to equip the office.

A Belated Boom

However, while Tokyo alone is home to more than 100 co-working operators, Ho Chi Minh City only recently reached the modest threshold of 10, covering less than one percent of the city’s overall office space. The reason is easy to guess: Japan experienced a “start-up boom” earlier and on a larger scale than Vietnam.

Between 2010 and 2012, the number of co-working spaces in Japan, tailored to the new business model, skyrocketed by more than 1,400 percent! Meanwhile, the very first co-working provider in Ho Chi Minh City, Start Saigon, began its business in 2012.

coworking spaceImage source: up-co.vn

The numbers seem to indicate a similar, yet more moderate trend in Vietnam. According to data from the General Statistics Office, the amount of newly registered companies has been growing at an average 21 percent per year across the country since 2015.

The start-up model has taken hold in Vietnam, even though at a comparatively slow speed.

Ho Chi Minh City is in the vanguard of this movement, followed by Hanoi and Danang.

Let’s embrace the future by taking stock of the present: here’s all you need to know about five major co-working spaces in Ho Chi Minh City.

DREAMPLEX

DreamPlex 1: Level 9 - 10 - 11, 21 Nguyen Trung Ngan, D1
DreamPlex 2: Level 10 - 11 - 12, 195 Dien Bien Phu, Binh Thanh D
Auditorium: Ground Floor, 195 Dien Bien Phu, Binh Thanh D |+84 28 7306 6880 | info@dreamplex.co dreamplex.co
Business hours: Mon-Sat 9 a.m. to 6 p.m.
Price: VND 150,000/day; From VND 2,000,000/month

coworking spaceImage source: coworker.imgix.net

- What’s the place like? DreamPlex has two huge complexes in District 1 and Binh Thanh District with DreamPlex 1 catering to small or medium start-ups, while DreamPlex 2 provides bigger space for bigger companies.

- Who does it cater to? All kinds of individuals, start-ups and small businesses are welcome.

- What about private offices? Small studios for two to four people come at VND 17,000,000 to 20,000,000

- Business services? DreamPlex provides contact to law and accounting firms, audit and HR companies, investment mentoring and coaching.

- Networking events/workshops/coaching? There are weekly events and workshops to connect investors and start-ups.

- Is there an in-house coffee shop? Yes.

- Any special amenities? DreamPlex 2 also houses a 225-m2 auditorium for up to 210 guests.

- What else to mention? Former American President Barack Obama spoke with entrepreneurs at DreamPlex when he visited Saigon in May 2016.

START SAIGON

18bis/14 Nguyen Thi Minh Khai, D1 | +84 28 6682 8580 | hello@start-coworking.spacestart-saigon.com
Business hours: Mon-Fri 9 a.m. to 6 p.m.
Price: VND 120,000/day; From VND 1,800,000/month

coworking spaceImage source: leungalexander.com

- What’s the place like? Start Saigon sets a casual environment spread over two houses. It was the first co-working space in Vietnam.

- Who does it cater to? The focus lies on IT start-ups and design professionals.

- What about private offices? Private offices for five or more co-workers come at VND 25,000,000/month.

- Business services? Start Saigon actively helps start-ups with product development, web design and team building. Renowned partners provide legal advice and business licences.

- Networking events/workshops/coaching? It organises daily community lunches, barbecue and pool parties, tech meet-ups, workshops, etc.

- Is there an in-house coffee shop? No.

- Any special amenities? Start Saigon boasts outdoor areas including a swimming pool and a rooftop lounge.

- What else to mention? For those who want to make their workspace their home, a private bedroom including membership is VND 11,000,000/month.

SAIGON COWORKING

101 Cu Lao, Phu Nhuan D | +84 9 6510 0244 | info@saigoncoworking.com | saigoncoworking.com
Business hours: Mon-Fri 9 a.m. to 9 p.m.
Price: No daily pass; From VND 2,000,000/month

coworking spaceImage source: leungalexander.com

- What’s the place like? Saigon Coworking was among the first co-working spaces in Saigon. Housed in a multi-storey building in a calm neighbourhood, it is a dynamic and large co-working space.

- Who does it cater to? Saigon Coworking attracts co-workers from all business and creative fields.

- What about private offices? Saigon Coworking offers private offices for up to 15 people, starting at a monthly fee of VND 11,000,000.

- Business services? It provides co-workers with legal, financial and IT consulting, as well as a range of business and individual services including help with driving licence or work permit.

- Networking events/workshops/coaching? No.

- Is there an in-house coffee shop? Yes.

- Any special amenities? How about a lush rooftop garden?

- What else to mention? Saigon Coworking can organise a personal secretary for you.

GO WORK

15 Nguyen U Di, D2 | +84 28 3744 2589 | info@factoryartscentre.com | factoryartscentre.com/go-work 
Business hours: Mon-Fri 9 a.m. to 7 p.m.
Price: VND 100,000/day; VND 1,900,000/month

coworking spaceImage source: coworker.imgix.net

- What’s the place like? Go Work is a smaller co-working space that is part of The Factory Contemporary Arts Centre.

- Who does it cater to? All kinds of individuals, start-ups and small businesses are welcome.

- What about private offices? No.

- Business services? No.

- Networking events/workshops/coaching? It organises networking events and workshops.

- Is there an in-house coffee shop? Yes.

- Any special amenities? Go to the outdoor terrace or the exhibition hall to have a creative break.

- What else to mention? Membership comes with a discount at the on-site restaurant, bar and cafe with an organic and healthy menu; members have free entrance to all exhibition openings at The Factory.

FABLAB

44/10 Nguyen Van Dau, Binh Thanh D | +84 9 4971 6313 | hello@fablabsaigon.org | fablabsaigon.org
Business hours: Mon-Sat 9 a.m. to 6 p.m.
Price:
No daily pass; VND 1,300,000/month

coworking spaceImage source: fablabsaigon.org

- What’s the place like? Fablab is a makerspace, a coffee shop and a co-working space all in one, housed in a typical Vietnamese town house.

- Who does it cater to? Fablab is tailored to creatives and designers.

- What about private offices? You can rent a private office for eight-10 people, starting from VND 8,000,000/month.

- Business services? No.

- Networking events/workshops/coaching? Fablab runs regular workshops of original content and engages members in community projects.

- Is there an in-house coffee shop? Yes.

- Any special amenities? Fablab also has a makerspace and an on-site shower.

- What else to mention? Membership comes with one free drink per day and a 10% discount on food and beverages.

Banner Image source: soundpostacoustics.com


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