Property prices in Vietnam are very low and this is getting the attention of many buyers in China and Hong Kong. Because the cost for property is so much lower than those in Thailand and Singapore, there is no limit of interested buyers and investors.
Last year, Taiwan and Hong Kong brought in 25% of Southeast Asia’s foreign buyers which is up by 4% from 2016.
Another attraction to property in Vietnam, buyers with limited overseas assets are purchasing properties and diversifying their investments. Reports have shown that the demand for property in Vietnam was higher in the first quarter of this year which is approximately 300% higher than in 2017. Vietnam is still not the ideal place for buyers but that could be changing very soon.
Estimates have shown that 645 to 1,000 sq ft units are selling for approximately $229,000 compared to property in Thailand at $6,000 per sq ft or Singapore at $15,000 per sq ft.
The development company, De La SOL currently has 10 projects in Chi Minh City and 2 in Hanoi. This puts Vietnam at third place in the Asian market. De La SOL has a completion date for their 12th project in Singapore during the last quarter of 2020.
The 177 million dollar project offers 482 units located in three separate towers which are idyllically located within 10minutes to the business district. Buyers must make a down payment of 10% of the purchase price and then make payments over 2 years from January 2019 to the end of the last quarter in 2020.
Since laws are now allowing non-locals to own apartments, developers are selling 30% of their units in each building to foreign investors.
Growing interest in Ho Chi Minh property is taking center stage for foreign buyers. Approximately 10 yrs ago, the Pudong area of Shanghai started addressing the construction of infrastructure which included a subway system and airport that boosted their property value. It’s believed that if Ho Chi Minh takes the same actions as Pudong, the prices for homes will rise approximately 5 times over the next 10 years.
Many buyers believe that purchasing property is a major investment due to the stability of the socialist party which is on the rise and therefore the possibility of growth could mirror that of China.
From 2009 to 2013, Vietnam suffered a huge housing slump but now seems to be coming back due to a 6.8% economic growth which is quickly drawing the attention of foreign investors. As an example, home prices in Ho Chi Minh increased 3.6% during the last quarter of 2017. Along with those figures, townhomes and villas rose to 13.6% during the same period of time.
Evaluations have shown that Vietnam is a great deal less stable than other nations and therefore, buyers should beware when purchasing property. Doing good research and looking into properties that have amenities would be the wisest choice. Properties that are conveniently located to shops, restaurants, and schools or with water views will produce more value over time. While those in the real estate market have high expectations that property in Vietnam will continue to grow in 2018, if prices hit the ceiling that bubble could burst, especially if there is no available land for future development.
Experts have strongly advised that buyers only work with developers who have the financial strength to complete projects and provide solid property management services.
The founder of Asia Bankers Club who is an agent for overseas property said that investors buying in Vietnam will have to pay a transaction cost of 2% on the selling cost. But, they would also earn anywhere from 6 to 8% on rentals which is higher than a 2% in Hong Kong.
Another important aspect, foreign buyers are allowed to sublet or resell their properties to other investors or locals but they may not buy apartments from locals because they own properties that are freehold.
CapitaLand believes the worst of the property market is now in the past and investors might just find some nice treasure troves in Vietnam. Note: CapitaLand has more than On billion dollars in assets in the country and was the first foreign developer to enter this market.
Vietnam has had its fair share of ups and downs in the real estate market but seems to be on the road to significant success. Foreign investors, especially in China and Hong Kong, are taking note and believe this is going to become a very interesting and profitable place for investments. Buyers are not under the same strict limitations so often found in Singapore and Hong Kong. If they have limited assets they can still purchase properties in Vietnam. Time will tell but it seems that many experts in the investment world believe that Vietnam is going to become the next chosen place for development and investments.
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