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Limit 30% of foreign ownership about the realty projects in special economic zones

Foreign investors will be restricted to 30 percent ownership of real estate projects in Vietnam’s future special economic zones if a new draft law is approved, despite government promises of added incentives to attract overseas investment. The cap is the same as the one currently imposed across the country.

The Law on Special Economic and Administrative Units, which is being drafted at the moment, would grant foreign investors 99-year leaseholds on properties in new investment areas, almost twice the 50-year terms granted elsewhere in Vietnam.

But a major barrier remains as the law would only allow foreigners to buy up to 30 percent of an apartment building or resort project in these areas, said Tran Huy Dong, director of the Economic Zones Management Department at the Ministry of Planning and Investment. The limit is to guarantee security and prevent acquisitions by foreigners in special economic zones.

He said the heads of these zones will have to consult the Ministry of National Defense and the Ministry of Public Security before granting any land to foreign investors. However, the policy will be open to changes depending on investors’ demands. Vietnam is preparing to develop special economic zones in the northern province of Quang Ninh, the central province of Khanh Hoa and the southern resort island of Phu Quoc.

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The government has cast them as major investment magnets along the lines of Singapore and Hong Kong. The investment ministry said that investors in these special zones will receive greater incentives and fewer restrictions than in Vietnam’s 18 existing “normal” economic zones, and they will be free from local regulations. Casinos have been approved in these zones, which will be the first in the country to be licensed to receive Vietnamese citizens.

Phung Quoc Hien, vice chairman of the legislative National Assembly, even suggested opening “red-light districts” in these zones at a meeting earlier this month. Life has such realistic demands. We’ve got to go with the flow and work out an appropriate management mechanism.

This draft law is expected to be presented to the National Assembly in May next year.

Source: VNexpress

September 27, 2017 / by / in
Ho Chi Minh City will not allow to build the small apartments

According to the latest news, Ho Chi Minh City has decided not to allow investors to build commercial apartments under 25 square meters (270 square feet) out of fear that fast urbanization and population growth may spiral out of control. In a letter sent to the Ministry of Construction, the city said small apartments are not part of its development plans. Small apartments would allow more people to buy property in the already overcrowded city, which would lead to population growth and more pressure on infrastructure, it said.

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To strengthen its argument, the city stated that it does not want to create “elevated slums”. In a letter issued in April to a domestic developer, the ministry said the firm would be allowed to build 25-square-meter apartments to attract low-income earners before new national standards for apartment sizes are set.

Vietnam’s 2015 construction law abolished a previous requirement that set the minimum area for an apartment at 45 square meters, but did not stipulate a new limit. In December 2015, a government decree on housing development for low-income earners came into force and set the minimum area at 25 square meters. Decrees often require guidance from related ministries before they are implemented.

Construction businesses and provincial authorities have been seeking permission to build commercial houses of 30-40 square meters to attract individuals, small families and low-income buyers, and they have been given the go-ahead due to the huge demand, the construction ministry said. Vietnam currently has 2.2 million people working in industrial parks, but only 20 percent of them have their own homes, according to the ministry.

HCMC’s decision appears to be its latest attempt to rescue itself from the infrastructure mess it has found itself in. The city has already instructed its construction department not to license any more high-rise condo buildings on roads that simply cannot handle them. This follows high-rise projects on Ung Van Khiem St and Nguyen Huu Canh St in Binh Thanh District and Ben Van Don St in District 4 that have put immense pressure on infrastructure, local media reported.

Tim Doling, a British author who has studied Vietnam’s history and tourism extensively, wrote on his Facebook page: “More warnings that continued construction of massive ugly high rises along the city’s main arteries will cause infrastructure to ‘break down’, with increased risk of flooding and further heavy traffic pressure.” Ung Van Khiem St is less than 2km long but is now home to around ten condo projects, while Nguyen Huu Canh St, one of the main roads connecting the eastern part of the city with the downtown, often suffers from flooding and heavy traffic jams.

Explaining the reason for these projects, the construction department said it had been given the nod to make adjustments to the city’s development plan by allowing investors to build more high-rise buildings in those areas. The Department of Transport said “due to the need to streamline administrative procedures, it hasn’t been invited to comment on residential apartment construction.” The city may be trying to make amends for the situation by putting high-rise condo buildings on hold and saying no to small apartments, but experts have described its solutions as “locking the stable door after the horse has already bolted.”

Source: VNexpress

September 18, 2017 / by / in
More 750 foreigners own the property in Vietnam

Even though Vietnam has relaxed the policies that allow foreigners to buy houses in the country, the numbers are not as high as expected. More than 750 foreigners have been granted house ownership certificates in Vietnam since the Law on Housing came into effect in 2014, reports the Ministry of Construction. The figure is six times higher than that of eight years since Vietnam implemented the Resolution No 19/2008/QH12, which piloted the scheme to allow foreign organizations and individuals to buy and own homes in the country.

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However, a representative from the Ministry of Construction’s Housing and Real Estate Market Management Department told the Vietnam News Agency that the number of foreigners buying houses in Vietnam was still low due to many other factors including their financial capacity, jobs, demand and the cost of real estate.

The regulations on housing and the policies on house ownership in Vietnam have been relaxed including the conditions of house ownership and the number of houses being owned by foreigners, which all suit the current situation, the representative said.

Mr Nguyen Khanh Duy, director of sales at Savills Vietnam in Ho Chi Minh City, said legal procedures on real estate ownership of foreigners in Vietnam had basically received positive feedback from both buyers and sellers. The attraction of foreigners buying homes in the country in accordance with the law is expected to develop the country’s real estate market, especially in the segment of luxury housing which is abundant.

Source: Vietnamnews

September 7, 2017 / by / in
Developing social housing in Ho Chi Minh City

The experts have estimated the shortage of social housing for the locals, especially in the big cities like Ho Chi Minh City and Hanoi. Therefore, Ho Chi Minh City aims to build about 20,000 social houses, 35,000 concentrated residential places for workers at industrial parks and 10,000 others for students during 2016-2020.

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To that end, the city will classify subjects to social housing, targeting revolutionary contributors, low-income earners, the poor, those near the poverty line, workers in and outside industrial and processing zones, and officials, according to Tran Vinh Tuyen, Vice Chairman of the municipal People’s Committee. The houses will be built in different areas to serve different purposes and sold at prices ranging from 300 million VND ($13,200) to about 1 billion VND ($44,000), he said.

At the same time, the locality will adjust the State budget for social housing, accelerate administrative reform to make it easier for relevant investment procedures, and publicize the list of eligible social housing projects. The national housing development strategy targets 12.5 million sq.m of social and affordable housing by 2020.

Source: Vietnamplus

August 10, 2017 / by / in
Investment in Vietnam’s realty market is absolutely popular

In the recent years, the realty market has become more active and dynamic in Vietnam, especially the segments of Hanoi and Ho Chi Minh City. Therefore, instead of putting money in banks, gold or dollars, investment in property is more attractive to the investors.

Minh Hanh of Ho Chi Minh City’s Tan Phu District, for instance, said: “I never put my money into saving accounts because I used to invest in gold and dollars. But now I invest my money in real estate and stocks because gold prices have decreased sharply and the gap between domestic and international prices is too big.” Since 2010, gold has plateaued. The Government has tightened gold management and banks are not allowed to mobilize or borrow gold any more.

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This year, the real estate market has gathered pace and been a magnet for investors. Duc Vinh of Ho Chi Minh City’s Go Vap District said last October he had bought a piece of land for VND2.6 billion ($115,000) and planned to build a house. But half a year later, a buyer offered VND3.5 billion ($155,000) for it and he sold it immediately.

However, Vinh’s profit is not considered huge in the current market situation. Hoang An, a broker in District 12, said now everybody wants to buy land because of high profits and liquidity. Things have turned on their head from a few years ago when prices were low yet it was difficult to sell land. “Bank savings interest rates are very low, gold and dollars do not yield high returns and investors are looking for better investment opportunities,” he said.

“Inflation has been controlled well in recent years and buying gold as a hedge has reduced.” Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City branch, said the loans given to the property sector in the city are worth VND238 trillion ($10.6 billion) or 10.8 per cent of the total.

The Ho Chi Minh City Real Estate Association reported that in the fist six months of this year lending to the sector increased by 6.35 per cent, 1.35 percentage points higher than in the same period last year. Real estate firms accounted for a full third of the 18,000 companies established in the city in the first six months of this year.

July 26, 2017 / by / in
Japanese firms invest in real estate market in Vietnam

Many Japanese firms such as Mitsubishi, Maeda, Kajima, Sumitomo and Creed Group have made investments worth tens to hundreds of millions USD in the Vietnamese realty market within over the past year. For example, the Mitsubishi Group has invested 290 million USD in a joint venture with Vietnam’s Bitexco to develop the Manor Central Park in Hanoi. In the first stage of cooperation, the two sides agreed to establish a joint venture to develop 240 low-rise buildings and two high-rise buildings with 1,036 apartments.

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In September 2016, the Kajima Overseas Asia Company spent $500 million to establish the Indochina Kajima Development joint venture with Indochina Capital. Both plan to invest in Vietnam’s real estate market in the next 10 years. More recently, Sanyo Home invested in the field via cooperation with Tien Phat Company under the Hoa Binh property business and construction joint stock company to invest in the Ascent Lakeside project in District 7, HCM City. Meanwhile, Sumitomo will invest in the Nhat Tan-Noi Bai urban area in Hanoi along with Vietnam’s BRG Group.

According to Toshihiko Muneyoshi, president of the investment fund Creed Group, with a population exceeding 93 million people, increasing incomes and rapid urbanization, the demand for houses among young customers is huge. Notably, each year, 50,000-60,000 new households are expected to be built in Hanoi and Ho Chi Minh City, he said, adding that the fund will focus on the middle-range segment and seek more partners in Vietnam. Japanese investors have secured their position in Vietnam in recent years with 3,411 projects worth nearly $44 billion.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, in the first six months 2017, Japan rose to first position in 94 countries and territories with investment projects in Vietnam, with total registered capital of $5.08 billion, making up 26.45 percent of total investment.

Source: Vietnamplus

July 24, 2017 / by / in
The real estate market gets the highest sales since 2011

According to the report of Real Estate Firm Savills, the affordable housing went through the roof, with Quarter 2 sales jumping 123% in Ho Chi Minh City. It saw a strong performance in the apartment business in the second quarter this year, thanks largely to the affordable segment.

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Apartment transactions between April and June increased 33% from the first quarter of the year, and by 67% from the same period last year, with 11,600 units sold, according to figures from real estate consultancy firm Savills. The number was the highest since 2011, the year of the city’s housing crisis. The affordable housing segment accounted for 64% of the sales, the company said in a report released on Monday.

While transaction volume in the top-tier dropped 32% on-year, sales of more affordable units costing less than 30 million VND ($1,320) a square meter surged a whopping 123%. With 58,000 new households (families) formed in 2016, Ho Chi Minh City has the biggest real estate market in Southeast Asia, the company said, but in terms of affordability, it is among the worst in the region.

The market has for years focused on the high-end segment, where prices hit 90 million VND (nearly $4,000) per square meter. That would mean it would take two working adults 20 years to pay for a 60 square meter apartment, based on the city’s average income in 2016. Besides, many people in the city are migrants and low-income workers.

Savills research suggests that the market is changing and will continue in an affordable direction to catch first-time buyers. Low-cost apartments are expected to occupy nearly half of the apartment market in the city this year, with a further 48,000 units to be launched by the year-end.

Source: VNexpress

July 13, 2017 / by / in
The foreign investment is increasing in the real estate projects

A sharp increase in foreign arrivals to Vietnam at the start of 2017 has injected a huge development impetus into the coastal resort sector, and there have also been a raft of investments, mergers and acquisitions in other real estate sectors. Vietnam’s largest property consultancy firm Savills recently released a report on the investment and transfer of real estate projects that have taken place so far this year.

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One of the stand out transactions was made by CapitaLand Group with the purchase of a 0.6-hectare (1.5-acre) piece of commercial land in downtown Ho Chi Minh City to build Vietnam’s first A-class international complex. The project will receive more disbursement from a $500-million investment fund committed by Singaporean developers last November. CapitaLand also announced the acquisition of a 90 percent stake in a 0.8-hectare project in Thao Dien, Ho Chi Minh City, to build over 300 apartments.

Another Singaporean developer Keppel Land has paid VND 846 billion ($37 million) to raise its share to 16 percent in the Saigon Center project in downtown Ho Chi Minh City.

Besides, in March, Hong Kong Land officially became a strategic partner of the Ho Chi Minh City Infrastructure Investment Joint Stock Company (CII) to build housing projects in the new Thu Thiem urban area.

In another popular residential area in the southern economic hub, local group An Gia and its Japanese partner Creed Group continued their takeover of five apartment blocks in La Casa project in District 7 worth some VND 910 billion (around $40 million).

In the resort sector, Malaysia’s Berjaya Land sold its 70 percent stake in a four-star resort on Phu Quoc Island to Sulyna Hospitality for $14.65 million.

According to Savills, Vietnam’s tourism sector enjoyed a great start to this year with around 3.2 million foreign arrivals in the first quarter, up 29 percent on-year.

This growth follows record numbers in 2016 when Vietnam welcomed over 10 million international tourists. The country is forecast to receive 11.5 million foreign visitors this year. This should provide the ideal conditions for further growth in the resort sector, said Savills.

Source: VNexpress

June 27, 2017 / by / in
Ministry does not accept proposal of building mini apartment

The Ministry of Construction has rejected a Ho Chi Minh City Real Estate Association proposal for housing developers to construct mini apartments that measure less than 25 square meters each.

The association has proposed the Ministry of Construction give the green light to developers to construction these mini apartment units for rent to replace many slums and cramped, dirty apartment buildings in Ho Chi Minh City that fail to meet both quality requirements and living conditions for tenants.

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The Ministry gives the reasons of rejection

The association explains that the majority of low-income earners can afford to own these small units, which will result in a substantial improvement in their living environment and security issues. However, the ministry said the proposal was not in line with its Circular 20/2016 TT-BXD.

Specifically, the circular specifies households or individuals can develop rooms for rent with a minimum area of 10 square meters, as the majority of such individuals develop these housing units on their land that is usually not large. These regulations are aimed to encourage households or individuals to build homes for rent.

Meanwhile, the enterprises must cover at least 25 square meters to develop each budget housing apartment since they can secure vast areas of land to develop their projects. In addition to apartment units, they have to invest in technical and social infrastructure in order to guarantee residents’ quality of life, the ministry added.

Regarding a question by the Ho Chi Minh City Real Estate Association over funding for social housing projects to support the poor, the ministry said the Government has directed the Ministry of Finance to work with relevant ministries and agencies to map out a mechanism for partly covering interest rates for social housing apartments, which are budget homes for poor people.

Besides, the Ministry of Planning and Investment has been assigned to coordinate with the ministries of finance and construction to determine the amount of money needed.

The State Bank of Vietnam and the Vietnam Bank for Social Policy are responsible for devising interest rates. Then, the Prime Minister will have a final say on this.

Source: The Saigon Times

June 21, 2017 / by / in
The property market of Vietnam in the first half of 2017

Macroeconomics

Vietnam remains an attractive destination for foreign investors, demonstrated by the substantial increase of 77.6% y-o-y in the newly registered FDI recorded in 1Q17. Among investors, South Korea, Singapore and China ranked the three largest sources.

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Residential market

Both Ho Chi Minh City (HCMC) and Hanoi reported strong launching and sales activity in the first quarter of 2017. New launches came on a citywide and segment-wide manner in both main markets, and sales continued to respond positively to the new supply. The market witnessed good performance of both the investor and owner-occupier demand. In addition, thanks to the currently good market sentiment, coupled with more improvement in infrastructure development and the retail sector across the cities, prices extended their prevailing up-trends. Until year-end, good momentum in many facets of the residential markets is expected to be continued.

Office for lease market

Both HCMC and Hanoi market reported high-level net absorption rates in the first quarter of 2017, with HCMC mainly driven by the two new Grade B buildings and Hanoi led by Grade A and Grade B buildings completed in recent years 2015-16. In terms of rental rates, the Grade A segment in both markets reported q-o-q increases while the Grade B segment showed opposite trends. Some long-standing Grade B buildings in Hanoi quoted lower rents q-o-q in order to stay attractive compared to their competitors. Between now and end-2017, increased leasing activity is likely in both markets, with two new Grade A buildings expected in HCMC and five Grade B buildings expected in Hanoi.

Retail market

The retail markets in HCMC and Hanoi were quite stable in the Shopping Centre segment with no new supply. Rental rates in the Non-CBD areas of the two cities continued to experience decreases while those in the CBD areas reported different trends. Shopping centres in the HCMC’s CBD saw some slight increases in rents thanks to the increased footfall and openings of new flagship stores. The two markets in the remainder of 2017 are expected to be more active, with an addition of around 40,000-50,000 sqm of retail space to each market. The Convenience Store segment has experienced considerable growth in recent quarters and this is expected to continue into the remainder of 2017.

Source: JLL

June 19, 2017 / by / in