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Updated April 10, 2019
The real estate market in Vietnam has been growing continuously since 2013. 2018 was no exception. With the country’s emerging economy seeing a growth of over 6% annually since the 2000s, the Vietnamese people have seen their individual wealth grow to a point where properties are becoming more and more affordable.
Here is a brief look back at what’s been happening in Vietnam regarding that sector. The numbers, the big projects, the trends and what to watch out for in 2019 and beyond…
Vietnam’s economy is healthily flourishing. The GDP’s growth rate was at 7.1% in 2018.
While the Vietnamese Dong went through some fluctuations against the United States Dollar in the middle of the year, it reached an all-time value high, of 23,360 VND to $1USD, in November 2018. The dong is expected to hold itself up well in 2019, with the State Bank of Vietnam ready to step in and steady the currency if needed.
International visitors to the country have seen an increase of a little over 21% compared to 2017 with the estimated numbers of 11,123,556 arrivals in the first 11 months of 2018.
Compared to 2017, Vietnam’s retail sales grew 10.9% to its highest-ever – $129.6 billion, spurred by a rising middle class and an influx of overseas retailers.
On the real estate and property front, applications for home loans saw an increase of 77% since 2017 and the mortgage rates keep going down, from 17% in 2011 to 7& in 2017.
The Central Committee’s goal is to reach an average housing area for the nation of 25 square meters per capita by 2020. To achieve this, 100 million square meters of new housing will be built each year, with 70% in urban areas.
65 projects comprised of more than 22,000 units and over 1,000 low-rise buildings were launched to the market in Ho Chi Minh City for 2019. Of these, affordable housing occupies more than 4,500 units or 19 % of the total.
A report by the World Bank shows a deficiency of housing in Vietnam with 70% of the population not owning any properties. This means that in the low-end market, the demand seriously outpaces the supply and to meet this demand, 20 million housing units would be needed.
Some housing types such as serviced apartments, ‘condotels’ and ‘officetels’ are not being registered with authorized agencies and pose high risks to investors. The high-end side of the market is also showing the first signs of oversupply. Fortunately, mid-end apartment products in 2018 did occupy a high ratio and helped to maintain a sustainable market growth.
The three future special economic zones of Van Don, North Van Phong, and Phu Quoc, while being the subjects of rare protests in Vietnam are suffering from land fever, and the prices have surged dramatically in those areas.
Last March, Saigon authorities and the building’s main contractor Coteccons held a topping out ceremony, when the building reached 461.2 meters and became the tallest building in Vietnam. It was opened officially on July 27 to mark the 25th anniversary of its owner’s parent company, Vingroup.
Another big riverside project, Golden River is a waterfront location in the city’s District 1. An original project mixing apartment towers and villas, that are filling up right now. Shops and restaurants have also opened on the ground level.
The construction of this resort-style apartment complex in the heart of the Binh Thanh District is at about 80% done. Surrounded by lush landscaped gardens, verdant lawns and offering relaxing pool areas, it is easily recognizable by its curved shape.
Vietnam is attracting more and more foreigners, mainly Chinese and Singaporeans. With relaxed laws on foreign ownership, like a renewable leasehold period of 50 years, the country has seen an increase in overseas investors of about 21% since last year.
The central government has introduced several buyer-friendly laws in 2015 and made it much easier to handle real estate transactions. Foreigners can purchase properties even on a tourist visa. They can own a maximum of 30% of the units in a residential complex, instead of just one as before.
Learn more about investment in Vietnam here.
All of Vietnam’s major cities saw regular prices increase in the last few years. Being one of the most developed cities Ho Chi Minh City is leading the way, with Hanoi a close second. Small businesses are on the rise due to low fixed costs. Meanwhile coastal towns like Nha Trang and Da Nang are also furiously developing and offering more and more exciting investment possibilities.
The high amount of domestic buyer and the strong demand for low-end residential units will keep the market healthy, and it should continue to grow in 2019 and in the following years. Driven by a rapidly growing middle class and a very young and active population (in a population of 95 million people, 50% are younger than 30), helped with relaxed taxation, and relatively low-priced properties make Vietnam an ideal place to purchase real estate in Asia, if not the world.
By Eric Trudel