Vietnam Real Estate on the Rise

The Vietnamese real estate market is experiencing new life. Following almost a half decade of stagnation, as a result of the property bubble burst in 2009, the Vietnamese economy is rebounding and the real estate market is improving as a result.

New government policies, renewed interest by foreign investors, positive regional trends and the improving economy have all contributed to the recent real estate trends.

Anthony S Casey

Foreign investment is surging in Vietnam

As a result of revised policies, foreigners are now allowed to own property in Vietnam. The strong signs of recovery have already attracted foreign investors to fund over 1,600 projects. Investors see promise in the Vietnamese market because of the its high demand, young population and stable economy.

In early 2013, the Vietnamese government introduced a $1.4 billion stimulus package to offer low interest loans for the purchase of social housing in an effort to revive the real estate market. While only 14.5% of the package was distributed, the program was successful at stabilizing the market and increasing the number or real estate transactions.

The Vietnamese economy grew beyond expectations last year — gross domestic product growth reached 5.98% — and the economy shows no signs of slowing down. A $2.34 billion stimulus is expected for this year to support the commercial housing segment.

International property agencies forecast investment value in Vietnam to increase 5% this year to $118 billion. The investment growth is supported by a number of factors which have created a prime market environment. This include new private equity real estate funds, increase in institutional investors’ allocations for Asia Pacific, growing activity by Asian institutional investors and adequate debt financing.

However, there are some policies still in place which could potentially limit the market from reaching its full potential. The real estate investment trust (REIT), which is a popular method to raise funds around the world, is not currently available in Vietnam. However, the Vietnam State Securities Commission has stated that they are going to work on making amendments to allow for REIT funding in Vietnam. This announcement is a positive sign for Vietnam, as the real estate sector will need continued funding to take advantage of this remarkable market situation.