Property developers are encouraging the government to loosen foreign property ownership regulations in Vietnam in order to attract more overseas buyers for luxury projects. According to a report in the VN Express, homebuilders want to increase the number of international buyers allowed at high-end projects to ease oversupply.
Currently, foreign property ownership regulations in Vietnam do not allow international buyers to hold more than 30 percent of the units in a single building. This is less than Thailand and the Philippines which allow for 49 percent and 40 percent of foreign unit ownership per building respectively.
The Vietnam Association of Realtors told the newspaper that international buyers continue to look for high-end condominiums in Hanoi and Ho Chi Minh City which local residents find too expensive. Despite the demand from overseas, the luxury segment is now oversupplied due in part to Vietnam’s foreign property ownership regulations.
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The impact of easing foreign property ownership regulations
Should foreign property ownership regulations be loosened in Vietnam, the majority of demand would come from the employees of South Korean and Japanese companies operating in Vietnam as well as the Vietnamese diaspora currently living in the United States and Europe.
“Expats who have long-term projects in Vietnam and those with Vietnamese spouses prefer buying a house to renting, while the Vietnamese diaspora with money consider property in their home country an investment,” Su Ngoc Khuong, Senior Director of real estate service firm Savills Vietnam, told the VN Express. “As Vietnam seeks more foreign direct investment, it should give high-skilled foreign laborers more opportunity to own property.”
There is also interest from other property investors since Vietnam remains one of the fastest-growing economies in Southeast Asia. Additionally, the country’s rapid response to combating COVID-19 could ensure key sectors, such as manufacturing and tourism, return faster than its neighbors.
Many developers with projects in the high-end segment believe current foreign property ownership regulations make it difficult to satisfy demand from overseas buyers.