FDI in Vietnam real estate sets new record

FDI in Vietnam real estate sets new record

Foreign direct investment (FDI) flows in Vietnam in Jan-Apr 2019 sets a record for the value of registered investment capital over the same period in the past 4 years, according to a report from the Foreign Investment Agency under the Ministry of Planning and Investment. 

Specifically, in the first months of the year, total FDI reached $14.59 billion, up 81 percent compared to the same period last year. Some $5.7 billion of FDI have been disbursed, an increase of 7.5 percent year-on-year.

Processing and manufacturing sector still ranks first among the 19 sectors attracting FDI. According to the report, FDI inflows into this sector in Jan-Apr reached nearly $10.5 billion, accounting for around 72 percent of the total registered capital.

FDI in Vietnam real estate

Real estate ranks second with $1.1 billion, making up 7.5% of the total, an increase of more than 36 percent over the same period of 2018. This is considered a record level. Since 2016, real estate has continuously maintained the second position in the list of FDI attraction industries with the increase of total investment capital.

Notably, Hong Kong surpassed Japan and South Korea to take the leading position on the list of countries and territories pouring FDI into Vietnam. Accordingly, after 4 months, FDI from Hong Kong into Vietnam hit $4.7 billion, accounting for 32.5 percent of total investment capital. The next one is Korea with a total investment of $1.98 billion, making up 13.6 percent, followed by Singapore with $1.87 billion, or 12.8 percent.

With a total registered FDI of more than $4.47 billion in 4 months, accounting for 30.6 percent of the total, Hanoi remains its leading position in attracting FDI, followed by Ho Chi Minh City with $2.37 billion, or 16.3 percent, and Binh Duong with over $1 billion, making up 7 percent.

(Source: Thanh nien)

April 30, 2019 / by / in
A guide for foreigners buying property in Vietnam

The amended 2014 Housing Law, which took effect from July 1, 2015, allows foreign individuals and organizations to own property in Vietnam. The more “open” regulations of the Law have created new demand and momentum for the local real estate market. Here are the latest updates on Vietnam property foreign ownership that you need to know. 

How can foreigners buy property in Vietnam?

Foreign individuals are eligible to buy residential properties in Vietnam, as long as they can enter the country legally. All legal entities like foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies that are established in Vietnam; are also eligible to buy Vietnam properties. The Housing Law allows eligible foreign entity and individuals to buy and own all residential sectors including apartments and landed properties such as villas and townhouses (previously only applicable to apartments). However, foreigners can not buy more than 30% of the total units within one condominium complex; not exceeding 10% for the total number of the separate houses for each project or 250 separate houses in a ward-level administrative unit.

A guide for foreigners buying homes in Vietnam

Several major past restrictions on property ownership have been removed for foreign buyers

Tenure of ownership:

– Foreign individuals: up to 50 years leasehold from the date of issuance of ownership certificate with possible renewal (subjected to approval by authorities.)

– Foreign individuals with Vietnamese spouse: Freehold

– Foreign organizations: up to the duration (inclusive of extended duration) indicated in the investment certificate.

Purpose of purchase: 

Properties owned by foreigners can be sold, sub-leased, inherited and collateralize (previously only for the owner’s residence purpose).

In addition, experts from real estate consulting firm Savills advise foreigners should open bank account in Vietnam when they need to make payment to housing developers. They recommend international banks with branches in Vietnam such as ANZ, Citibank, HSBC and Standard Chartered.

Taxes involved in Vietnam property foreign ownership

Value added tax (VAT): 10% VAT is taxed on any sale of property by local or foreigners.

Administration fee: A minimal administration fee is to be granted an ownership certificate at the current regulation.

Registration tax for ownership: 0.5% registration tax for obtaining the house ownership certificate on the apartment value.

Maintenance fee: This is a shared fund contributed by buyers for maintenance of shared parts of the housing project. Currently, the maintenance fee is 2% on the pre-tax sale price.

Personal income tax (for resale): If personal income is earned through the assignment or resale of apartments or houses, a 2% personal income tax has to be paid on the transacted value.

Personal income tax (for rental income): If personal income is earned through rental of house/apartment, 5% VAT and 5% PIT has to be paid on revenue.

For rental income exceeding VND 100,000,000 per year, a business license tax of VND 1,000,000 per year applies.

(Source: Enternews)


April 30, 2019 / by / in
HoREA offers proposals to help real estate firms access long-term bank loans

The HCM Real Estate Association (HoREA) has suggested the State Bank of Vietnam (SBV) extend the application of regulations on banks’ maximum ratio of short-term funds used for medium- and long-term loans until the end of 2020.

Image result for real estate in ho chi minh city

The HoREA also proposed the rate should be reduced to 37 per cent starting from January 1, 2021; 34 per cent from July 1, 2021; and 30 per cent from July 1, 2022.

The moves were announced after the SBV released a draft circular stipulating that the maximum ratio of short-term funds used for medium- and long-term loans at banks would be reduced from the current 45 per cent to 40 per cent from 2019 to June 30, 2020.

Under the SBV’s draft circular, the rates of 37 per cent and 30 per cent will be applied from July 1, 2020 and July 1, 2021, respectively.

According to the HoREA, the amendments will damage the real estate market as property enterprises are in dire need of medium- and long-term loans. It explained that due to the large proportion of short-term capital in banks’ total mobilised capital, banks will find it difficult to meet the demands of the real estate market.

The HoREA said real estate firms in developed countries have raised capital from investment funds and stock markets. Bank loans are mainly provided to homebuyers. However, in Vietnam, property companies are dependent on bank loans and capital mobilised in advance from homebuyers, while most homebuyers also take loans from banks.

The local stock market has yet to become a major channel of capital access for real estate enterprises as the number of listed property firms is small. Only some 65 out of more than 1,000 real estate firms are listed on the stock market, the HoREA said.

Real estate investment funds and the stock market are unable to meet the high demand for capital in the property sector. Vietnam currently has only one investment fund for the sector, Techcom Vietnam Real Estate Investment Trust, an arm of Vietnam Technological and Commercial Joint Stock Bank, with charter capital of only VND50 billion (US$2.14 million).

The foreign direct investment (FDI) inflow to the local real estate market is also limited and does not meet capital demands, though it accounts for some 21 per cent of the country’s total FDI value, the HoREA said.

It expects the application of the amended Law on Securities this year to create favourable conditions for the establishment of real estate investment funds and trusts to provide capital for the local market.

According to the Law on Real Estate Business, investors in property projects must provide at least 15 per cent of the equity or 20 per cent of the investment capital. The remaining 80-85 per cent of capital can be mobilised from banks or customers.

Source: VNA

April 30, 2019 / by / in