Vietnam’s booming economy drives luxury home market

This in combination with swift moves by the Vietnam government to amend the laws related to foreign ownership has propelled the property market onwards and upwards and past the bottom of the last crisis that has plagued it the past three years.

Vingroup leads the high end housing market in Hanoi with its recently launched Vinhomes Times City-Park Hill condominium project offering residents 5-star living standards in 1 to 4 neo-classical designed bedroom units from 56 m2 to over 143 m2.

More than 1,000 potential buyers attended the opening on July 19 at which 323 units were sold at prices ranging from US$88.96 (VND 2 million) to US$222.40 (VND 5 million) per square metre.

Buyers from overseas

Foreign executives and managerial staff relocating to Hanoi to set up manufacturing outposts have been the lead driver of the upturn in luxury housing sales, according to CBRE Vietnam.

Hanoi’s economic recovery has also been a godsend to entrepreneurial Overseas Vietnamese (OVs) who are returning to Vietnam in record numbers to start up business ventures and gobbling up upscale homes at a brisk pace.

CBRE Vietnam attributes the 2014 amended housing law, which eased regulations for foreigners to purchase property as the key to the turnaround in the market, particularly in the big cities of Hanoi and HCM City.

Recently enacted legislation further relaxing the laws on foreign ownership will come into effect in September 2015 and is expected to provide additional fuel to fan the surging property market flames as it allows anyone with a valid residential visa, as well as foreign companies, to jump into the market.

Resounding success

Easing restrictions on buyers from overseas has clearly resulted in pronounced positive results, CBRE representatives have said.

Vingroup representatives recently reported they held two sales opening events for projects exclusively targeting foreigners and OVs in Hanoi and HCM City.

The property firm said it quite amazingly received deposits for 112 condominiums within two short hours of opening.

In addition, according to The Eastern, 70% of the units it has sold from May to July for a condominium project jointly developed by a Vietnamese and a South Korean company, were to foreigners and firms buying accommodation for foreign staff.

Almost all of the staff consisted of key executives and managerial staff work at the Saigon Hi-Tech Park, which is home to large multinational companies the likes of Intel and Samsung.

Le Hoang Chau, president of the Vietnam Real Estate Association in turn not long ago told Reuters that there are an estimated 30,000 foreign executives and staff working in Vietnam long-term and 4.2 million OVs.

That shows dramatic potential for a bright future in the property market, Chau emphatically said.

Underlying demand propping up the market derives from the expectation that with the Vietnam economy growing at a robust 6.28% in the first half of the year— the middle class expansion will trigger yet increased demand for even higher upscale housing in the long term.

The speed of the property market's turnaround from its collapse three year ago has been startling and by all appearances the government’s easing of restrictions for foreign ownership of real estate has been a resounding success.