Vietnam’s Property Sector Proving Increasingly Attractive to Investors
While the announcement may have passed without fanfare, the Global Real Estate Transparency Index (GRETI) has recently afforded Vietnam’s real estate market so-called “semi-transparent” status for the first time.
This increased level of transparency enables individuals fully benefited from the security provided by home-ownership, thanks to the deployment of market fairness, stringent regulations and improved accessibility.
This has helped Vietnam’s property market to become increasingly attractive to investors, both domestically and overseas. We’ll explore this further below, while asking why else people are flocking to invest in real estate in the Southeast Asian country.
Vietnam Real Estate Remains a Safe Haven Asset for Investors
Interestingly, the Vietnamese property market has experienced an inevitable downturn in 2020, thanks largely to the impact of the coronavirus pandemic and the subsequent lockdown measures.
This trend has been prevalent across the globe, but unlike the vast majority of nations, the real estate market in Vietnam has already begun to showcase the green shoots of recovery as 2020 has progressed.
More specifically, the absorption rate has increased incrementally throughout the year, from just 14% in Q1 and 37% in Q2 to a relatively impressive 50% by the end of the third quarter.
The trend here is clear; as each quarter has seen the market record a definitive rebound and mark a significant increase in investment activity (particularly from overseas). Similarly, a further hike is forecast for the fourth quarter, in line with rising demand and existing seasonal trends that impact on activity in the Vietnamese marketplace.
In this respect, Vietnam property represents a genuine safe haven asset in the current climate, particularly at the lower-end of the real estate spectrum.
Certainly, apartments with selling prices of between 25 and 35 VND per square metre experienced a particularly significant increase in transaction volumes throughout the year, whereas those with a value of 50 million VND or more were less widely sought after.
Why Else Should You Invest in Vietnam Real Estate?
Aside from the robust nature of Vietnamese real estate and the increased security that it provides, there are numerous other reasons to invest in this fast-growing marketplace.
There’s also an excellent reason why low and mid-value properties are thriving in Vietnam, as these assets generally enable investors to optimise profitability and benefit from the market’s innately high yields.
Make no mistake; Vietnam is famous for delivering some of the best returns in the Southeast Asia region, often peaking at between 6% and 8%. In some cases, this can rise as high as 12%, particular for costly developments involving condo-hotels and villas.
From the perspective of foreign investment, the Vietnamese property market has become increasingly accessible in the five years since 2015.
This is thanks to the proactive efforts of the Vietnamese government and regulators, who have looked to ease restrictions on foreign investors and encourage far greater capital inflows. Prior to 2015, overseas investors were only allowed to own a single condo unit for self-dwelling purposes, with this restriction having been lifted to enable more widespread investment levels.
Similarly, it’s now possible to buy a property as an investor simply with a tourist visa, while individuals can build a profitable portfolio of assets over time (so long as the number of units within a particular development is at least 70% owned by Vietnamese nationals).
This is also excellent news for those who want to invest in lucrative property stocks, with this portion of the Vietnamese financial market having outperformed alternative equities and similar assets throughout 2020.
Realty stocks are poised to increase further into 2021 and beyond, particularly as the coronavirus pandemic continues to ease and numerous vaccines reach the latter stages of the development process across the globe.
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