Investing in real estate projects in Vietnam offers significant opportunities for foreign firms, driven by the country’s economic growth, urbanisation, and rising demand for residential, commercial, and industrial spaces. However, navigating the market requires a thorough understanding of local regulations, investment structures, and cultural nuances.
Real Estate Market in Vietnam: Overview
Vietnam’s rapid urbanisation is a major force shaping the real estate industry. By 2024, around 40 percent of the population will live in urban areas, with major cities like Ho Chi Minh City and Hanoi at the forefront of the demand for housing and commercial space.
Infrastructure development—such as the expansion of metro lines, highways, and airports—has been critical in unlocking real estate growth in suburban and previously underdeveloped areas. This has seen strong growth over the last decade or so in all sectors of Vietnam’s real estate industry.
Residential Real Estate
High-rise condominium developments continue to dominate in major cities, with demand for both luxury and affordable housing. The trend toward vertical living is driven by limited urban land and a preference for modern amenities.
Box 1: The current state of Vietnam’s real estate market recovery
At the beginning of 2023, construction work on buildings in Vietnam was slowly winding down as the real estate industry ground to a halt. Hard hats were hung up and cranes ten stories high fell dormant leaving the cement shells of unfinished residential towers standing dark and empty–cold reminders that Vietnam’s real estate market was not in good shape.
This was due to a number of factors but in short, the Evergrande crisis in China in 2022, had led Vietnam to take a long hard look at its own real estate industry, and what it found was not good. The misuse of investor funds, particularly those acquired through the bond market, was rife, and a number of real estate firms were grossly over-leveraged. These revelations then went on to spook investors and consequently, the market took a sizable downturn…
Read more: Vietnam’s Real Estate Market Recovery 2024: Unpacked
Commercial Real Estate
The commercial real estate sector in Vietnam is experiencing growth across retail, office, and mixed-use developments.
Demand for Grade A office space in central business districts remains high, particularly in HCMC and Hanoi. The rise of multinational corporations, startups, and the growing digital economy has spurred demand for modern, tech-enabled office environments. Co-working spaces are also expanding, reflecting the flexibility required by the dynamic business environment.
Industrial Real Estate and Manufacturing
Vietnam has cemented its role as a regional manufacturing hub, attracting significant foreign investment in industrial real estate. In 2024, the demand for industrial parks and logistics facilities continues to grow due to Vietnam’s strategic location, trade agreements, and competitive labour costs.
Hospitality and Tourism Real Estate
Vietnam’s coastal areas like Phu Quoc, Nha Trang, and Da Nang are hot spots for luxury resorts, eco-tourism projects, and hotel developments catering to international tourists. The increasing number of tourists, especially from Asia and Europe, is driving the demand for high-end accommodations.
Establishing a company in Vietnam
Ownership and Investment Structures
Vietnam has opened its real estate market to foreign investors, but there are still restrictions on land ownership. While foreigners cannot own land outright, they can acquire land use rights, typically through long-term leases (up to 50 years, renewable). Foreign firms can invest in real estate projects through several structures:
- Wholly Foreign-Owned Enterprises (WFOE): Foreign investors can establish a wholly owned company in Vietnam, which can acquire land use rights and develop real estate projects.
- Joint Ventures: A common approach is to enter into a joint venture with a local partner. This can provide easier access to land, local networks, and navigate regulatory challenges.
- Public-Private Partnerships (PPP): For infrastructure-related projects, such as industrial parks or logistics centres, PPPs offer opportunities to collaborate with the government on real estate investments.
Property Ownership Restrictions
For residential properties, foreign investors can own up to 30 percent of the units in a single apartment building and up to 10 percent of properties in a housing project. In commercial projects, such as office buildings or shopping centres, foreign ownership is generally less restricted, particularly in special economic zones or free trade areas.
Key regulations for real estate businesses in Vietnam
Law on Land
Last year, a revised Land Law passed Vietnam’s National Assembly. This revised law has the potential to have a huge impact on Vietnam’s land market and could speed up foreign-invested projects considerably. With this in mind, this cheat sheet runs through the key changes in the new Land Law and how this might impact foreign firms doing business in Vietnam.
Law on Real Estate Businesses
The Law on Real Estate Businesses, enacted by the National Assembly of Vietnam, marks a significant update to the regulatory framework governing the real estate sector. This new law aims to address various challenges within the industry by focusing on transparency, consumer protection, and sustainable development.
Law on Housing
Vietnam’s Law on Housing 2023, enacted by the National Assembly, introduces several key reforms and updates to the housing sector. The law aims to address current challenges, promote sustainable development, and enhance housing access and quality for all citizens.
Licensing and Permits
Foreign firms must comply with a range of legal requirements to invest in real estate projects in Vietnam, including:
- Investment Certificate: Required for all foreign-invested enterprises (FIEs) and includes details about the project’s objectives, capital, and scope.
- Land Use Rights Certificate: Foreign investors must secure the land use rights (LURs) to develop or operate a project.
- Real Estate Business Licence: This is mandatory if the firm is involved in property leasing, property trading, or acting as a broker.
Navigating the regulatory landscape can be complex, so it’s advisable to work with local legal and financial advisors to ensure compliance.
Box 3: Starting a real estate business in Vietnam
Starting a real estate business in Vietnam presents many opportunities, as the country’s economic growth and rising incomes are fueling demand for both commercial and residential properties. However, entering the Vietnamese real estate market requires a deep understanding of the country’s business environment, real estate culture, and the regulatory landscape.
Read more: How to Start a Real Estate Business in Vietnam: Ultimate Guide 2024
Developing and managing real estate projects
Residential Real Estate Development
Foreign firms looking to develop residential projects need to be aware of local preferences, particularly in terms of design and amenities. The growing middle class and expat community often seek modern, well-designed apartments in convenient locations. Luxury developments can attract wealthy Vietnamese buyers and foreign expats, while affordable housing projects tap into a larger market.
Commercial Real Estate Development
Vietnam’s rapidly growing economy is driving demand for office spaces, retail complexes, and industrial properties. Foreign firms involved in commercial real estate development should consider the following:
- Office Spaces: Prime office spaces in central business districts of Ho Chi Minh City and Hanoi are in high demand. Shared office spaces and flexible work environments are also gaining popularity.
- Retail Spaces: As retail expands in Vietnam, malls and mixed-use developments are becoming attractive investments. However, foreign firms must understand Vietnamese consumer behaviour, as the retail landscape can differ significantly from other markets.
- Industrial Parks and Logistics Centers: With Vietnam’s booming manufacturing and export industries, there is high demand for industrial parks and logistics hubs. Investing in these types of real estate projects can provide strong returns, particularly in special economic zones.
Property Management and Leasing
For foreign firms involved in real estate investments, effective property management and leasing strategies are essential. Whether managing residential complexes or leasing commercial properties, providing excellent service and meeting tenant expectations are crucial for success.
Many foreign investors partner with professional property management firms in Vietnam to handle day-to-day operations, maintenance, and tenant relations. This approach can streamline operations and improve profitability.
Construction material availability in Vietnam
Cement
Vietnam is one of the world’s largest cement producers and exporters. The country has abundant natural resources, such as limestone, clay, and gypsum, which are essential for cement production. As a result, local manufacturers supply high-quality cement at competitive prices, making it widely available for both small- and large-scale construction projects. Common types of cement include Portland cement, blended cement, and sulphate-resistant cement, all widely used in residential, commercial, and infrastructure projects.
Steel
Steel is an essential material for construction, especially in high-rise buildings, bridges, and industrial complexes. Vietnam has a strong domestic steel industry with large-scale production facilities, particularly in southern and central regions. Local producers supply rebar, structural steel, and galvanised steel, while imports from countries like China, Japan, and South Korea provide specialty steel for projects requiring higher-grade materials.
Bricks and Tiles
Bricks are widely used in Vietnam’s residential and commercial construction. Both traditional clay bricks and modern alternatives like concrete blocks are readily available. Tiles, including ceramic and porcelain, are produced locally and imported, offering a wide range of options for flooring, wall finishes, and decorative purposes. Traditional red clay bricks are the most common, though eco-friendly options like lightweight concrete blocks are gaining popularity due to their energy efficiency and insulation properties.
Foreign real estate developers in Vietnam
CapitaLand, a major real estate developer from Singapore, has established a strong presence in Vietnam. Known for its large-scale residential and commercial projects, CapitaLand focuses on high-quality developments that cater to both local and expatriate markets. Some of its prominent projects include The Vista, Vista Verde, and d’Edge Thao Dien, all located in Ho Chi Minh City.
Another significant player from Singapore is Keppel Land, a subsidiary of Keppel Corporation. Keppel Land has invested in various residential and commercial projects across Vietnam, including office towers and luxury condominiums. Key projects by Keppel Land include Estella Heights, Saigon Centre, and Palm City, all situated in Ho Chi Minh City.
Mapletree Investments, also based in Singapore, has made substantial investments in Vietnam’s real estate sector. Mapletree’s portfolio spans residential, commercial, and industrial properties. Notable developments include One Verandah in District 2 and Saigon South Place in District 7, along with its Mapletree Business Centre.
Gamuda Land, a prominent developer from Malaysia, has been active in Vietnam since 2007. Gamuda Land is known for its large-scale urban townships and integrated developments, focusing on sustainable and modern urban living. Significant projects include Gamuda City in Hanoi and Celadon City in Ho Chi Minh City.
Frasers Property, another Singaporean firm, has invested in a variety of real estate projects in Vietnam, ranging from commercial properties to residential complexes. The company’s notable project in Ho Chi Minh City is Q2 Thao Dien.
Lotte E&C, part of the South Korean Lotte Group, has made significant strides in Vietnam’s real estate market. Known for its mixed-use developments, Lotte E&C’s notable projects include Lotte Mall Hanoi and Lotte Center Hanoi.
Hongkong Land, a major property investment and development group from Hong Kong, is focusing on high-end residential projects in Vietnam. The Nassim, a luxury residential development in Ho Chi Minh City, exemplifies their commitment to premium real estate.
Kusto Group, originating from Kazakhstan, operates in the real estate sector with a focus on luxury housing. Their significant project in Ho Chi Minh City is Diamond Island, known for its high-end residential offerings.
Sunwah Group from Hong Kong has been investing in Vietnam’s real estate market for several decades. They are known for their high-end office towers and residential properties, including the prominent Sunwah Tower in Ho Chi Minh City.
Ciputra Group, a leading real estate developer from Indonesia, is recognized for its large-scale urban developments in Vietnam. One of its key projects is Ciputra Hanoi International City, a significant urban development in Hanoi.
GS E&C, from South Korea, focuses on both residential and infrastructure projects in Vietnam. Their substantial contributions include the GS Metrocity (Zeitgeist) development in Ho Chi Minh City, one of the country’s largest urban projects.
What’s next?
Investing in real estate projects in Vietnam offers foreign firms significant opportunities for growth and profit, but the market is complex and requires careful planning and compliance with local regulations. By conducting thorough market research, partnering with local firms, and leveraging government incentives, foreign investors can successfully enter and thrive in Vietnam’s booming real estate sector.
That said, Vietnam’s business environment, however, is dynamic and can change quickly. With this in mind, to keep abreast of changes in Vietnam’s real estate market, foreign firms operating in Vietnam should make sure to subscribe to the-shiv.