In 2009, Resolution 19 was issued as a
five-year pilot project. Under it, for the first
time, foreigners were allowed to purchase
residential property. The resolution technically
expired at the end of 2013, although it is
uncertain whether its application will cease.
In any event, there are significant limitations
attached to Resolution 19. For example,
the only foreign buyers entitled to purchase
property are those individuals who fall into
one of the following categories:
Investors who make direct investments to
Vietnam;
hose married to Vietnamese citizens;
T
xpatriate managers working in Vietnam; or
E
hose possessing special skills that are
T
needed in Vietnam.
Moreover, only 50-year lease terms for
apartments – not individual houses on plots
of land – may be purchased under the terms
of Resolution 19. Buyers may only purchase
one unit at a time and are prevented from
subleasing the premises.
Given those limitations, it is not surprising that
the number of foreign investors who have
purchased apartments under Resolution 19
has been fairly low. In order to facilitate the
real estate market’s recovery, then, various
government ministries have proposed a law
that would lift most of those restrictions.
Under the resulting new Draft Housing
Law, both individual investors and foreign
organizations would be entitled to invest in
property. The only requirement for individuals
would be that they hold a visa, valid for at least
three months, to enter the country.
Under the proposal, in addition to apartments,
foreign individuals and organizations would
be allowed to acquire houses of less than 500
square metres in size. As well, the maximum
lease period for an apartment would be
extended to 70 years, foreigners would
be able to own more than one residential
property at a time, and the properties could
be leased out.
Another prospective liberalization of the
housing ownership laws would allow
foreigners to invest in property through an
offshore share ownership plan that includes
a mix of offshore and onshore transactions.
As such, the proposal, called the Nam Hai
structure, would not involve direct leases to
individual buyers.
Outlook For The Future
Vietnam’s real estate market is therefore
poised to improve in 2014. Many of the
country’s economic challenges are being
addressed. The country’s stock market rose
by 22% in 2013. And importantly, residential
housing prices have eased down to more
reasonable levels.
Meanwhile, Vietnam is in negotiations with
other Pacific Rim nations, including the United
States, Canada, Japan, Australia and Singapore,
on a Trans-Pacific Partnership free trade
agreement. If it is signed, Vietnam’s economy
and real estate market are likely to benefit.
As for the Draft Housing Law, while passage
is not certain, the momentum required for
approval seems to be there. The proposals
have received the backing of the prime
minister and other key government officials.
There is a general trend toward greater
economic openness and it could be just a
matter of time before Vietnam’s housing
market is more welcoming of foreign buyers.
For anyone interested, it would be wise to keep
a sharp watch on this year’s developments.
Joh