January 14, 2022

Why Do Foreigners Invest In Vietnamese Real Estate And You Should Too?


Vietnam is an emerging market with great potential for foreign investors who are looking to diversify their investment portfolios and seek profits. When the country increasingly goes into integration with many international trade agreements, demand for development investment from abroad into Vietnam has increased. Without exception, Vietnamese real estate is also becoming a target for individual investments or foreign companies.

Real estate market in Vietnam

Why is real estate in Vietnam so attractive to foreigners?

Interior factors

Vietnam attracts foreign investors through many other factors. Firstly, Vietnam's political stability is one of the most attractive factors for the Investors to Vietnam and this is also highly appreciated by international friends. If you look at a number of countries in the region, it can be easily seen that most countries have experienced political coups or crises, meanwhile, Vietnam's politics is always stable, ensuring consistency in economic development policy and in attracting foreign investment. This will make foreigners extremely secure when investing in real estate in Vietnam. Secondly, Vietnam always opens its market and encourages and attracts foreign investors through administrative procedure reform and investment incentives. Typically, the Investment Law 2020 and Enterprise Law 2020, coming into force on January 1, 2021 further strengthens Vietnam’s open foreign investment policy by cutting some administrative investment procedures. This makes it easier for foreigners to invest in Vietnam.

In addition, the growth in value of projects as infrastructure develops is also an attraction for investors. For instance, the Empire City - an outstanding project in the Thu Thiem area - has opened for sale in phase 1 with the price of only 2800$/sqm. However, when the infrastructure of Thu Thiem is partially completed with the Thu Thiem tunnel and Thiem bridges, the price of this project has reached about $7500/sqm in 2021 (about 200% increase). This proves that in the future when Thu Thiem peninsula will be completed and developed as a financial area, the price of projects in this area will continue to increase in price.

Empire City perspective

Exterior Factors

According to the CEO of Modoho, Vietnam is still an attractive investment destination for foreign investors, such as from Japan, Korea and Singapore. According to statistics from the Ministry of Planning and Investment, in the context of complicated developments of Covid-19, foreign direct investment (FDI) in the first 7 months of the year still reached 10.5 billion USD, an increase of 3.8% over the same period last year. In which, FDI poured into real estate reached US$1.16 billion, ranking third in the fields attracting the most investment capital, with major partners from Korea, Japan, Singapore, and Indonesia. Since then, the demand for rental housing from foreigners has increased, making investors earn a lot of profit.

In addition to the real estate business with developers key investment from Singapore and Hong Kong, etc. The inevitable trend of housing also becomes a major concern for individuals. Simply explained, Vietnamese real estate for domestic people is high, but for foreigners, the price is "cheaper" a lot.  According to a recent report from the real estate floors of the Vietnam Association of Realtors, most of the high-end and luxury projects in Ho Chi Minh City recently attracted a very strong number of foreign visitors. Because of high demand, while the rate of real estate is limited, there has been a situation where foreigners buy for investment, lease or transfer to each other. Along with the ease of transactions and good prices, Vietnam has motivated a lot of foreigners to come here to live.

The shifting of locations and capital inflows from China is also one of the important factors to attract foreigners to invest . Indeed, China’s ongoing move towards a higher income nation and the deepening ties of Vietnam into global supply chains have acted as major factors to brighten Vietnam on the global map of investment hubs. China’s role in the global economy is maturing as manufacturing focuses inwards and the country becomes more service-based and less dependent on exports. In addition, the trade dispute with the US is speeding up this transition. Therefore, Vietnam is poised to be a key beneficiary in the rotation in China thanks to its lower labor costs and more affordable land costs, less restrictive trade barriers, straight forward access to new supply chains, improved infrastructure, and more industrial policy support, among others.

Investing as a foreigner – Yes or No ?

Vietnam is trying to come up with incentives to attract foreign investment, which will be a good opportunity for any investor observing the Vietnamese real estate market. A recent study also showed that the number of super-rich classes in Vietnam increased the third fastest in the world, which will make the economy in Vietnam grow rapidly in the near future. In addition, Vietnam is only behind Singapore in the list of favorite places to work for expats in Southeast Asia. All have motivated many foreigners to come to Vietnam to choose as a place to live.

Why do foreigners invest in Vietnamese real estate and you should too?

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