This highly anticipated and long discussed amendment has had support from all levels of the government and throughout the property industry. It allows foreigners to lease and own a maximum of 30% of an apartment building or up to a maximum of 250 villas or townhouses. This effectively provides a registered 50 year leasehold title.
The recent amendment follows the relaxation on Overseas Vietnamese who now have full and unfettered ownership rights. In 2013 overseas remittances were up 10% year on year to US$11B, much of this can now effectively and confidently be held in real estate.
Foreigners now have an enforceable title, at the same time opening up a far deeper purchaser pool. This will add greater liquidity to the residential market that is now showing signs of a modest recovery across the nation. Importantly the amendment helps Vietnams property market become more competitive within the region. It will also allow investors with entry visas to have exposure to a very attractive asset class within an emerging market that has excellent structural characteristics and strong growth potential.
The decree also allows foreigners to ‘pay for the property via a financial organization operating in Vietnam’. The retail banking sector is highly competitive, this should flow though to promoting easier access to property mortgages for foreigners.
These amendments follow wholesale legal reform influencing many sectors and comes at a time when foreign investors are showing increasing interest. Vietnam’s rapidly changing legal landscape is creating greater business certainty and a healthier and more competitive financial environment.