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Recently, attending an interview, Stephen Wyatt - Country Head of JLL Vietnam gave his opinion about The new policy allowing foreigners to buy and obsess property in Vietnam.
Q1: Recently, legislation for foreigners to purchase property in Vietnam in 2016 has been realized and its future prospect still remains a major doubt. What are your views on this decision?
In July 2015, the new policy which allows foreigners to own property in Vietnam officially came into effect, giving positive impacts on the real estate market. Noticeably, since the introduction of this new policy, JLL has witnessed strong sales volumes on the amount of properties purchased by foreigners, together with significantly improved sales rate from many projects. According to some recent reports of JLL, the total number of units sold in 2015 doubled compared to 2014 figures thanks to the growth in both demand and supply, as well as the available financial support from commercial banks for both developers and investors. This trend is anticipated to continue in 2016 and foreigner buying house in Vietnam will remain an interesting topic. We believe that the Vietnam real estate market is going to attract further attention from investors in neighbor countries.
Q2: There are recently controversial arguments on the implementation of this new policy. While some people may view it as a positive move of the government to lessen the procedures of residential property purchase and possession, others stay pessimistic among nummerous conflicts in the issue of foreign money transfer, as well as the complicated mortgage processing at credit institutions. What are your comments on these matters?
Regarding the new policy on foreign ownership of property in Vietnam, we believe that it is showing a positive impact, which reflects the government's concern on the development of the real estate market and in reality the market is receiving better results. However, various challenges remain to be concerned. Instructions for implementing the policy are still ambiguous to foreigners, especially those who have not lived in Vietnam for a long time. Moreover, there are still issues on money transfer as well as shortcomings in financial support from credit institutions. In fact, only a small number of banks are willing to support foreign investors on purchasing a property in Vietnam. Therefore, we expect higher levels of cooperation between the authorities, credit institutions and developers in order to increase foreign demand on real estate in Vietnam. JLL has been hosting events across different countries in the region to introduce domestic real estate products, which have been receiving positive feedback from foreign investors. This trend is thanks to the fall in popularity of neighboring real estate markets in the region, such as Singapore and Hong Kong, as opposite to the attractiveness of the new foreign housing policy in Vietnam.
Q3: Are there any differences between Vietnam's and other countries' housing policy for foreigners?
Indonesia can be our subject of comparison since they have recently implemented a similar policy which allows foreigner to own properties as well. Basically, foreigners will also have the equivalent rights to purchase condominium units as the Indonesians do. The ownership tenue will be 80 years in total, which is granted for the first 30 years, then renewed in the next 20 years and finally extended for the last 30 years. However, this policy does little impact on the domestic real estate market because foreigners are required to have visa and/or work permission in Indonesia to legally own their properties, otherwise they will be retrieved. Not many people would want to stay in Indonesia for 80 years in order to own their assets. It can be said that the legal requirements in Vietnam are much more relaxed as foreigners can even transfer their properties after purchased. The impact of the policy on the Vietnamese real estate market will be significant as foreign demands for real estate investing and owning are highly boosted.
Q4: In the first two months of 2016, is there any positive change in the number of foreign buyers?
The policy allowing foreigner to own domestic residential properties has recently been implemented. Decree 99/2015/ND-CP which serves as a guide for the implementation of this policy has just taken effect since December 2015. Following its introduction, one of the upsides is that a lot of attention has been drawn from numerous real estate investors. Nonetheless, investments still remain at a modest level.
Q5: In your opinion, which political changes have to be taken in order to guarantee a growth in foreign purchases in the next period?
It actually takes a quite lot of time to implement a policy. Currently, one positive contribution of the policy is the growing attention from various subjects. However, several difficulties regarding its implementation are still left to be discussed. For instance, the money transferring process for real estate transaction in Vietnam has yet to be well documented. In addition, there is no legislation regarding mortgage loans for foreigners. Legal procedures in general are still tiresome and unspecific, causing misunderstandings for a lot of people.
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