2007 is lining up to be a very positive year for the property market in Vietnam with the government already having made significant changes to real estate investment laws in 2006 and having offered certain ownership concessions to Vietnamese citizens living abroad for example.  In addition to these factors, local affordability is increasing, overseas investment is escalating, ongoing effort is being made to improve the transparency of the property buying and ownership processes and as a direct result of all of these positive factors, strong investment is inward flowing into property in Vietnam.  Earlier in the year we reported on the positive changes being seen in the Vietnamese investment property market already as a result of the enactment last year of new housing laws – foreign investment commitment into property development projects has increased since the new laws came into force in July 2006, and one of the largest demographic groups of investors now paying special attention to the potential of the property industry in Vietnam is the Arab investor community.  According to the Taiwan based Central Trading and Development Corporation which is one of the largest and most significant foreign investment companies in Vietnam and currently the largest property development company in Vietnam, Arab investors are targeting Asia with China, India and Vietnam the three most popular countries for their investment interest.  The chairman of the Central Trading and Development Corporation has direct contact with Arab investors and believes that the next five years will see increasing and substantial financial commitment from the Arab world into property related projects in Vietnam because of the inimitable and almost untapped potential available from the nation’s real estate industry. This is extremely encouraging news for both the Vietnamese property market and also other overseas investors considering the viability of a commitment in Vietnam.  Other good news likely to encourage further foreign investment pledges is the fact that the Superior Council of French Notary has agreed to work directly with the Vietnamese government to modernize and vastly improve real estate registration and regulation processes in Vietnam. Because the French land registration system is proven and so well regulated it is seen by the Vietnamese as the model to emulate and now the Honorary President of the Superior Council of French Notary has agreed to give full support and direct assistance to the Vietnamese Ministry of Natural Resources and Environment to get their real estate registration affairs in order.

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The laws relating to the direct foreign ownership of property in Vietnam are currently under review by the Vietnamese government – the law as it stands does not permit foreign ownership of real estate anywhere in Vietnam. 

A new draft law was submitted to the National Assembly in 2005 and it is due to be ratified sometime in 2006; under the terms of the draft law the real estate market will become more accessible to foreign investors. 

The real estate buying process in Vietnam for foreigners currently does not therefore exist!  All expatriates living in Vietnam rent accommodation and foreign investors are restricted to the development of housing and commercial real estate. 

Foreign direct investment is being targeted but the Vietnamese government are incredibly determined to remain in tight control of their country and therefore all those who wish to invest in the real estate construction and development industry have to deal with a maze of laws, rules and regulations before they are permitted to invest in the fast growing property market in Vietnam. 

There’s no denying the fact that the government’s determination to remain so restrictive is holding back the potential in the real estate market in Vietnam.  There is a massive requirement for residential accommodation that is not being met at the current construction rates - and furthermore there is strong demand for residential property from expatriates, investors, Vietnamese living outside of Vietnam and those seeking an exciting second home destination. 

This ever increasing demand for investment property in Vietnam coupled with the fact that the Vietnamese government is slowly adapting laws to allow for the foreign ownership of real estate means that Vietnam is one to watch.  It is a country where there is a property boom waiting to happen and those who remain ready and watchful and who will be able to move when restrictions are lifted will likely profit the most. 

Because of the nature of the country and its government, potential investors determined to enter the real estate market in Vietnam when the time is right should be aware that it is likely that short term gains will be an unachievable prospect because it is likely the government will restrict speculative property investment. 

Instead the best returns will be made by targeting the tourism and expatriate rental markets.  Those who wish to profit from property in Vietnam today should consider investing in development and construction projects.

Rhiannon Williamson writes about living abroad and investing in international real estate.  She also maintains www.amberlamb.com - which is an online resource for expatriates, international investors and anyone planning a new life abroad.