Three months after a new rule allowing foreigners to buy and own local properties took effect, there is no significant growth in the volume of foreign homebuyers, an expert said at a regular conference on the Vietnamese realty market last week, though foreign buyers have shown more interest.

It is a result of the fact that foreign buyers are waiting for detailed instructions and progress in implementation of the new law, which took effect on July 1, Marc Townsend, managing director of U.S.-owned realty service company CBRE Vietnam, said at the conference last Wednesday.

Under the provisions of the new Housing Law, the requirements for foreigners to buy and own homes in Vietnam have been loosened.

Specifically, foreign organizations and individuals investing in Vietnam, branches and representative offices of foreign companies and investment funds and foreign banks operating in the country have the right to buy condominiums or own and inherit as gifts at most 30 percent of the apartments in a condo building.

Regarding individual properties including villas and semi-detached houses in an area with the number of people equivalent to that in a ward-level administrative unit, foreigners are allowed to buy or own a maximum of 250 houses with the time span of 50 years.

They are also entitled to buy or own a house or condo much longer than the 50-year limit if married to a native Vietnamese person.

After the 50-year period of house ownership, under the new Housing Law, foreign individuals can carry out procedures to extend the ownership once, but not for more than 50 years.

The old law permitted them to own only one piece of property for a maximum time frame of 50 years.

In addition, foreigners and overseas Vietnamese are eligible for housing ownership in Vietnam as soon as they arrive in the country, if they meet immigration requirements.

Hurdles in getting access to bank loans

In May, Nguyen Trong Ninh, deputy head of the department for housing and realty market management under the construction ministry, told Tuoi Tre (Youth) newspaper that foreigners only need a valid visa for immigration to be allowed to buy houses and apartments in Vietnam, and even a visa with only one day of allowed stay is eligible for house and apartment purchases.

“For businesses, investment funds or branches of foreign banks, they must be operating in Vietnam and have such required documents as investment licenses, and legal office and branch establishment permits,” Ninh said, citing the new law on housing.

“We do not have the total number of successful purchases of foreign investors, but from what we observe, around 5-8 percent of total successful transactions at many high-end projects located in areas which are attractive to foreigners, like in District 2 and District 7, are from foreigners,” Townsend said.

Meanwhile, the numbers of potential foreign buyers seeking information about those projects have risen around 30-35 percent compared to the time before the law came into effect, he added.

An example of a project luring foreign buyers in Ho Chi Minh City is Vinhomes Central Park in Binh Thanh District with around 400 such buyers and overseas Vietnamese, the managing director said.

Most of the successful deals are from overseas Vietnamese, he added.

The professionalism, including the foreign language proficiency, of the sales staff at those projects and the willingness to create favorable conditions for foreign buyers when allowing them to pay by credit card of the developers will be the key factors in attracting foreign clients involved in the market in the longer term, Townsend said.

Another problem arising during the investment process is that Vietnamese authorities always keep a close watch on the inflow and outflow of foreign currencies from and to the countries, especially to and from the real estate sector, he said.

It is a challenge to foreign investors if they want to buy or sell properties in Vietnam, as they have to complete a lot of paperwork, and then have to pay or receive cash only.

In addition, there are some remaining hurdles, like although the laws allow foreign investors to access bank loans for buying houses, it turns out that only those having permanent or temporary residence cards can do so.

“I have one, but it only enables me to access two-year loans from a bank, which is a limitation to attract more foreign homebuyers and investors,” Townsend added.

“But overall, the relaxation of foreign ownership restrictions is more significant than previously anticipated and marks a strong step toward the opening up of the Vietnamese real estate market to overseas investment.”

According to the World Bank’s Ease of Doing Business 2015 report, Vietnam recorded an improvement in ranking by six points.

This could provide a boost in confidence for global and regional companies looking to set up new offices or expand their operations to Vietnam, Townsend said.

Sound economic signal

The third quarter of 2015 witnessed the strong impact of the global economy’s movements on Vietnam, as China’s economy continued to slow down and missed the estimate on industrial output, according to CBRE’s quarterly report released on Wednesday last week.

Meanwhile, the Vietnamese dong has been devalued for three times in 2015, but it will be less likely to lose value again this year as the U.S. Federal Reserve confirmed its intention to delay an interest rate hike until at least later this year, combined with the State Bank of Vietnam’s announcement that it would hold the foreign exchange rate stable until early 2016.

On a positive note, inflation is now at the lowest level in the last ten years and bank interest rates are expected to stay at their current low level for a considerable length of time.

Vietnam’s economy has also showed further integration with the rest of the world through several important free trade agreements, including the one with the EU which was signed in August

Another significant free trade agreement, the Trans-Pacific Partnership, will be likely to add 0.11-2.11 percent to Vietnam’s real GDP.

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