No influx of foreigners to buy houses in Vietnam

VietNamNet Bridge – The local property market is awaiting potential foreign purchasers, following the Ministry of Construction’s proposal to loosen regulations for foreigners to buy houses in Vietnam. The market after five years under a pilot program to sell houses to foreigner has seen only some 120 houses sold to them, compared to a huge number of around 80,000 foreigners living and working in the country.

Stephen Wyatt, new country head Vietnam for Jones Lang LaSalle.

The Saigon Times Daily talked to Stephen Wyatt, who has just been appointed as country director for Vietnam at the global real estate consultancy firm Jones Lang LaSalle, over the issue. Excerpts:

The Ministry of Construction has just put forward an idea allowing any foreigner who has a visa valid for three months to buy a house in Vietnam. What do you think about the initiative?

- Stephen Wyatt: As the above figures suggest, the pilot program that allows foreign purchasers to buy residential property in Vietnam has received a lukewarm response.

This can be attributed to a number of reasons, first and foremost the domestic economy and property market in Vietnam over the past five years has suffered and the majority of foreigners looking to buy residential property have looked for “safe havens” to invest, such as London, New York, Hong Kong and Singapore. Second, the regulations within Vietnam for foreign ownership are considered unclear by many foreigners and then there is the obvious language barrier.

How is the forthcoming regulation in Vietnam compared with other countries in the region? Will it be liberal enough for foreigners to buy houses in the country?

- Each country in the region has its own rules on foreigners owning property. The new regulations proposed for Vietnam should be acceptable to most foreigners especially if the length of lease could be extended to over 50 years or the lease can be extended for a further 50 years and the ownership structure is clear and transparent.

Some people say the housing price in Vietnam is too high, and that is among reasons making foreigners hesitant to buy houses in Vietnam. What is your comment?

- Housing prices anywhere in the world are based on supply/demand dynamics and Vietnam is no different. We are currently experiencing oversupply in the mid-end segment of the market, so many commentators believe the house prices are high. However, with good market research and a detailed understanding of the market we are now confident there are good opportunities for foreign purchasers to buy property at reasonable market levels.

But with the current housing price, as a foreigner, do you prefer to buy or lease a house to live?

- People from different nations have different preferences. As an example, the majority of British people prefer to buy property and use it as part of their pension plan, whilst in Germany and France many people prefer to lease as opposed to buying as they do not like the responsibility and commitment of a long term mortgage.

Some people feel optimistic about the ministry’s initiative, expecting that it will provide a source of potential homebuyers to the local property market, and will help cut the current housing stock? What do you think about that?

- Whilst we encourage the move and believe it is a positive step forward for the property market in the country, it is unlikely that there will be a massive influx of foreigners buying property in Vietnam. This measure alone will not be a quick fix for the residential property market, but it should be one piece of the puzzle that will help to kick-start the residential property market.

Source: SGT

No influx of foreigners to buy houses in Vietnam