Many experts hailed 2018 as a landmark year for Vietnam’s residential property sector. The Vietnam real estate market recorded a record number of foreign purchases and this, along with the strong economy, should power the country’s continued performance.
“The momentum in Vietnam’s residential market continued to be driven by the golden demographics, the positive economic outlook and the completion of new infrastructure projects,” Neil MacGregor, Managing Director Savills Vietnam, explained in a press release. “Ho Chi Minh City and Hanoi are undergoing rapid transformations, continuing to catch regional peers. Meanwhile, Ho Chi Minh City’s apartment market is underwritten by strong occupier demand, whilst the high-end segment in both cities is appealing to both local HNWIs and international purchasers.”
The latter group in particular was surprisingly active with the vast majority of high-end projects hitting their 30 percent foreign quota at launch, according to research from Savills. Demand for investment properties has increased significantly since 2015 with the Vietnam real estate market now seeing the full benefits of this policy shift.
“Apartment prices in Ho Chi Minh City and Hanoi are generally still lower than regional peers such as Kuala Lumpur and Bangkok, despite much stronger growth rates (here) when compared with these markets,” MacGregor said. “The average price across the broader market is expected to continue to increase, albeit at a somewhat slower pace, with price increases linked to higher development standards and continued strong residential demand driven by urbanization, the rapid growth of the middle class, as well as new infrastructure.”
Another reason the Vietnam real estate market has performed well recently is due to lower tax rates. MacGregor noted that taxes and stamp duties in places like Hong Kong and Singapore makes Vietnam property more interesting to both international and domestic buyers.
“Although there is still a long way to go for the Vietnam property market to reach the dizzying heights of Hong Kong and Singapore, Vietnam is well on the way to becoming Asia’s next tiger, with strong economic growth, a rapidly growing middle class and, for the time being at least, relatively affordable pricing,” MacGregor pointed out.
At the moment, there remains a distinct shortage of prime property in Vietnam’s key cities. Real estate investors can see the potential for significant capital gains over the long term while rental yields remain in excess of 5 percent. MacGregor concluded that buyers look set to benefit from potential capital appreciation as the Vietnam real estate market continues its upward trajectory.