A investor’s guide to property in Ho Chi Minh City

The Vietnamese property investment market is really starting to go places. I’ve spoken here before about my interest in this growing area – it makes an affordable and attractive alternative to the increasingly prohibitive costs that are pushing a lot of investors out of Hong Kong and mainland China. Affordability, a buoyant market and a government whose more welcoming policies towards foreign investors interested in buying property in the country makes it an interesting option for anyone looking to grow their investment.

A huge market

With this healthy picture in mind, I though it might be valuable to take a look at one market in particular – the largest city in Vietnam, Ho Chi Minh City. Formerly known as Saigon, it’s probably most famous for the pivotal role it played in the Vietnam war, but today Ho Chi Minh City is a vibrant and rapidly expanding place. The first thing to understand about Ho Chi Minh City is its sheer scale and its rate of growth. In the last twenty years the urban area of the city has stretched to over a 100 kilometres in length, and today has a population of around 18 million people. That is a huge market – but also a potentially overwhelming one to the uninitiated foreign property investor.

Huge potential for growth

The second factor to build into your considerations is the scale of investment in infrastructure that is going into making Ho Chi Minh City a modern, connected city. It’s estimated that around $2.5 billion is being poured into the city’s new metro system – a development that will connect and transform this already very dynamic city even further. It’s all a part of a new urban zone that will redefine Ho Chi Minh City, bringing new roads, giant malls, and of course, fresh property developments to provide for the rapidly growing population.

Apartments are particularly in demand – well over forty thousand new ones have been built in recent years – and now is a great time to get into the market before prices truly take off again. It is estimated that residential property prices could rise by as much as 15 per cent over the next few years, and rental yields stand at around 6 to 8 per cent. Areas of interest in Ho Chi Minh City that are particularly popular with foreign property investors are the new urban districts such as Districts 1, 2, 3 and 7. These are growing areas with plenty of opportunities – District 1 contains the CBD and is very vibrant and upscale, while the Thao Dien area of District 2 in particular is full of expat shops, restaurants and bars – there are parts where you’d think you were in Europe. Meanwhile District 3 has quiet, pleasant neighbourhoods with some of the best local restaurants. Section 7 has historically been where Koreans have settled – and is even known locally as Little Korea.

Relatively few obstacles

While it is a lot easier today for foreign investors to buy property in Ho Chi Minh City, it’s still just tricky enough to make it attractive for those of you willing to make the effort to take on the administrative challenges and beat the rush before it begins.

So what are those remaining obstacles? Well, there are currently restrictions on the number of foreign investors who are allowed to own property in any one neighbourhood of Ho Chi Minh City, and all land is still actually owned and managed by the state – effectively it is in collective ownership rather than private hands. In the past, foreigners were only able to ‘own’ property on a 50 year lease agreement. Thankfully that’s now changed, with any foreigners who have a valid visa, any business based in Vietnam, or any foreign investment fund based here, able to own property outright. Again, it’s worth noting that while you might own the property outright, the state will still own the land it sits on.

As with any investment – property or otherwise – just make sure you do your due diligence before you put your money into any property in Ho Chi Minh City. Thoroughly check out the credentials of any property developer you might be considering doing business with, and get a feel of who you’re dealing with before you make your move. Again, the government are increasingly supportive of new investment from abroad and generally keep excellent land registry records of plots that are available – so once again there’s no excuse for not making sure you’ve thoroughly done your research into the particular opportunity you’re looking at.

Robert Weider 

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