Just like most investors and entrepreneurs, I’m always looking for the next opportunity. It’s all a part of the joy of being in business – that relentless pursuit of new frontiers, the chance to be among the pioneers in a new area. Of course, investing in property is one of the oldest businesses in the world, but even here there are still new opportunities and markets opening up all the time.
Looking for new opportunities
Based in Hong Kong, I’m acutely aware of the preciousness of property – real estate price is exorbitant here, not least because of the lack of space. property prices both here and on mainland China have sky rocketed in recent years, reducing the opportunities for investors to grab a slice of a rapidly diminishing and increasingly expensive pie. As a result, investors here have been turning their eyes to different locations in an attempt to break into new markets and to try and turn a profit again. One of these is Vietnam – the country is already becoming one of Asia’s latest property hotspots but I believe there are plenty more opportunities as we head into 2018.
An affordable alternative
Why? Well, I’ve got a few good reasons why I think this is the case. The first is affordability. Compared to the rapidly rising prices in Hong Kong and mainland China, there are still plenty of affordable options – both commercial and residential – even in high profile locations like Ho Chi Minh City (HCMC). In many ways, the market is comparable to the Chinese one a decade ago – the country’s economy is booming, making it attractive to prospective investors looking to grow their money – and yet property prices in the capital are still at around 5 per cent of the prices of comparable Hong Kong flats. It’s also clear that much of the growth in new property development that is taking place in cities like HCMC and Hanoi is at the luxury end of the market – possibly not such good news for local residents looking for affordable housing, but certainly an attractive option for many foreign investors. Combine this with high rent yields – at around 5 to 7 per cent they’re around 3 per cent higher than Hong Kong’s – and you have a pretty attractive package for anyone who is looking for an alternative to the property markets in Hong Kong and in mainland China.
An encouraging environment for new investors
Another big reason why I’m a firm believer in the new opportunities appearing in Vietnam at the moment is the positive and welcoming attitude of the authorities there. Their property market was only opened up to foreigners as recently as July 2015 – but today foreigners are allowed to own, sell and lease up to 30 per cent of the apartments in a development or up to 250 houses in a designated area, under a 50-year leasehold. And things are certainly picking up as a result of the government’s moves – for example, almost all of the high-end residential projects launched in HCMC in the last two years have fully utilised the 30% foreign purchase quota. That, for me, shows that the government’s policies are already starting to pay dividends.
The bigger picture
There are also very positive signs in the Vietnamese economy as a whole, which should be encouraging to foreign investors. In a recent report PwC have said that the country stands out in the region for its high and long-term economic growth prospects and the vast scale of investment opportunities’ it is currently offering to foreigners. GDP per capita has grown 6% annually since 1990, and foreign direct investment has been pouring into the country. An important factor supporting the growth is its young population, with a median age of 30.6. Not only does Vietnam boast a young workforce, but it is also a relatively skilled one. The demographic advantage, coupled with a still cheap labour force, makes the growth story a compelling one. Indeed, many comparisons have been made between the economic trajectory of Vietnam now and that of China at the turn of the century.
It’s a country that I will be watching closely in the next few years, and property is not the only bright spot.