An estimated 4 million foreigners and overseas Vietnamese have a desire to buy housing in Vietnam, according to the Ministry of Construction.

Since the Law on Housing 2014 took effect on July 1, 2015, 3,053 foreigners have bought homes in Vietnam, mostly apartments. The homes foreign organizations and individuals buy are mainly in big cities and provinces, such as Hanoi (1,765), Ho Chi Minh City (850), Bac Ninh (110), Binh Duong (210), and Ba Ria-Vung Tau (50). Most buyers are from South Korea, China, Singapore, the US, Australia, and Japan.

However, the Vietnam Association of Realtors (VARS) view the number of foreigners buying houses in Vietnam as still being quite small. The number bought by foreigners since the Law on Housing took effect accounts for only 0.53 per cent of the total exchanging hands in the 2018-2022 period. Meanwhile, foreigners living and working in Vietnam have high demand for property to live in or to conduct business in around the country.

The trend towards more foreigners owning housing in Vietnam is a positive sign, confirming that the country has a fast-growing and dynamic economy, and it is indeed considered a bright spot in the Asian region by prestigious international organizations.

VARS said that in recent years a series of major developers with large capital sources have been looking at opportunities in Vietnam.

Along with strong flow of FDI capital, the number of foreigners coming to live and work permanently in Vietnam increases every year.

Long-term employment in Vietnam and rising demand for investment in Vietnam’s real estate market will certainly lead to more house and apartment purchases by foreigners and overseas Vietnamese.

High housing prices and tightened immigration regulations in some countries will also make the demand for home ownership in Vietnam increase.

A report from Juwai IQI for the first half of 2023 shows that Southeast Asia is emerging as a popular destination among rich Chinese, including Vietnam.

However, legal issues and administrative procedures remain barriers that make it difficult for foreigners to access housing in Vietnam, according to VARS.

Similarly, CBRE Vietnam said it has conducted many transactions with foreigners, and demand is quite high but legal issues make it problematic.

Faced with challenges, VARS believes that in order to create favorable conditions to attract and promote investment, the Law on Housing needs to be revised towards increased transparency and smother regulations.

In particular, regulations need to be more open and specific instead of simply putting up barriers. Any amendments must also be in sync with the provisions of the Land Law and the Law on Real Estate Business.

It is necessary to continue to boost housing supply and develop products suitable for the housing and investment needs of foreigners in Vietnam in permitted areas. To avoid speculation, VARS has proposed imposing a progressive tax on real estate. The tax rate could be gradually increased if the owner does not use the property.

Foreigners should be permitted to buy houses and tourism real estate from Vietnamese citizens, as these are high-end, difficult-to-sell products, and suitable for foreigners’ pockets. Such a policy, once effective, would help clear a large amount of inventory, making the market more vibrant.

Under the latest draft amended Law on Housing, expected to be approved by the legislature this November, foreign organizations and individuals will not be allowed to own houses attached to land, as is currently the case.

Data from the Overseas Vietnamese Entrepreneurs Association indicate that there are about 5.5 million Vietnamese living abroad and more than 1 million second- and third-generation Vietnamese with foreign nationalities. Some 600,000-700,000 are businesspeople and intellectuals, with many hoping to return to their homeland to invest, do business, or live, meaning demand for housing in the country is huge.