Why do Korean investors prefer Vietnamese real estate?

Since the Housing Law has been relaxed, allowing foreigners to buy houses in Vietnam, Vietnam's real estate market has become an attractive investment environment for international investors. In particular, Korean investors are putting Vietnamese real estate on "sight" in the context of the country's real estate market showing signs of hot development.

According to statistics on attracting foreign investment capital just announced by the Foreign Investment Agency - Ministry of Planning and Investment, in the first nine months of 2019, 109 countries and territories have investment projects in Vietnam. In particular, South Korea ranked second with a total investment of 4.62 billion USD.

In terms of capital contribution and share purchase, Korea is one of the two countries with the largest number of capital contributions and share purchases by Vietnamese enterprises in the past nine months, with 1,267 times of capital contribution and share purchase. Investors from this country also have a high number of new projects and newly registered capital into Vietnam, with 819 projects reaching US $2 billion.

The report of CBRE Vietnam also revealed that in the third quarter of 2019, the demand for apartments from foreign investors is on the rise in Vietnam. In particular, the number of South Korean tourists, Hong Kong, Taiwan accounts for about 85% of foreign visitors to buy houses in Vietnam.

According to Savills Vietnam, over time, Korean customers have shown strong interest in luxury apartments in Ho Chi Minh City, the financial center of Vietnam.

Nguyen Khanh Duy, director of the housing business at Savills Ho Chi Minh City, said that the attractiveness of Vietnam's real estate market is explained by a number of factors such as attractive price, high profit potential, high quality products with the participation of reputable developers and the 2015 Housing Law are relaxed to create conditions for foreigners to buy houses in Vietnam.

"For the same amount, instead of investing an apartment in their home country, they can buy three apartments in Vietnam." Artwork image

In addition, the price of apartments in the city. HCMC and Hanoi are generally lower than regional cities in the region such as, though growth rates are much stronger. New house prices in the central area of Ho Chi Minh City currently range from 5,500 to 6,500 USD/m2, much lower than the prices in Hong Kong. Meanwhile, rental returns of more than 5% show that this is an attractive investment compared to other markets in the region.

Mr. Duong Duc Hien, Director of Housing Sales of Savills Hanoi, analyzed that in the past 14 years, Vietnam's real estate market has made great strides. Thinking about architectural ideas compared to 10 years ago was much better.

“If previous projects lacked in utilities, living space, and quality of life were not high, it has now been improved and improved. On the other hand, the quality of the project, hand-over conditions, and technical infrastructure are also guaranteed compared to the past” Mr. Hien assessed.

According to Mr. Hien, after Vietnam joined APEC, the market has recorded a large wave of foreign investment, including customers from Korea, China, and Japan into Vietnam. Private investors from these countries have begun to "target" the field of real estate.

Talking about the attractiveness of Vietnam's real estate market to foreign investors, Mr. Hien said: “Many customers have shared with Savills that, with the same amount of money, instead of investing an apartment in Their country, they can buy three apartments in Vietnam. As such, they can diversify their portfolios. Not to mention, the rental profit in Vietnam is quite good”.

“For foreign investors, the annual rental rate on a pro rata basis if the threshold of 4-5% is reached is successful. Especially for countries with stable economic growth” Mr. Hien said.

Discussing this issue, Ms. Nguyen Hoai An, Director of CBRE Hanoi Consultancy and Research Department, said that the trend of foreigners, especially Koreans buying houses in Vietnam, appeared in the range of 4-5. Last year and this trend continued in 2019 in both Hanoi and Ho Chi Minh City.

In the first 9 months of 2019, a number of other countries also increased interest in buying houses in Hanoi such as Taiwan, Hong Kong and Singapore.

According to An, the increasing trend of buying houses from foreign visitors in Vietnam reflects the potential of the real estate market in the context of Vietnam's economy showing signs of positive growth. Besides, compared with the price of houses in neighboring countries, such as South Korea, housing prices in Vietnam in general and Hanoi in particular are at attractive levels.

For example, the average unit price (near high-end) in Vietnam is only about 2,000 - 4,000 USD/m2. Meanwhile, this price in Korea can be up to 15,000 - 20,000 USD/m2. This is also the basis for expectation in the coming years, Vietnam's real estate prices may increase.

However, the expert also said that the development of real estate segment for foreigners also includes difficult and favorable factors.

The most obvious advantage is that many foreigners are attracted to the potential of Vietnam's real estate market.

Regarding difficulties, according to Ms. An, to serve and meet the requirements of foreigners requires solving many factors such as the foreign language ability of the seller, the ability to analyze which products are suitable for the market. hospitality of foreigners as well as the management of houses for foreigners when they are not in Vietnam.

According to Tam An