Vietnam labelled Asia's new property hotspot
Vietnam is quickly becoming Asia's latest property hotspot as more and more Hong Kong and mainland China investors continue to purchase real estate across the country.
According to Alex Shen, a Hong Kong-based finance industry worker, a recent drive by Vietnam's government is just one reason why the country is drawing in a new wave of property investors.
"Home prices in Vietnam are still very cheap compared with Hong Kong or mainland China," said Shen, "and with the local government keen on attracting buyers, through various stimulus measures, this looks like a big chance to win."
Vietnam only opened its property market up to foreign investors in 2015, but now developers are allowed to sell 30 per cent of units in each building to foreign buyers. Property investment is also encouraged by the country's rapid economic growth, as well as a number of supportive government policies and considerable growth in recent years in Vietnam's two biggest cities Ho Chi Minh and Hanoi.
A number of infrastructure developments have also boosted the success of Vietnam's real estate market, with the first line of Ho Chi Minh's metro expected to be built by 2020, while the first six lines in Hanoi will be completed in 2018.
According to the Ho Chi Minh Real Estate Association, an estimated 700 foreigners bought property in the city between mid 2015 and the end of the first quarter in 2016. Meanwhile, more than 300 potential investors have attended property investment seminars, signalling their interest in financing real estate growth in Vietnam.
Commenting on the country's property success, Kingston Lai, founder and CEO at Asia Bankers Club, one of the organisers of recent seminars, suggesting that ordinary investors are now focusing on the south-east Asian economy as it rapidly develops.
"It’s like where China was 10 years ago," he said. Lai went on to describe the country as the world's next factory, labelling it a strong investment destination. Currently, according to the data, top-end properties in Ho Chi Minh City alone are priced at US$3,000 to US$5,000 per square metre, with annual rental yields at around 7 to 8 per cent, which is 1.5 to 2.5 per cent higher than Hong Kong and Singapore.
Stephen Wyatt, country head of JLL Vietnam, added: "On the back of its economic improvement and with a GDP target of 6.7 per cent in 2017, market sentiment is very positive."
He said: "Foreign buyers typically like the new urban districts such as Ho Chi Minh’s district 2 and district 7, and many investors from mainland China are hoping to see these cities replicate the same growth as Beijing and Shanghai."