1.2 Socio-Economic Reasons to Invest in Vietnam

1.2.1 GDP Growth and Strength

In 2021, GDP growth remained positive at 2.6% despite the Covid-19 pandemic. Industry and construction accounted for 63.8% of GDP, services accounted for 22.3% and agriculture, forestry and fishing contributed 13.9%. According to VinaCapital, Vietnam’s economic growth in Q2/2022 was 7.7% year-on-year (YoY), the fastest growth in the last ten years. 

On a regional level, Vietnam was forecast to have the fastest growing economy amongst ASEAN countries in 2022. The Asian Development Bank reiterated this message at the end of H1/2022, with GDP growth in 2022 expected to be higher than Malaysia, Singapore, and Thailand.

1.2.2 Free Trade Agreements in Vietnam

Vietnam is part of numerous FTAs and bilateral trade agreements. FTAs are one of the main reasons to invest in Vietnam. New age trade agreements include the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), EU-Vietnam FTA (EVFTA), and UK-Vietnam FTA (UKVFTA). 

Mr Matthew Powell, Director of Savills Ha Noi, commented on the UKVFTA. He said: “The UKVFTA is an encompassing agreement that outlines market liberalisation for goods, services, and investment. It includes agreements fundamental to boosting trade, like tariff elimination, transparency commitments and a comprehensive framework for trade in services. Interestingly, this agreement detailed commitments to sustainable development alongside fiscal agreements. Other factors like competitive wages, a skilled workforce, tax exemption policies, and establishment policies are some of the main reasons to invest in Vietnam.”

1.2.3 Demographic Changes in Vietnam

Vietnam has a population of nearly 100 million people. The country’s urban population is forecast to increase from 37% in 2020 to 44% by 2030, and households are getting smaller. These factors will drive increased housing demand.

The country is also seeing a rise in the average daily spend. Since 2010, the average daily spend per person has increased significantly. By 2030, 55% of the population will have a daily spend of VND 250,000 to VND 690,000, higher than the 16% in 2010. In addition, more than 2% of the population will have a daily spend of VND 1,600,000 by 2030.  

1.3 Investing in Property in Vietnam

Having illustrated the main reasons to invest in Vietnam from an economic standpoint, we will unpack the practicalities of how to invest in Vietnam as a foreigner. Before investing in the Vietnamese housing market, investors and occupiers must understand the property ownership laws and should work with a reputable property consultant. The consultant will advise on property value, how to maximise outcomes and legal compliance. Working with consultants will help foreigners understand how to invest in Vietnamese real estate.

1.4 Investment Laws for Foreigners in Vietnam

“Can foreigners buy property in Vietnam?” In simple terms, yes.

1.4.1 Types of Property Ownership in Vietnam

Before investing, one must understand the laws that apply to owning and buying property in Vietnam. Businesses or individuals can acquire land use rights (LURs) via land lease or allocation with land use fees (LUFs). For land allocation, also known as a land grant, the user pays a one-off fee, and terms can be definite or indefinite. Land lease differs because the user pays fees annually or in a lump sum covering the entire lease term, which is fixed. For both processes, the local authorities review the land-use plan annually, which details the land use rights in a specific area.

Foreign enterprises can develop residential projects for sale or lease on land that requires land use fees. Foreign investors involved in residential projects for lease may also acquire LURs via a land lease with a term not exceeding 50 years; however, this can be extended to 70 years in certain circumstances. Foreigners who are eligible for land allocation or lease with a one-off payment can transfer, sub-lease, gift, mortgage, and contribute land use rights within the term.

• Read our comprehensive 2022 investment guide here. 
• You can read more on the property ownership laws for foreigners here. 

1.4.2 Can Foreigners Buy Real Estate in Vietnam?

Two groups of foreign buyers can buy and own properties in Vietnam. First are legal entities, such as foreign investment funds and banks, branches and representative offices of overseas companies established in Vietnam. The second group includes foreigners or overseas nationals with an appropriate entry visa.

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1.4.3 What Properties Can Foreigners Own in Vietnam? 

There are several ways foreigners can own property in Vietnam. They can either invest in housing construction projects or buy, rent, or inherit houses, including apartments and landed properties like villas or townhouses. The only exceptions are if the properties are on land used for national defence and security.

To increase transparency, streamline administrative procedures, and regulate the resale process, there are laws regulating how much property foreigners may own. While there is no limit to how many properties an individual can buy, foreigners can only own up to 30% of the units within an apartment complex or 250 landed properties in an administrative ward. 

1.4.4 Property Taxes in Vietnam When Buying and Owning

Foreign businesses and individuals are responsible for paying taxes on properties they own. Since 2016, almost all enterprises have had to pay corporate income tax (CIT) of 20%. However, enterprises that lease or purchase social housing only pay 10% CIT. 

Read more about social housing in HCMC. 

Foreigners are also responsible for paying land use tax, such as on land for urban and rural residential use. Land for non-agricultural production or business is also subject to land tax; examples of non-agricultural use include industrial parks, production facilities, mines, or cemeteries. These tax rates are progressive and range from 0.03% to 0.15%.

2. Occupiers Guide to Real Estate in Vietnam

While laws and taxes for investors occupiers overlap, the pull factors differ. In the guide to real estate in Vietnam for occupiers, the article looks at how affordable it is to live in Vietnam, property prices and real estate projects in Ho Chi Minh and Ha Noi, and taxes foreign homeowners must pay. 

2.1 How Affordable is Vietnam?

Many expats enjoy how affordable is it to live in Ho Chi Minh City and Ha Noi. According to Numbeo, in September 2022, rent in Ho Chi Minh City was -85% less than in New York, and US$2,100 in Ha Noi would afford the same standard of living as US$9,200 in New York. 

Vietnam ranked seventh in InterNations’ 2022 Expat Insider ranking for the best places for expats to live. More than 80% of respondents were happy with the cost of living in Vietnam compared to 46% internationally. Approximately 92% of the respondents found that their disposable incomes were more than enough to live comfortable lives.

2.1.1 How Much Does a House Cost in Vietnam?

In Savills H1/2022 market report, in Ho Chi Minh City, landed properties of over VND 18 billion accounted for 64% of sales. In Q1/2022, villas in Ha Noi cost VND 134 million/m2 LA, townhouses cost VND 185 million/m2 LA, and shophouses cost VND 323 million. The quality of real estate in Vietnam is constantly improving and landed properties in Vietnam are often in high-end townships and come from reputable developers like SonKim Land. 

Browse our landed properties and apartments for sale in Ho Chi Minh City and Ha Noi. 

2.1.2 How Much Do Apartments Cost in Vietnam?

The average apartment in Ho Chi Minh City cost US$2,730/m2 in Q1/2022, and apartment prices in Ha Noi have increased continuously since Q1/2019. In Q2/2022, the average apartment price in Ha Noi was VND 45 million/m2. Vietnam is also no stranger to luxury properties, with urban branded residences like Grand Marina Saigon by Masterise Homes fetching prices that rival Paris or London. 

Ho Chi Minh City and Ha Noi also have active rental markets, with landed properties and apartments that cater to dynamic players, from bachelors looking for penthouses, couples looking for retirement apartments, or families wanting enough space for their children and pets in a home.

Browse our collection of rental apartments and rental homes in Vietnam. 

2.2 Property Taxes in Vietnam

2.2.1 Personal Income Tax 

Personal income tax (PIT) is progressive and applies to individuals with a taxable income after deductions, which include insurance premiums, charitable contributions, or dependents. 

2.2.2 Taxes When Owning and Buying Property in Vietnam

When buying property in Vietnam, foreigners must pay certain taxes and fees. When buying properties in Vietnam, 10% VAT applies, along with administration fees and stamp duties of 0.5% of the property value. When leasing properties, owners must pay 5% VAT and 5% PIT on rental income; they are also responsible for an annual sinking fee, which is approximately 2% of the apartment or house value, before VAT. If homeowners sell their properties, they must pay a transaction fee, which is approximately 2% of the transacted value. 

Conclusion

We hope that this expat guide to buying property in Vietnam was informative At Savills, our team specialise in finding bespoke real estate solutions for foreigners. If you would like to know more about our supporting services, click here. Alternatively, contact Mr Them, Senior Manager of Residential Sales, to find out more about real estate for lease or properties for sale in Vietnam.