HANOI Nov 28 Vietnam has eased restrictions on
foreign ownership of property in an effort to lure the cash
needed to revive a market saddled with oversupply since a real
estate bubble burst in 2011.
The Southeast Asian nation has been battling with lingering
bad debt after years of easy credit and lax oversight came to an
end three years ago, sparking a crash in the property market and
leaving the banking sector unable to provide the credit
companies needed to grow.
Investors with business interests in Vietnam from Singapore,
China and Japan were the most likely to buy property, attracted
by the potential for higher yields in Vietnam than at home,
property firms and analysts said. Singapore and Japan are the
second and third biggest sources of foreign direct investment in
Vietnam after South Korea.
Lawmakers amended the law on foreign property ownership on
Tuesday to allow foreign investment funds, foreigners with valid
visas, international firms with operations in Vietnam and
overseas Vietnamese to buy residential properties. The changes
will take effect in July 2015.
Overseas Vietnamese send home around $11 billion a year in
"A lot of that (remittance) money can go into property for
them, so I think that's the big headline and the motivator for
this," said Troy Griffiths, Deputy Managing Director of property
firm Savills Vietnam.
The law, however, limits foreign ownership to 30 percent of
an apartment building, and a maximum of 250 homes in one city
"If the government doesn't set limits, big investors or the
Chinese could just sweep in and buy the whole of Hanoi if they
wanted," Luu Minh Ngoc, CEO of Hanoi-based property firm Bac Son
"So the limit on foreigners is appropriate and should only
be relaxed gradually and in sectors."
The property market had shown signs of improvement before
the changes. The value of property in inventory fell to 83
trillion dong ($3.90 billion) by September, from 170 trillion
dong in March last year, according to local media.
Property market participants welcomed the new law as a boost
to liquidity and to clearing some of the property from the
market linked as collateral to bad debts.
Foreigners working in Vietnam have been permitted to own
houses since 2009, but red tape and usage restrictions for
foreign-owned houses dissuaded buyers, with just 100 out of some
80,000 foreigners managing to own house as of October last year.
(Editing by Simon Webb)