Vietnam Real Estate Market is Driven by the Rising Demand for Retail and Office Spaces from Companies Migrating away from China, the Government’s Pro Real Estate Policies and Rise of Vietnam as a Popular Tourist Destination – Ken Research reported.
“Vietnam’s government implemented the Housing Law and the Law for Real Estate Business that allows foreign nationals to own and lease property in Vietnam, which has proved to be a positive step for the demand of real estate in Vietnam.”
Trade friction between USA and China: The United States has imposed 25.0% tariffs on Chinese imports worth USD 250.0 billion and discussions of imposing an additional 10.0% on goods worth USD 300.0 billion are in progress. Hence, the trade war is driving multiple companies to diversify and relocate to Vietnam owing to its low-cost factors of production, stable government and growing GDP rates, which turned the Southeast Asian nation into an appealing alternative when compared to China. Intel Corp. and Samsung were early to spot its promise for manufacturing; they employ more than 182,000 workers combined at factories that assemble chipsets and smartphones.
Housing Law and Real Estate Business Law: The law that went into effect on 1st of July 2015 has given a strong boost to the demand of real estate in Vietnam by allowing the following individuals to own real estate in Vietnam: Investors with residential house construction projects in Vietnam.
Foreign-invested enterprises, branches as well as representative offices of foreign enterprises, foreign investment funds and branches of foreign banks operating in Vietnam; and Foreigners permitted to enter Vietnam.
Vietnam becoming a Popular Tourist Destination: Along with a total of 15.5 million international tourists visiting Vietnam during 2018, the country has been poised to become one of the major tourist attractions in the recent years. The average expenditure by international tourists in Vietnam in 2017 was evaluated USD 96.0 per day. Vietnam is expected to be welcomed by 53.5 million international tourists by the year ending 2025 which showcases the potential of Vietnam’s tourism.
Migration away from the CBD: Vietnam has witnessed a trend among the tenants and builders, where properties are being built in the Non CBD region and outer areas of business cities such as Ho Chi Minh City and Hanoi as the Land Bank gets depleted; while tenants prefer properties in the Non CBD region as rental rates are lower.
The report titled “Vietnam Real Estate Market Outlook to 2025 – By Office Real Estate Market (Grade A, Grade B and Grade C), By Retail Real Estate Market (Retail Podiums, District Centers and Shopping Centers), By Residential Real Estate Market (Apartment, Villas, Condominiums and Others), and By Hotel Real Estate Market (3 Star, 4 Star, 5 Star and Other Hotels)” by Ken Research suggested that the Real Estate Market in Vietnam is growing and carries major potential in each of its sub segments. The government’s policies favoring the real estate market such as the Housing Law and the Law on Real Estate Business coupled with the dynamics of global trade causing companies to migrate away from China to Vietnam driven by Vietnam’s low cost land and labor forces, will elevate Vietnam’s Real Estate Market to greater heights.
Vietnam’s office market supply (in NLA), retail market supply (in GLA), residential market supply (in units) and hotel market supply (in total number of keys) is projected to grow by a CAGR of 5.7%, 9.9%, 15.4% and 8.1% respectively over the forecast period 2018-2025 thus, showcasing the potential of real estate in Vietnam in the near future.