Real Estate

What Foreigners Are Buying Up Hanoi’s Property Market?

In the first half of 2024, foreign buyers snapped up over 1,000 apartments in Hanoi, with purchasers hailing from a diverse range of countries and territories. This included buyers from China, South Korea, Hong Kong, Taiwan, Singapore, the USA, the UK, and more. Notably, Chinese buyers accounted for the majority of these sales, purchasing over 400 apartments.

Administrator

20 July, 2024

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According to the Ministry of Construction, over 3,000 foreigners have purchased real estate in Vietnam from 2015 until the end of Q3 2023, mostly apartments in commercial projects located in major provinces and cities. Hanoi accounted for more than half of these sales with 1,765 units, followed by Ho Chi Minh City with 850, Bac Ninh with 110, Binh Duong with 210, and Ba Ria – Vung Tau with 50 units. The majority of buyers originated from China, South Korea, Singapore, the US, Australia, Japan, and Malaysia.

However, the total number of foreigners who have purchased property in Vietnam is still considered low compared to the actual demand.

Calculations by the Real Estate Brokers Association (VARS) indicate that the number of properties bought by foreigners since the enactment of the 2014 Housing Law accounts for only about 0.53% of the country’s total housing stock during the period of 2018-2022. Meanwhile, the demand for housing among foreigners living and working in Vietnam, including ownership for residence and business purposes, is substantial. The Ministry of Construction estimates that approximately 4 million people intend to buy property in Vietnam in the future, including foreigners and overseas Vietnamese.

According to the writer’s research, in the first half of 2024, foreigners purchased more than 1,000 apartments in Hanoi. These buyers came from China, South Korea, Hong Kong, Taiwan, Singapore, the US, and the UK. Among them, Chinese nationals accounted for the majority with approximately 42% and acquired over 400 units.

South Koreans followed closely with more than 210 units (21%), Hong Kong citizens bought nearly 90 units (9%), while Taiwanese and Americans purchased 49 units (5%) and 41 units (4%) respectively.

Source: Writer’s Research

Which projects are favored by foreigners?

In the first half of 2024, over 20 projects in Hanoi were selected by foreigners, totaling 1,014 apartments. Among these, the top three projects with the highest number of foreign buyers were Hai Dang City, Imperia Smart City Tay Mo, and Golden Palace A, collectively accounting for 610 units, or 60% of the total number of apartments purchased by foreigners in Hanoi during this period.

Hai Dang City (Mon City) by Hai Dang Real Estate Investment Joint Stock Company was the most popular project among foreigners, with 263 units sold. Half of the buyers were from China, followed by South Korea (38%) and the US (9%).

Spanning over 7 hectares, Hai Dang City comprises 2,128 apartments and has an investment capital of more than VND 8,300 billion. According to our research, prices at the Hai Dang City apartment complex range from VND 37-47 million per square meter (including VAT and basic furnishings). With areas ranging from 52.6-86 square meters, buyers can expect to invest between VND 2-4 billion per unit.

Hai Dang City Project Rendering

The second most popular project was the high-rise building project on lot F4-CH04 and F4-CH05 of the Tay Mo – Dai Mo – Vinhomes Park (Imperia Smart City Tay Mo) project, with 247 units sold to foreigners. HBI Joint Stock Company is the developer of this project, and Chinese nationals accounted for the majority of buyers at 84%, followed by South Korea at 6%.

Located on 3 lots (F4-CH04, F4-CH05, F4-CX03) within the Vinhomes Smart City in Tay Mo ward, Nam Tu Liem district, Hanoi, Imperia Smart City Tay Mo spans approximately 3.3 hectares and consists of 5 blocks with 4,600 apartments. The total investment capital is around VND 5,600 billion. Our research indicates that prices at the Imperia Smart City Tay Mo apartment complex range from VND 50-65 million per square meter. With areas ranging from 28-76 square meters, buyers can expect to invest between VND 1.5-5 billion per unit.

Imperia Smart City Project Rendering

The Golden Palace A (The Matrix One Me Tri) project also attracted foreign buyers, with 100 units sold, primarily to Taiwanese (43%), South Koreans (43%), and Chinese (8%) nationals. With an area of over 20.6 hectares and a total investment capital of VND 4,460 billion, the project is developed by Mai Linh Investment Joint Stock Company. On the market, Golden Palace A is offered at prices ranging from VND 60-90 million per square meter. With areas ranging from 86-112 square meters, each unit is valued at approximately VND 5-10 billion.

All three projects mentioned above have had their sales contracts signed by foreign buyers.

Source: Writer’s Research

Additionally, in the first half of 2024, 12 projects with 67 apartments were granted Land Use Right Certificates to foreigners, with the majority located in the Udic Westlake high-rise building project (developed by the Urban Infrastructure Development Investment Corporation) with 15 units, followed by the D’. Le Roi Soleil Quang An project with 5 units (developed by Soleil Hotel Investment and Services Joint Stock Company), and various projects within the Tay Mo, Dai Mo-Vinhomes Park area with 12 units.

Projects with Land Use Right Certificates granted to foreigners (Units)

Source: Writer’s Research

Which segments are favored by overseas Vietnamese?

In late June, the National Assembly passed the Land Law, Housing Law, and Real Estate Business Law, which will take effect on August 1, 2024, five months earlier than the previously decided date of January 1, 2025.

The Housing Law includes new provisions that offer a more open approach to homeownership for organizations and individuals from other countries in Vietnam, which may have an impact on the country’s real estate market.

3 Real Estate-Related Laws to Take Effect on August 1, 2024

Regarding the topic of overseas Vietnamese wanting to buy property in Vietnam, Dr. Pham Anh Khoi, Director of the Institute for Economic, Financial, and Real Estate Research at Dat Xanh Services, and Chief Economist at Dat Xanh Services, expressed his surprise at the assumption that overseas Vietnamese, when allowed to buy property in Vietnam, would focus on high-end and ultra-luxury segments. However, he noted that most buyers in these segments are actually Vietnamese citizens, and not as many overseas Vietnamese target these segments.

“It’s possible that in the past, overseas Vietnamese bought high-end products, but with the current prices of luxury apartments in Ho Chi Minh City, many cannot afford them. Only the rich and super-rich in Vietnam can purchase these properties,” Dr. Khoi explained.

According to Dr. Khoi, the majority of overseas Vietnamese will focus on products that can be rented out and offer high returns. The very reason they invest in Vietnamese real estate is for long-term gains.

“In foreign countries, especially in the US, interest rates are only at 1-2%, so investment products with high returns of 3-5% can satisfy overseas Vietnamese. They will focus on segments that are within their budget, can be rented out immediately, and offer profits in the near future and the long term,” Dr. Khoi added.

Mr. Nguyen Duy Khanh, General Director of DXMD Vietnam, shared that most overseas Vietnamese from Southeast Asian countries or other regions with a large Vietnamese population, about 70% of them, buy property not for investment but for their relatives in Vietnam to own. They usually opt for properties in the mid-range segment, costing around VND 2-3 billion.

Mr. Khanh further explained that for those who intend to rent out the property, they often choose ready-to-move-in homes in populated areas. On the other hand, if they plan to hold the property for a few years before renting it out, they tend to choose emerging markets in peripheral areas or localities adjacent to major cities, prioritizing locations with favorable conditions and a large population.

Thanh Tu