Currently one of the fastest-growing economies in the world, Vietnam’s growth has averaged more than 6 per cent per year over the past 20 years. Factories have also been relocating from Southern China, causing GDP to top 7 per cent in 2018.
That hot economy is causing both foreign investors as well as local buyers to look into investing in the country’s real estate. Investors see Vietnam in a place where Southern China was 10 to 15 years ago. While it may no longer be considered a sure bet considering home prices have been rising steadily over the past 18 months, many still feel that it has good value especially if one is able to hold the investment for a longer period.
According to reports, prices for luxury condominiums in Ho Chi Minh City climbed 17 per cent in 2018 to an average of US$5,518 per square meter, and is expected to climb nearly 10 per cent by early 2020 to US$6,000 per square meter. That said, more affordable condos in the city only increased 1 per cent in 2018.
And while a large proportion of the demand comes from overseas investors, Vietnam’s new rich make up the latest group of buyers. The number of people with net assets of US$30 million or more increased by 320 per cent from 2006 and 2016, the fastest pace in the world, ahead even of China.
Many Vietnamese have built their wealth with real estate. Home ownership rates exceed 90 per cent, one of the highest in the world. Rising values mean there are middle-class families with dwellings in excess of US$1 million.
Developers, including Singapore’s CapitaLand, used to focus on the middle class but are now turning their attention to the more affluent. Land supply in central locations, however, is extremely tight, one reason the wealthy are keen to buy now. Another factor driving demand for urban apartments is the shift away from the Asian tradition of several generations living under one roof.