With its new master plan to meet industry development goals by 2020, the government has expanded business opportunities for local and international businesses to resolve the housing supply-demand deficit.
The real estate industry is currently booming in Vietnam, opening up greater opportunities for local and international investors to enjoy, said Nguyen Manh Ha, head of the Ministry of Construction's Housing Management Department.
He says Vietnam's urbanization is expected to increase its total current land use more than fourfold by 2020 from 105,000 hectares to 460,000 hectares.
Increased demand originates from urban inhabitants, whose present density of 10.4 square meters per capita is expected to surge to 20 square meters per capita by 2020, Ha added.
Correspondingly, the growth of housing demand sees an addition of 35 million square meters per year.
Deficits in the housing sup-ply will be a burden for the country as demand for office buildings, industrial parks, shopping centers, high standard hotels and apartments for international expatriates escalates rapidly, Ha said, adding that Vietnam's WTO accession draws more foreign investors and inhabitants to the country which in turn imposes high pressure on the real estate industry.
Strong FDI flow
With the release of Vietnam's master plan to meet industry development goals by 2020, Minister of Construction Nguyen Hong Quan said the Government has encouraged business opportunities for local and international businesses to invest further capital to address the housing supply-demand deficit.
Quan explained that new legislation allows foreign investors to own 100 percent of their real estate ventures, as opposed to the previous limit of 69 percent in required joint ventures with local partners.
At present, foreign businesses are granted certificates of land and house-use rights indicating 100 percent ownership when they invest in the development of houses for sale or rent or infrastructure on rented land for on-rent.
However, foreign businesses are restricted to sell apartments they develop to directly end-users, or they have to establish joint ventures with local partners to sell portions of the property.
They are also permitted to join in services such as consultancy, assessment, management and auctions.
Their licenses will be valid up to 70years instead of 50 years like before.
Like local businesses, foreign investors are legally able to receive and reinvest in land projects— including industrial and high techparks, export processing zones, and inhabitant or production areas— whose use rights are transferred to them by other investors.
Ha said the current regulations have encouraged international real estate developers to invest in large-scale projects in recent years, such as Kumho Asiana Plaza in Ho Chi Minh City, Keangnam Landmark Tower in Hanoi and Bac An Khanh New City in Ha Tay Province.
Bok Sang Chang, general director of Kumho Asiana Plaza Saigon, said the country's development of real estate will remain strong through the next 50 years, with its highest growth period projected during the next ten years.
Ha predicts that in the period from 2006-2010, Vietnam will attract some US$8-10 billion from direct foreign investment (FDI) channeled into the real estate industry.
In 2007, about 40 percent of the $16 billion of FDI capital was licensed to the industry.
A worker atop a villa under construction at Phu My Hung development project in HCMC.
The real-estate market has been booming in the country's big cities like HCMC, Hanoi and Da Nang.
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