Hong Kong people consider property in Vietnam

May 26, 2021 07:47
Vietnam was one of the fastest growing economies in Asia, with 4.8 per cent last year and seven per cent forecast for 2021. Photo: Reuters

Hong Kong people are scouring the world for property investments – and one new choice for them is Vietnam. The favoured cities are the capital Hanoi and its economic centre Ho Chi Minh, formerly known as Saigon.

Last weekend Hong Kong real estate firm Ashton Hawks launched its latest offering, Central Residence, an apartment complex in Hanoi being built by Gamuda Land, a Malaysian developer.

Overlooking Yen So Lake, the complex has three 40-storey towers, with a total of 910 units, according to the company website. They range in size from studio to three-bedroom. The cheapest unit costs HK$900,000.

Under Vietnamese law, foreigners may buy up to 30 per cent of the units in a residential building. The rest are reserved for local people.

Kingston Lai, founder and chief executive of Ashton Hawks, told a sales seminar on Saturday that Vietnam was one of the fastest growing economies in Asia, with 4.8 per cent last year and seven per cent forecast for 2021.

The country of 96 million has had remarkable success in controlling Covid-19, with 42 deaths and 5,217 cases as of May 24 and the economy able to resume normal operations from May 2020.

Lai said that Vietnam had been a major beneficiary of the U.S.-China Cold War, with major companies moving production there from China, to avoid U.S. import tariffs. These include LG, Google, Apple, Samsung, Nintendo and Pegatron. The Japanese government is encouraging its companies to leave China and reduce their dependence on that country.

Vietnam belongs to the 15-country free-trade Regional Comprehensive Economic Partnership, signed in November 2020.

Lai said that perspective tenants for the Central Residence apartments were foreigners and middle-class Vietnamese working in these multinational companies. “Hanoi is the centre of power and wealth, like Beijing. Ho Chi Minh City is like Shanghai.”

“The Vietnamese currency is not convertible. This limits the investment options for Vietnamese people. The stock market has low liquidity, making real estate the most attractive option,” Lai said.

Mortgages are not available for this project, so a buyer must pay entirely in cash. A foreigner must sign the sales and purchase agreement in person in Vietnam, to prove that he can enter the country. He obtains a 50-year lease, which he can renew.

A foreign buyer can use the apartment himself or rent it out to a foreigner or a Vietnamese. He can sell it to anyone; if he sells to a Vietnamese, then the Vietnamese buyer cannot sell it to a foreigner.

One European attending the seminar said that he was considering a purchase. “I am optimistic on Vietnam. It is where China was 20 years ago. Friends of mine who live there love it. The price is very low.

“The risk is that the project will only be completed in 2024. Some Hong Kong people want to move their money out of China. That is another attraction. One friend moved his money to Singapore, where there is zero risk. In Hong Kong, there is one per cent risk. With anything connected to national security, you are at risk.”

Last year one Irishman paid about HK$10 million for an apartment of 145 square metres in Ho Chi Minh city. Because of Covid-19, he was not able to enter the country and needed the help of the seller’s agent.

“I have use of the property for 50 years and can extend for another 49. I can repatriate the money after obtaining a few chops. Vietnam's asset prices have been doubling every four years for a while now, so people are used to buying ahead, which might be risky. Middle-class properties close to subway stations are, as in Hong Kong, a better investment.

“Vietnam is a one-party Communist state in the first stage of socialism. Although the party is openly disliked, the people have greatly appreciated the reform policies and stability of the last 30 years. The real test is coming in the next 20 years when Vietnam needs to bring its infrastructure in line with China's and improve its systems to compete with Hong Kong and Singapore. There is a chance it could outstrip both,” he said.

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A Hong Kong-based writer, teacher and speaker.