Vietnam’s Soaring Real Estate Attracts FDI, International Interest

In January, Vietnam’s real estate sector seized the spotlight as the primary beneficiary of foreign direct investment (FDI), with an infusion of $1.27 billion, constituting 53.9% of the total FDI influx. This surge, documented by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, marks a doubling compared to the same period last year, propelling real estate to the forefront of FDI attraction after years of residing in the shadow of the processing-manufacturing sector.

Hanoi, in particular, experienced a remarkable uptick in FDI, primarily fueled by a substantial residential project injecting over $662 million into the market, as reported by the FIA.

Simultaneously, foreign interest in Vietnam’s real estate market is on the rise, as evidenced by a survey conducted by the Vietnam Institute of Real Estate Studies (VIRES). Polling 500 large investors from established real estate markets such as the US, South Korea, and Singapore, the survey identified attractive pricing as the paramount factor driving foreign investors’ enthusiasm for Vietnamese real estate.

However, VIRES emphasized the imperative need for continued enhancement of the legal framework, as well as improved access to information and data, to provide an optimal environment for foreign investors in the sector.

According to the survey, 10.5% of respondents deemed Vietnam’s property market and prices highly attractive, while 47.4% found them very appealing but suggested improvements in legal and informational conditions. Additionally, 21.1% considered the market relatively attractive, with 15.8% expressing moderate appeal, and only 5.3% stating that the market and prices were unattractive.

Exploring specific real estate segments, middle- and high-end apartments emerged as the focal point for foreign investors, with 57.9% expressing interest in purchasing and 36.8% in renting these properties. Demand for tourism and resort properties was also noteworthy, with 26.3% and 31.6% expressing interest in purchasing and renting, respectively. Conversely, industrial park real estate and commercial offices garnered lower interest, with only 5.3% expressing a desire to rent and purchase.