Vietnam has come a long way since the real estate bubble burst a few years back.
Buyers are scooping up properties since a new law opened the market to foreigners.
HO CHI MINH CITY — Vietnam is hoping to see a lot more people like Haig Conolly. The Australian and his wife became the first foreigners to buy real estate in Vietnam under a new property law that took effect over the summer. Policymakers pushed the law as a way to attract foreigners and increase demand in the property market.
"We were enormously assisted everywhere we went," Conolly says. "The quality of the product is increasingly of international standard."
But that doesn't mean that transactions are simple. It's been several months since foreigners could officially take advantage of the law, but as Conolly describes it buyers are still confused about the details of contracts, whether titles will really get transferred to them, and the willingness among banks to approve mortgages.
"I think the challenges and frustrations are part and parcel of life in emerging markets, so you tend not to see them as challenges and frustrations, you just go with the flow," he says. "This is a fundamental part of the whole thing. If challenges and frustrations concern you, then to an extent you're in the wrong place. That's just a reality."
Many foreigners are taking Conolly's approach — working through the difficulty of investing in Vietnam because they think it'll pay off eventually.
One of the biggest difficulties foreigners complain about is that Vietnam doesn't have guidelines for how to navigate the new property law.
Chau Ta, legal counsel at SC Capital, which invests in real estate, says that creates confusion when buyers submit paperwork to local governments. "There are laws out there that allow foreign ownership, but implementing decrees aren't out yet," she explains.
David Lim, a property attorney with ZICOlaw, believes these difficulties ultimately will be sorted out, because foreigners have long been interested in Vietnam's real estate market. "I think there's a lot of pent-up demand." he says. "You know that foreigners were only allowed to buy starting July 1, 2015. And also at the same time, I think we're just coming out of the financial crisis. So I think with the loosening of the law and the opening of the market, you'll start to see more transactions."
Foreigners are buying property for personal use, but also as large-scale investments. That's because Vietnam looks like a relatively stable place to invest compared with Thailand and Myanmar, which are undergoing political changes, and the currency volatility in Malaysia and Indonesia.
"It may be political, it may be economic, but there are things that are happening in the region right now that are destabilizing and perhaps creating some headwinds for a few of our ASEAN neighbors," Lim says.
To really take advantage of this foreign interest, Vietnam should simplify the transaction process, says Tran Nguyen, CEO of Jen Capital investors. "My suggestion would be to have a one-stop shop for all the foreigners who want to buy a unit in Vietnam," he says. "With a clear roadmap of what they've got to do, so they know even before they buy that they need to have certain documents.
If Vietnam could make buying easier, he says, it could be a very "exciting" place to invest.