Legal hurdles hamper foreign investment in property

Although there are many assets are being available for sale due to economic slowdown, few of them are accessible to foreign buyers due to lack of legal permits, differences in price expectations of both buyers and sellers, and compensation policies, according to property consultancy Cushman & Wakefield.

Another challenge is that many properties up for sale are not listed publicly and officially, making it more difficult for foreign buyers to find high-quality assets.

Managing director of property manager Savills Vietnam Neil MacGregor said that bureaucracy was a big obstacle to foreign buyers, and few projects have acquired all necessary legal permits.

This prevents banks from approving buyers’ requests for loans to purchase property projects, he added.

Condotel, for example, has been given a legal status, but still authorities are reluctant in giving it title deeds, he said.

Until changes are made to reduce bureaucracy, merger and acquisition activities in the property market will continue to face difficulties, he added.

In the first nine months, the total property M&A value reached $729 million, a 33% decrease compared to the same period last year, due to the lack of large-value deals, according to RCA and Cushman & Wakefield.

Foreign investors still dominated in transaction activities at 90%.

Cushman & Wakefield Vietnam country head Trang Bui said that if legal challenges are resolved there will be a boom in the property M&A market in the next two or three years.

Vietnam is an attractive emerging market that offers attractive profitability amid global uncertainties, she added.

Cushman & Wakefield expects a large wave of foreign investment to pour into Vietnam’s property in 2024-2026 and investors will be looking for land with all permits acquired.

MacGregor said that Vietnam had advantages in attracting investors from Singapore, South Korea, Thailand, Malaysia and Japan thanks to its large population, growing infrastructure and urbanization, abundant foreign direct investment and booming middle class.