How attractive is Vietnam’s luxury residential segment amid global slowing trend?
Luxury residential prices in HCMC and Hanoi are generally still lower than regional peers such as Kuala Lumpur and Bangkok, making Vietnam’s property market relatively attractive to international investors, according to Savills Vietnam.
“New home prices in Ho Chi Minh City’s CBD now average around US$5,500-US$ 6,500/sq.m, a fraction of the eye watering levels seen in Hong Kong where prices are at all-time highs,” said Neil Macgregor, managing director Savills Vietnam.
He attributed the advantage of Vietnamese cities to higher development standards and continued strong luxury residential demand driven by urbanization, the rapid growth of the middle class, and upgraded infrastructure.
Another reason making the luxury segment prices in Vietnam competitive is that relatively low taxation, enabling investors to earn more profits.
With the distinct shortage of prime property in Vietnam’s key cities, many buyers can see the potential for significant capital gains over the longer term. Whilst in the meantime, rental yields of more than 5% represent an attractive investment versus falling returns elsewhere in the region.
Notably, the validity of the housing law since 2015 which allows foreigners to own houses in Vietnam up to 50 years has secured legal basis for the investment of international investors.
“At the luxury end of the market there is tremendous upside and opportunity for long term investment, with buyers set to benefit from potential capital appreciation as Vietnam continues its remarkable growth story,” Neil Macgregor noted.
Although there is still a long way to go for the Vietnam luxury property market to reach the dizzying heights of Hong Kong and Singapore, Vietnam is well on the way to become Asia’s next tiger, with strong economic growth, a rapidly growing middle class and, for the time being at least, relatively affordable pricing.
The world’s city luxury home price growth slows while Vietnam luxury residential sector remains attractive to international buyers, Savills concluded.
In terms of sociology, the ultra-high net worth (UHNW) community in Vietnam posted fast growth in the 2012-2017 period. The Southeast Asian country ranks the world’s third in the growth of the UHNW (that owns assets worth US$30 million each) with 12.7% annually, according to Wealth-X’s World Ultra Wealth Report.
The move has led to a good market sentiment when it witness investment diversity and real estate sector is one of the best choice and prime segment remains the key investment portfolio.