|South Korean paid million dollars to own real estate in Vietnam
Matthew Powel, director of Savills Hanoi, assessed that people and enterprises from the Republic of Korea (RoK) play an important role in the Vietnamese real estate market. Many real estate companies even create a separate department to serve South Korean customers in Vietnam.
Woojin Jung, representative of Cen Korea, said that there are around 150,000 South Koreans living and working in Vietnam. Therefore, the demand for buying and investing in real estate is huge and they are looking for real estate companies which are prestigious and understand the market to connect, consult, and support them.
According to CBRE, the demand of foreign customers in Vietnam is increasing, however, not many investors can meet their needs due to lacking consultants who are good at foreign languages.
Data from the Ministry of Planning and Investment showed that in the first half of this year, the RoK was the second-largest foreign direct investor in Vietnam with about $2.73 billion, accounting for 14.8 per cent of the total registered FDI.
According to The Chosun Ilbo, the daily news from Korea, the RoK's individuals and enterprises spent $56.1 million to own real estate in Vietnam, the second in the list of countries to invest in the real estate market.
As the South Korean real estate market shows signs of overheating, the government has implemented new regulations to curb speculation and raise prices by imposing a tax on real estate transfer profits, property ownership, as well as other property-related taxes. South Korean real estate investors have therefore been seeking alternative markets, among which Vietnam is one of the top destinations in sight.
According to Savills Vietnam, South Korean investors and buyers showed the greatest interest in the high-end apartment segment in Ho Chi Minh City, the financial centre of Vietnam.
The Vietnamese real estate market attracts customers with its impressive prices, high profit potential, as well as high quality based on the participation of prestigious developers. In addition, the country also created favourable conditions for foreign customers to own real estate in Vietnam.
Apartment prices in Ho Chi Minh City and Hanoi, in general, are still lower than cities in the region such as Kuala Lumpur and Bangkok. The average price of a new house in the centre of Ho Chi Minh City is about $5,500-6,500 per square metre, only a portion of what is charged in Hong Kong.
According to a report from real estate firm CBRE’s fifth annual Global Living report analysing property markets across 35 cities, the average price of a home in Hong Kong in 2019 is more than $1.2 million.
The low real estate tax in Vietnam is also another point attracting both domestic and foreign buyers, especially since the country opened the gates for foreign investors. However, whether the country has enough supply to accommodate the demand remains a question.