Buy-to-let sector reaps rich dividends

In the southern province of Dong Nai, near Ho Chi Minh City, an investor declining to be named has bought a dozen villas in the Dai Phuoc project. The villas will be available for leasing at weekends and during festive periods.

A source at Dai Phuoc Lotus Villas said that the advantageous location of these ecological villas had caught interest from customers who hoped to  re-lease them as resort residencies for visitors from Ho Chi Minh City.

According to Kenneth Atkinson, executive chairman of Grant Thornton Vietnam, the buy-to-let industry in Vietnam has become a lucrative investment channel.

Atkinson has purchased several apartments in Vietnam, one as a buy-to-live property and two as buy-to-let. “After a time of using those apartments for lease, I realised that rental yields in some areas such as districts 1, 2 and Binh Thanh, are currently quite attractive,” he told VIR.

According to CBRE Vietnam’s latest research, buy-to-let potential is now a factor with ever-increasing importance.

Dung Duong, director and National Business Line leader of CBRE Vietnam, said that the buy-to-let industry had become more and more popular thanks to its high profit generation.

Dung also noted that the relaxation of foreign housing ownership regulations, combined with promotional sales programmes offered by developers, was already reaping results just three months after implementation.

“We are seeing a lot of interest from Singaporean, the Republic of Korea, Japanese, and Malaysian buyers who live and work in Vietnam, most of whom are buy-to-let investors,” she said.

For some high-end condominium projects in districts 2 and 7 in Ho Chi Minh City, gross rental yields are estimated by CBRE to stand at 6 to 8 per cent, while net yields are roughly 4.5 to 6.5 per cent.

“Compared to net yields of 2-3 per cent in Singapore, or 3-4 per cent in Bangkok, this rate is very attractive,” Dung said.

With a large pool of tenants readily available in these districts, especially near international schools, investors tend to fill up their vacant apartments quickly.

Previously, investors predominately focused on re-selling their properties to gain a small profit on their purchases. However, the buy-to-let trend now offers investors the stability and benefits of a long-term investment.

Furthermore, the current economic situation means that other investments, such as gold and securities, are no longer the most efficient channels for investors.

In Ho Chi Minh City, properties at a variety of projects in districts 2 and 7 are being snapped up by leasers.

Meanwhile, foreigner immigration has led to a surge in projects that boast an infrastructure system containing features such as healthcare centres, spas, schools, trading centres, and leisure facilities.

In Hanoi, the most desirable areas for foreign leasers are still around West Lake and in the central business districts (CBD), while domestic leasers tend to focus on non-CBD, such as Hadong and Tu Liem.