The Law on Real Estate Trading (2014) (Law on Real Estate Trading) has more detailed regulations on the scope of real estate trading activities of foreign investors, but there are still many incomplete points.
Real estate is a field that attracts many foreign investors, with the potential for future growth and profits. In addition, facing the situation of shifting production facilities from other countries (for example, from China) to Vietnam, helping the industrial real estate market increase strongly, along with the demand for the construction of housing and service areas for workers and employees in industrial parks with development opportunities
Legal Regulations on Real estate business by Foreign Investors
Law on Real Estate Trading defines it as the “investment of capital to carry out construction, purchase and transfer activities for sale or transfer; lease, sublease, lease purchase of real estate; real estate brokerage services; real estate trading floor services; real estate consulting services or real estate management for the purpose of profit”.
Before July 1st, 2015, foreign investors were only allowed to participate in two segments of real estate trading in Vietnam: investment in building houses, construction works for sale, lease, lease purchase and investment in renovating land and infrastructure works on leased land for lease of land with infrastructure, unless otherwise provided for by an international treaty to which Vietnam has ratified or signed. As for other segments in real estate trading, foreign investors and overseas Vietnamese are not allowed to participate. As such, foreign investors have not been treated equally to domestic investors in this area. However, from July 1st, 2015, the scope of operation of foreign investors has been expanded
Investment in real estate by Oversea Vietnamese
Specifically, according to Clause 2, Article 11 of the Law on Real Estate Trading, overseas Vietnamese may do real estate trading in the following forms:
(1) rent houses and construction works for sublease;
(2) to invest in building houses on land leased by the State for lease; invest in the construction of houses and construction works other than houses for sale, lease, or lease-purchase;
(3) invest in building houses and construction works on land leased from organizations, households and individuals for lease according to the right purposes of land use;
(4) receive the transfer of all or part of the real estate project of the investor to build houses or construction works for sale, lease, or lease-purchase;
(5) invest in the construction of houses on land allocated by the State for sale, lease, or lease-purchase; or
(6) may invest in the construction of houses and construction works for leased or transferred land in industrial parks, industrial clusters, export processing zones, hi-tech parks or economic zones for business purposes in accordance with regulations. Purpose of using the land.
Investment in real estate by Foreign-Invested Enterprises
Pursuant to Clause 3, Article 11 of the Law on Real Estate Trading stipulates that foreign-invested enterprises may conduct real estate trading in the following cases:
(1) renting houses or construction works for sublease;
(2) investing in building houses for rent; invest in the construction of houses and construction works other than houses for sale, lease, or lease-purchase for land leased by the State;
(3) receiving the transfer of all or part of the investor’s real estate project to build houses or construction works for sale, lease, or lease-purchase;
(4) investing in building houses for sale, lease, or lease-purchase for land allocated by the State; or
(5) are entitled to invest in the construction of houses and construction works for business in accordance with the land use purposes for leased land in industrial parks, export processing zones, high-tech zones, economic zones.
Thus, according to the provisions of Article 11 of the Law on Real Estate Trading, the scope of real estate trading for foreign-invested enterprises compared to overseas Vietnamese is somewhat more limited.
Limitations on real estate investment
Accordingly, foreign-invested enterprises are not allowed to invest in building houses and construction works on leased land of: organizations, households and individuals.
They can only invest in the construction of houses and construction works on leased land in industrial parks, industrial clusters, export processing zones, hi-tech zones, and economic zones for business purposes in accordance with land use purposes. Foreign-invested enterprises are not allowed to receive the land transfer in industrial parks, industrial clusters, export processing zones, hi-tech parks and economic zones.
Along with the development of the economy which is on the way to international integration, leading to the strong development of real estate trading activities of foreign investors, which requires legal regulations regarding conditions on operating real estate activities of foreign investors in Vietnam also need to be gradually improved and developed in line with the trend of expanding the legal corridor so that different business entities can enter the market.
