Should tourist real estate be owned by foreigners?

	Necessary to remove the legal problems in investment and real estate business
	It is necessary to have a specific solution to recover the real estate market
	The real estate market is growing unstable

Vietnam tourism real estate prices are very competitive compared to other countries in the region. Photo: ST

What work needs to be done?

According to the Ministry of Construction, the real estate market is currently facingmany difficulties, the rate of product consumption is low, the FDI source in the field has declined. Meanwhile, there have been many projects such as: resort real estate, a multi-purpose project combining licensed accommodation and relaxation, the supply of this type of real estate is relatively large and diverse. Therefore, to remove difficulties for the market as well as the tourism real estate segment, recently, the Ministry of Construction proposed to amend and supplement the Law on Housing and the Law on Real Estate Business 2014 in the direction of increasing the number of houses that are allowed by foreign organizations and individuals owning each apartment building and allowing foreign organizations and individuals to purchase tourist real estate in Vietnam.

Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, said that according to the Law on Real Estate Business 2014, the ownership of houses in Vietnam has been expanded to allow foreign businesses to invest in building houses and enterprises with foreign investment; branches and representative offices of foreign enterprises,foreign investment funds and foreign bank branches operating in Vietnam. The further loosening of the policy allows these individuals and enterprisesto buy, sell and own tourism real estate.Su Ngoc Khuong thinks this is the right thing to do.

With a 2,500km long coastline, Vietnam has great potential for tourism for rent and resort to be fully exploited, he said that owning real estate in Vietnam also increased consumer spending, foreign exchange cash flow poured into other economic sectors such as tourism, services and finance.

In fact, many countries and territories also have mechanisms to attract foreigners to buy resort real estate with the "second house" policy such as Malaysia, Thailand, Singapore, Japan, Indonesia, Hong Kong.

According to Doan Van Binh, Vice Chairman of the Vietnam Real Estate Association, real estate, especially tourist real estate, is experiencing a "hibernation" period when suffering from double impacts, so the consequences are significant. In that context, attracting foreigners to invest in tourism real estate after Covid-19 will be an effective solution in both the short and long term, helping the real estate industry in Vietnam recover soon, attracting foreign currency, taking full advantage of the open economy for sustainable development, contributing more to the economy of the country.

In terms of advantages, Mr. Binh said that the current housing rental and selling price in Vietnam is considered low compared to the region and the world, tourism property prices are also very competitive compared to other countries.

“Letting foreigners buy non-residential construction works like tourism real estate will contribute to attracting a large amount of capital to invest in this real estate segment which can still be managed by regulations on conditions and procedures for buying real estate of foreigners. This is similar to regulations on housing,”said Doan Van Binh.

Need to ensure security and defense factors

According to the economic expert Nguyen Tri Hieu, allowing foreigners to buy resort real estate is the solution for the difficult problem of resort real estate at present when domestic investors are indifferent to condotels, foreign tourists have not come back to Vietnam.

Therefore, this expert said that barriers should be removed, allowing foreign organizations and individuals who have been working in Vietnam for three years or more to buy resort real estate for foreigners in areas sensitive to security, defense and politics.

Mr. Doan Van said that it is necessary to amend the regulations on the right to buy real estate of foreigners according to the experience of other countries, which is the provision to exclude types of real estate that foreigners can own, including groups of products that affect national defense and security, social security.

“For example, real estate in the area to ensure national defense and security; social housing; real estate priced below a certain price threshold,so as not to affect the middle-priced housing segment for the majority of the population and to attract investment in high-value real estate. This shows both an open and attractive policy for foreigners and is convenient for investors' information inquiry process. From the beginning, foreigners wishing to invest in real estate in Vietnam have identified what types of real estate they are not allowed to buy, own and focus on searching for information about other types of real estate allowed,”said Mr. Doan Van Binh.

According to Dr. Su Ngoc Khuong, there are three key points to ensure the realization of this policy. First, the tourism industry needs to grow and be attractive to ensure long-term returns for investors. Second, removing barriers in legal documents, allowing real estate projects to be implemented, creating a clear investment environment.

“The important factor is to ensure the security and defense factor in the placement of these projects in positions that do not affect national security such as near military bases," saidDr.Su Ngoc Khuong, Senior Director of Savills Vietnam.

However, Mr. Le Hoang Chau, Chairman of the Real Estate Association of Ho Chi Minh City, said that on the basis of researching the opinions of the Ministry of Defense and the recommendations of the Ministry of Public Security, the HCMC Real Estate Association (HOREA) has not yet allowed foreigners to buy and own tourist property.

Foreigners wishing to invest in resorts and condotels will comply with the method of financial investment in accordance with the Law on Investment. When mentioning some of the limitations and shortcomings of resort real estate, HOREA's representative also said that there was a phenomenon of foreign individuals "hiding, buying up" real estate in some "sensitive” locations, especially in coastal areas.

Previously, the Ministry of Public Security sent a document to the Prime Minister, pointing out many problems in the management and trading of resort real estate leading to the risk of insecurity.

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Many people believe that concerns about national security and social order are the main reason why there are still concerns about the proposal for foreigners to own tourism real estate in Vietnam. Therefore, along with this proposal, state management agencies must develop convincing regulations to ensure this factor.