Have Vietnam’s relaxed rules caught on with foreign homebuyers?

When Vietnam opened up its housing market to foreigners in July 2015, many thought there would be so many buyers rushing in to grab the villas and apartments here.

But after a year and a half since ownership restrictions were removed, it seems nothing like that has happened.

Troy Griffiths, deputy managing director of real estate company Savills Vietnam, said that the relaxed rules make Vietnam as appealing as Malaysia and Thailand, which have already taken similar initiative to drive home sales to foreigners.

But the new policy, he said, has not been doing much for the Vietnamese economy so far. “It’s not been anywhere near as sensational as we all expected,” Griffiths toldVnExpress International.

He estimated that the number of sales has not reached thousands yet. His company has reported less than a hundred sales, mostly in high-end products, and smaller apartments to Taiwanese and Singaporeans.

There are around 80,000 foreigners working and living in Vietnam. Before July 2015, each of them could only buy one apartment here, under conditions that they were either married to Vietnamese nationals, held managerial positions, or had contributed to the country.

Industry insiders believe that easing ownership restrictions have at least created more interest in the local housing market. But many often complain that regulations and paperwork in general are still very complicated for foreign buyers.

Griffiths said that theoretically, there should be no regulatory problem with the new policy.

He said it is not easy to say for sure why the policy has not been a big success as expected. But he said the country might need more time for the new rules to work out, pointing out the case of Malaysia, which has implemented a similar law for more than 10 years and has only seen 3,000 foreign buyers a year at most.

Real estate was Vietnam’s best growing economic sector in2016 with 3,126 new companies in 2016, a staggering 84 percent annual increase.

But it also saw a nearly 70 percent rise in closures, only after agriculture and healthcare.

“It’s an extremely competitive sector,” Griffiths said.

He said the competition will continue in 2017 with a lot of supply coming on.

A report released by Savills Vietnam on Monday showed strong growth in all asset classes in Ho Chi Minh City, the country’s most crowded city, in the last quarter of 2016.

Tourism boom, new public transport projects, and the current low rate of urban citizens will be key drivers for Vietnam’s property market in 2017, it said.

More than 60,000 apartments are expected to enter the market in 2017 and 2018, with a strong growth in the mid-end and affordable segments, the report said.

Only 34 percent of Vietnamese are living in urban areas, and according to Griffiths, there’s a lot of room for residential development.

An oversupply will be good for the competition, Griffiths said, dismissing concerns of a bubble similar to the one that hit the market nearly a decade ago. “The good developers will continue on and the poor ones will drop away,” he said.