Tales of a Singaporean investor in Vietnam

apr74A seasoned global investor recounts his first-hand experience in HCMC.
Photography by Jan Yong

screen-shot-2016-10-29-at-4-36-16-pmReal change is happening in Vietnam. After 1 July 2015, foreigners not residing in Vietnam are eligible to buy real estate in Vietnam. In Sept 2015, together with a group of friends, I decided to take a property tour in Ho Chi Minh City (HCMC). On our first day, we visited many residential projects by local developers such as The Nassim, The Everrich Infinity, Gateway Thao Dien, Masteri Thao Dien, Rivergate Residence, and Vinhomes Central Park. We also visited our very own top notch Singaporean developers’ projects in District 2 – Estella Heights and Vista Verde – developed by Keppel Land and Capitaland respectively. Although the Singaporean developers have an advantage over design and built, and also a strong track record, we decided to buy a few units at Vinhomes Central Park due to our personal evaluation which I will touch on later.

Why I choose HCMC?
I have been actively investing in real estate in Singapore, London and Philippines. I strongly believe that real estate is still one of the best assets for wealth accumulation and preservation. Property cooling measures introduced in Singapore such as ABSD (Additional Buyer Stamp Duty), SSD (Seller Stamp Duty) and TDSR (Total Debt Servicing Ratio) within the last 6 years and the strength of the Singapore dollar have motivated many Singaporeans to invest overseas.

TDSR is the most drastic measure to deter Singaporeans in getting local bank loans for financing property purchases; it restricts the maximum loan for properties based on the ability of the borrower to repay the monthly mortgage. The lack of financing for property investment in other overseas destinations has made the cash affordable high-end prime location condominium units in Vietnam enticing. In Vietnam, property purchases are paid for in cash and through direct installments with the developers.

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Moreover, since the cost of living in Singapore is getting very expensive, I foresee more Singaporeans with Vietnamese spouses would adopt HCMC as their second home for retirement, not to mention the 4.2 million overseas Vietnamese looking to head back home. The comparative low cost of living, low serious crime rate, ease of return travel between Singapore and HCMC, culture similarities, countless sight-seeing locations, adoption of advanced infocommunication infrastructure, have all made HCMC my preferred choice as a second home.

The tenure of lease is 50 years (with possibility for a one-time extension) for foreign ownership in real estate in Vietnam. Singaporeans are at ease with investing in leasehold property as we are accustomed to 99-year leaseholds in Singapore. However, the laws in Vietnam allow for the leasehold to be converted into freehold when resold to a Vietnamese, so we will not lose any capital value despite the 50-year leasehold!

According to how world economics is played out, fast rising labour costs in China is prompting more and more manufacturing and supply chain companies to relocate from China to Vietnam. With the Trans- Pacific Partnership Agreement, large multinational companies from the US and South Korea have plans to set up factories in Vietnam. It’s not surprising that the Indo-Chinese nation is earmarked to be the next manufacturing powerhouse in Asia; its GDP growth is projected to be between 6% and 7% per annum over the next 10 years.

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