Vietnam’s real estate market presents significant appeal to foreign-invested enterprises (FDIs) due to its substantial growth potential and evolving legal framework in the context of economic integration. However, alongside the opportunities, numerous challenges persist.
This article, prepared by DNP Viet Nam Law Firm, offers a comprehensive analysis of the opportunities and challenges that FDIs may encounter when investing in Vietnam’s real estate sector.
1. Overview of Legal Regulations on Real Estate Business for FDI Enterprises
1.1. Law on Real Estate Business
The 2023 Law on Real Estate Business classifies foreign-invested economic organizations under two categories in Clauses 4 and 5 of Article 10, depending on whether the FDI enterprise must satisfy investment conditions and complete investment procedures. Specifically:
- If the FDI enterprise is subject to investment conditions: it may engage in real estate business under the forms stipulated in Clause 3, Article 10;
- If not subject to such conditions: it may conduct real estate business under the forms provided in Clause 1, Article 10.
Accordingly, enterprises not subject to investment conditions may engage in activities such as purchase, transfer, lease, or lease-purchase of real estate. Meanwhile, those subject to conditions are restricted to narrower activities such as investment in construction for sale, transfer, or lease.
1.2. Law on Investment
Vietnam’s Investment Law provides incentive policies for FDI enterprises involved in prioritized investment projects, including projects in industrial parks or economic zones (as stipulated in Clause 2, Article 15 of the 2020 Law on Investment). Incentives include exemptions or reductions in land use fees, land rent, and land use tax (Point c, Clause 1, Article 15).
2. Opportunities and Challenges
2.1. Opportunities
The Vietnamese Government has demonstrated a strong commitment to developing a stable and sustainable real estate market, notably through Directive No. 13/CT-TTg and Resolution No. 33/NQ-CP. These measures create a favorable investment environment for both domestic and foreign enterprises.
According to the Ministry of Finance’s portal and the World Bank, Vietnam offers various advantages in attracting FDI into real estate, including:
| Favorable Factor | Details |
| Stable economic, political, and social environment | Vietnam is recognized by the World Bank for its post-pandemic economic resilience and overall stability. |
| Strategic geographic location | Positioned in fast-growing Southeast Asia, with an extensive coastline ideal for logistics and trade. |
| Participation in numerous FTAs and BITs | Vietnam is party to various free trade and bilateral investment agreements, expanding trade and investment ties. |
| Attractive real estate loan interest rates | Commercial bank lending rates range from 7.8% to 10.1% per annum (State Bank of Vietnam, 2024). |
| Transparent legal framework | Notable improvements include reduced maximum deposit rates (from 10% to 5%), project information disclosure, and market-based land pricing (Land Law 2024 and Decree 71/2024/ND-CP). |
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2.2. Challenges
Vietnam’s open economy is susceptible to global economic and political instabilities—such as U.S.-China trade tensions and tariff policies—which may impact FDI inflows.
Investment licensing procedures remain complex and time-consuming. For instance, projects requiring policy approval under Articles 30–32 of the Law on Investment 2020 may take 35–60 days for processing, not including the additional time needed for issuance of an investment registration certificate.
Furthermore, FDIs in real estate must navigate additional risks, such as: real estate market fluctuations, competition with domestic firms, cultural differences in business practices, environmental compliance pressure, and the rise in non-performing loans.
3. Recommendations
To capitalize on opportunities and mitigate risks, FDIs must regularly update and comply with relevant laws, particularly the Land Law and the Law on Real Estate Business. Cooperation with local legal counsel or business partners is essential for understanding the market, minimizing legal risks, and leveraging incentives such as land tax exemptions.
In practice, major corporations like Hongkong Land, Keppel Land, and CapitaLand have successfully invested in Vietnam, developing high-end real estate projects and contributing to the country’s urban development. These firms demonstrate the long-term viability of FDI in Vietnam’s real estate sector, having navigated regulatory hurdles while taking full advantage of favorable market conditions.
Vietnam presents substantial opportunities for FDIs in the real estate sector, bolstered by legal reforms and strong market demand. However, to ensure sustainable growth, enterprises must proactively address regulatory challenges and competitive pressures through strategic planning and legal compliance.
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DNP VIET NAM LAW FIRM
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