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.
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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apr74bFundamentally, the population in HCMC is about 8.5 million with a high level of literacy and is positively skewed towards the young. With forecasted inbound migration to HCMC at 3% per annum due to rapid urbanization, its population is expected to balloon in excess of 10 million. Other factors which have also influenced my preference in investing in real estate in HCMC are: Political stability afforded by the Socialist Republic of Vietnam, large scale infrastructure improvements such as rail based rapid transit system, free from natural disasters like haze, robust banking system, local affordability and strong national buying interests particularly from northern Vietnam, an imbalance in supply and demand, and strong desire for Vietnamese to acquire real estate in their wealth portfolio.
I am a strong believer that location makes or breaks your property investments. Location analysis is especially critical when investing overseas. I have recommended fellow Singaporean investors and friends to buy off-plan property from renowned local developers such as Vingroup JSC, Bitexco, Novaland, Masteri Son Kim Land, and Phat Dat Corporation.
An example of my personal investment is Vinhomes Central Park, a 44-ha mixed residential & commercial development by Vingroup that is located in the core central region of HCMC. Its expected completion is 2017 and once completed, will be a landmark development and dream home for every Vietnamese.
The top developers are those that have deep insights and a good understanding of the importance of master planning; they would choose the best sites in central HCMC. Local developers understand local psyche and ensure that their pricing is affordable to their target market. I found that leveraging on the track records of top local developers is important in my decisionmaking process. Our own Singapore’s Capitaland and Keppel Land are highly respected in Vietnam. A note that when we visited Capitaland’s project, The Vista, the interior, swimming pool and walls remain intact even after many years of occupation.
In response to my question as to “Why I should buy Capitaland Vietnam’s project in HCMC”, Capitaland Vietnam’s employee said with conviction: “Because it’s Capitaland”. In short, buying a property developed by Capitaland or Keppel Land is a no brainer to us Singaporeans; the level of brand recognition and trust in delivering the project true to their promises is a given.
Back home in Singapore, we are constantly inundated in mainstream newspapers about opportunities to invest in Vietnam’s residential property market especially when there are product launches by Capitaland and Keppel Land. My personal advice is to never rush into making a decision after a perfect presentation by property agents.
There are not many people who understand the Vietnamese property market. Neither do they understand why Vietnamese prefer to use cash without loan to buy a property. So, never consult your friends and neighbours about buying property in HCMC (or other overseas destinations for that matter). My suggestion is for you to talk to a Singapore-based property agent familiar with Vietnam or Singaporean agents doing business in HCMC. Plan a property tour to HCMC and let these agents show you the property products, sights, and sounds of the city. Such agents are comparatively more knowledgeable and provide a higher level of service and professionalism.
They can advise you financially on opening a local bank account and the legal ways to minimize transaction costs in remitting money into Vietnam as well as set you on the right path to be able to move your money back overseas when you dispose of the property. Moreover, the agents can provide language support whenever documents are solely in the Vietnamese language; the Singapore property agents would help guide you before signing.
When it was time to place a deposit for my chosen unit, the local developers do accept credit cards for placing a booking fee. However, before you sign the booking agreement and make payment, always ask yourself these questions:
1. Will this project suffer from traffic congestion after completion?
2. Will the local Vietnamese be interested to buy this project?
3. Will there be a trusted agent on the ground to help me rent out and resell?
If the answers are not favourable, I strongly advise that you don’t have to commit to this project. Buying property should be with peace of mind. Never let emotions prevail in decision-making. Congratulations to you if the answers are favourable. Buying property is an active process.
After making your investments, you should pamper yourself with a 90-minute foot massage, Vietnamese pho (noodles), a myriad of sumptuous food in famous restaurants such as a particular one patronized by George Bush, etc. If your wife is with you, she would love you for that unforgettable experience at the Japanese concept nail spa on Le Thanh Ton Street. If you are a food adventurer, you must try the authentic French bakery near Ben Thanh Market. You will be spoilt for choice with a wide range of pastries, salads, baguettes, crepes, quiche and other French specialties.
Bon appétit. Tam Biet (goodbye in Vietnamese). Home sweet home is just a 2-hour flight away!

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