The real estate sector in Vietnam is increasingly attracting investors to pour capital to implement business projects. According to statistics of the Foreign Investment Agency, the real estate business ranks third in attracting FDI, which is one of the forms of investment in Vietnam that foreign companies are particularly interested in. The total value of newly registered capital, adjusted capital, and capital contribution or share purchase by foreign investors in the first 6 months of 2021 reached 300 million USD, equalling 35% as compared to the same period last year. Thus, it can be seen that Vietnam is still considered to be in a good position to attract FDI into the real estate business.

However, in the WTO Schedule of commitments, Vietnam has not yet made any commitments on the real estate business for foreign investors. Therefore, there are still many foreign investors wondering about the possibility of implementing real estate projects in Vietnam, whether the Vietnamese government allows the implementation of real estate business projects or not...

Foreign investors can invest in the business of real estate in one or both following: (i) directly engaging in house trading; and (ii) providing services on real estate. However, the scope of business in this field for foreign investors is not as preferential as the Vietnamese investors. In the short introduction of this article, TRUE LEGAL would like to highlight some guidelines for foreign investors who intend to start a real estate business in Vietnam.

1. ESTABLISHING A COMPANY OPERATING IN THE REAL ESTATE SECTOR

Investors investing in the real estate sector must obtain an investment registration certificate (the “IRC”). Vietnamese competent licensing authorities shall grant IRCs for investors if they comply with regulations of Vietnam’s law. The authorities shall not consider the investor’s ratio of capital contribution in such a company but consider business lines to issue an official approval or rejection on the application for IRC obtainment. The business lines should be under the commitment of the Government for foreign investors to freely engage or be regulated by Vietnamese laws.

For the business of real estate in Vietnam, Vietnam has not committed to Vietnam’s WTO Commitments about foreign investment. However, investors must comply with the regulations of Vietnam’s laws. They can set up a company specializing in real estate business without limitation on the ratio of foreign capital contribution.

After getting IRC, the real estate business must be implemented in the form of a legally established company. Investors must satisfy the separate requirements on the establishment of each kind of real estate business as follows:

(i) Directly engaging in house trading

The to-be-established company is not required to have a minimum charter capital after 01 January 2021. Investors just make sure that the form of enterprise complies with regulations.

(ii) Providing services relating to real estate

Some of services relating to real estate that investors can consider, including:

(a) Real estate brokerage service;

(b) Real estate trading exchange;

(c) Real estate consultancy; and

(d) Real estate management.

For the services of (a) and (b), founder(s) should satisfy or hire a managing person who meets statutory requirements. He/she must have the required certificates in the real estate sector for a legal establishment and operation of an enterprise.

For the other services, the investor having a duly established company with the business line of consultancy and/ or management of real estate can start its operation.

2. SCOPE OF REAL ESTATE BUSINESS

The foreign-invested real estate enterprise (“FIE”) shall have a scope of business complying with the law as follows:

► Renting houses, buildings for subleasing;

► Using the land leased from the State for building houses for leasing, or building other constructions which are not housing for sale, for lease, or for lease-purchase;

► Using the land allocated from the State to build houses for sale, for lease, or for lease-purchase; and

► Being transferred total or a part of real estate project from other investors to build houses, constructions for sale, for lease, or for lease-purchase.

Accordingly, there are some restrictions for the business of FIE such as:

► Purchasing houses or constructions from other organizations and individuals; or

► Building houses or constructions on land is transferred from organizations and individuals.

The above-mentioned restricted scope of business of an FIE is to ensure that it shall not obtain the right of using land and own houses or buildings in Vietnam unless otherwise approved by the State.

In conclusion, the investor please take the above-mentioned matters into consideration for drawing up your appropriate plans when investing in the field of real estate business in Vietnam.

HOW TRUE LEGAL CAN ASSIST WITH PROPERTY INVESTMENT IN VIETNAM

The first step to Vietnam property investment is doing market research and understanding the real estate sector in Vietnam. A great place to start is to connect with professionals in the Vietnamese property industry who can provide you with insightful feedback and ideas. With TRUE LEGAL, you can obtain a lot of insider information regarding Vietnam property investment and how to set up a real estate company.

We are your trusted consultant who has in-depth knowledge and can give you a realistic perspective on starting and running your business in this dynamic economy. Talk to one of our experts at TRUE LEGAL and we will give you advice on the most profitable and efficient way to set up your business in Vietnam.

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TEL: (024) 2219 9090 

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