How do you invest in Vietnam real estate?

Thank you all for sharing your experiences, didn't know there is no protection for foreigners buying property in Vietnam. I am aware of the Vietnamese short term mentality to hit and run. If I.have listened to my Viet buddy and invested in RE , will probably loose my pants. Cheers

You will lose money no matter how sweet the deal sounds. It's all PR and BS

There will be no shortage of so called experts who will tell you to invest.

However, you'll never know if they get a cash commission for sending you down that road from the seller or the seller's agent. All very messy.

Im a vietnamese guy. My wife and I working at U niversity Medical Center 10 years ago. We not have any experiences in real estate but last year we try to invest in two Appartments at May 2016, we sold it in October 2017 with 180 millions VND. You must known about vietnamese culture, their habit and money work flow. 
In some case like in district 9 the price up from 20 millions vnd/m2 to 55 millions vnd/m2.

You can invest if you have a friend in vietnam you trust

Finding someone you can trust is the problem.

Hi everybody,

A couple of weeks ago, I spent two weeks in HCMC visiting apts with RE Agents. I was going to buy one, except, I had decided to visit the place a second time before buying.
Since then, I read many posts on this topic on expat.com. Here is what I found out:

1) RE markets around VN are falling down.
2) They did not learn from the Vietnamese 2010 RE crisis.
3) Most expats, living in VN for many years, recommend to stay away from buying. Even renting can be tricky without a lawyer negotiating for you the leasing contract.
4) A few foreigners who invested in RE in HCMC, like in Vinhomes for example, recognized after one year that everything in the apt. had to be changed or repaired...
5) Interesting enough, not a single of these RE are officially present on Expat.com
6) I realize I'd better wait for the next RE crisis and buy 3 or 4 apts. with the best rentability possible, and sell later, as they will quickly recover from it.
7) Vietnamese people will never buy these apts at the current foreigner prices' levels.

Good luck :)

DELAFON :

5) Interesting enough, not a single of these RE are officially present on Expat.com

If any of the many banned spammers were actually official representatives of vinhomes, they've gone and are unwelcome to return.
The various teams sent hours deleting the spam messages, hidden spam pretending to be real posters and double acts set up to ask questions that led to vinhomes adverts in answers.
That isn't to say Vinhomes had anything to do with the large number of spammers but someone was trying to make a buck from the game.

Fred :
DELAFON :

5) Interesting enough, not a single of these RE are officially present on Expat.com

If any of the many banned spammers were actually official representatives of vinhomes, they've gone and are unwelcome to return.

They were not official representatives of vinhomes, they looked more to be either con artists, or a rogue agent trying to make a fast buck. You could spot them a mile off.

Moderated by Bhavna 11 months ago
Reason : Please don't promote your services on the forum.
We invite you to read the forum code of conduct

There has been a lot of posts about real estate in Vietnam. Each individual must do their own research and make their own decisions.

If someone wants to invest in real estate in Vietnam then it is up to them. If they want to ignore the advice of others with previous experience, that's also up to them.

It should be considered that most sales agents have no financial or any other investment in any property they want you to buy. They survive on making sales. It's how they make a living

Great read and thanks to everyone for contributing.  Adding my 2 cents here.

We have been doing real estate research in Vietnam for over 12 months and have invested in RE globally for over a decade.  Some observations we’ve picked up about investing in Ho Chi Minh:

1) Properties are expensive *everywhere* globally.  I’m sorry, but if your basis for a property crash is imply how unaffordable it is for the working class, then there are probably 10-20 cities that will crash in much more spectacular fashion way before HCMC.  Hong Kong, Vancouver, NYC, London, Sydney, Melbourne, Toronto, Bangkok, Lisbon, etc etc. are way more expensive than HCMC is on a price / income basis. 

Global QE policies means that the 0.1% owns properties beyond what the working class can afford.  This is nothing new and not specific to Vietnam.

2) From a macro economic perspective, Vietnam has one of the best, if not THE best, demographics and growth potential in ASEAN.  This is almost undeniable and widely accepted view in the investment world.  Outside of a war / global crisis (in which everywhere is in trouble) with China, the next 20 years look relatively much better for Vietnam than for many other developed economies.  The biggest reason for international funds and investors to not pile in anymore is due to dodgy regulations, lack of scale, and unavailability of leverage.

3) We are well aware of the dodgy government regulations and weak rule of law.  Humanitarian concerns notwithstanding, and speaking strictly from an investment perspective, authoritative countries grow MUCH faster than democratic economies in their early age.  Just look at India vs China.  Look at Singapore.  Look at Thailand.  And look at the USA / UK now - they can barely build a bridge to save their lives through the democratic process, whereas China can raze cities and rebuild new metro in the blink of an eye.  Chinese properties have gone up 10-fold in the past decade and many of us have profitably handsomely from it.

For HCMC specifically, the key is to buy with a reputable foreign developer with a long history and pink-book status.  Let the foreigner developer negotiate on the annoying aspects of procuring the pink book and other documents on your behalf.  You’ll probably be paying 10-20% more than a local developer, but given how *AFFORDABLE* properties are in Ho Chi Minh, an extra 10-20% doesn’t really matter in the long run given all the protection you have.

Remember, 200-300K USD in Vietnam buys you what 2-3 million USD buys you in the cities we are used to investing in.  Vietnam home prices aren’t even half of what Bangkok is right now, and who knows how far the gap will close within 20 years time.

4) Infrastructure and subway.  Delays and all, the arrival of a metro often transforms a city way beyond anyone can imagine.  Just look at Taipei pre subway and post subway.  They were every bit as bike and scooter-heavy as Vietnam back in the days.  Look at how their RE markets have gone over the past 20-30 years.

5) Lack of leverage.  Currently for foreigners, you cannot get a domestic mortgage, so we have to pay in cash.  If the investment decision is wrong and the foreigners lose $, while it’s uncomfortable, there is not going to be a credit squeeze and most foreigners are going to just “sit on it” until the market recovers as long as the property is rentable and generates cash flow.  Hence the focus to buy from high-end developers and in the best locations only.

6) Government needs FDI and foreign real estate investments to come in.  It’s no mystery that the govt is corrupt and wastes away insane amounts of cash with project delays.  But the point is, they also understand how important FDI is to the country, as they are basically getting a free lunch out of foreigners buying into their dream.  Thus, it is not in incentive (nor for their own country’s survival) to be screwing over the foreign investments.  Expect to see more foreigner friendly policies to come from them over the next 5 years.

7) Finally, overseas buyers who (should) do their research are well aware of the drawbacks and problems with the Vietnamese economy, political, and regulatory systems.  Most of these investments are “excess savings” that have come from profitable investments that were made abroad, or from investors that have been priced out of their home countries (such as HK and Singapore) and thus spreading over to Bangkok/Manila/HCMC etc.  No different than now Asian money was spilling over to Canada the past 15 years (look at Vancouver home prices now, 10:1 to HCMC) so it’s a spill down effect that will keep happening as long as the world’s income disparity keeps growing (and it will).

Anyway just my 2 cents in case it’s useful to others thinking about investing here.  We are pretty agnostic to where we want to invest as long as we think we can make money, but honestly Vietnam strikes us as one of the more promising countries over the next decade or two and we hope the country will continue to make great strides forward.

Maybe good value to you, but at an average wage of 2600 usd a year, it's very unaffordable for the locals.The house price to income ratio is greater than Australia.

@Plaxarc
No offense, and I wish you the best in your RE enterprise in VN, but it sounds like a lot of babble to me all the vagueness really does nothing to support the argument that this is the place to invest e.g. price to income, Quantitative easing (QE), " This is almost undeniable and widely accepted view in the investment world. ", "a reputable foreign developer", "rentable and generates cash flow." and it just goes on and on from a person who has been ".... doing real estate research in Vietnam for over 12 months.
As the old Wendy's Hamburger chain commercial once said " show me the beef".
The lack of leverage is an important issue for investors, the ability to research the title is I'm portent for an investor, title insurance is important for an investor, legal recourse is important for an investor, appraisal are important for an investor. Cap rate is important for an investor. And we have not even started on real money yet. Sound like an RE agent to me.

Guys, no need to get offensive.  If you didn’t appreciate the comment, that’s fine.

2600 usd/Sqm is... well.  Chump change dare I say?  We are paying 15-20k USD/sqm in Tokyo, 30-40k usd/sqm in Hong Kong, 10k usd/sqm in Bangkok, and somewhere in the middle for London/New York.

Point of the matter this, real estate is no longer a local product.  Just because locals cannot afford it means nothing for foreigners with excess savings who are coming to buy good products for the future.

If you guys think it’s bunk, please feel free to ignore.  Hopefully it was of some use to others.  Thanks and good luck to all for 2018

Most expats dont buy here due to the minefield of paperwork. Buying in your name creates several hurdles, hence very few expats buy here.

Sorry Plaxarc I was not trying to offend. It is just that you said a lot off words that have very little meaning to the subject at hand. It seems you grabbed terms you have heard and then tried to apply them here. For example 'Global QE policies means that the 0.1% owns properties beyond what the working class can afford." .1% of what? And how does it mean investing in RE in HCM is a good thing? Yes, Quantitative Easing (QE) made for cheap money and has now created another RE bubble in the making. But QE makes borrowing cheap. You yourself agree that foreigners can not borrow to buy here. And correctly emphasis that leverage ( buying with someone else money) is a positive. I agree and that is why, in part investing here is not the best thing to do. For example, and just using round arbitrary number, that you can buy a property for $100,000 and you pay cash. You later sell it for $120,000. Your cash-on-cash return is 20%. However, on the other hand if you buy the same property with 20% down and use OPM ( other peoples money or a loan) to finance the remainder your return 100%.
So just on that point alone it seems like you are arguing against your own point....that RE investing is great in VN.
And I could go on....point by point. I mean it is great you joined the conversation, but your points just are hard to make sense of. And it should be noted that you yourself say you have been investing in RE for a decade. Just so happens the boom and bust cycle of RE runs in 10 year cycles also. So you get in on the last bust. The euphoria builds and soon your advocating that RE is the best thing since sliced bread. The fact of the matter investing goes in cycles. It will be binds for awhile that offer the best returns then gold, then equities and then RE. But they all have their day in the sun. When the bubble burst the last fool that fell for the euphoria is the one that gets burned. And here in VN it is far easier to get burned due to lack of regulation, appraisals, title research, title polices etc.

@vagabondone

I don’t know how deep dive you want to go into and a public forum isn’t the right place.  But let’s start with a few points

1) Global central bank balance sheets have gone from 5 trillion to 20 trillion over the better part of the past decade since Lehman.  If you owned any sort of assets (instead of crying about how the world will end or collapse) you have probably made *a lot* of money and certainly way more than any regular job you could have had.

2) One of the 50% owned Singaporean developers have offered us a 6.5% Net (after tax) rental guarantee on one of the near-brand new prime projects in D2 with an unrivaled river view.  This is guaranteed for 2 years+ with a renewal option.  I obviously cannot name specifics beyond this.

3) If you understood how mortgage leverage works, you will know why Vietnamese houses are cheap on an international standards (because we can’t lever with a VND loan), and that’s why lack of leverage is a good thing from a risk perspective.  Title insurance and legal recourse and appraisals are of course important and are terrible in VN, but if you have ever invested in China, then this isn’t exactly something new.  If VN had rule of law like Japan, we would be at 10k usd/sqm by now, not 2-3k usd/sqm.  Everything has a price.

If you are buying in Vietnam, you better be hoping for a multiple of your return (not 20%, more like 200%) over the next decade as per the China scenario.  Our Shenzhen stuff has gone up by 7x over the past decade.  That’s where the hope is for Vietnam over the next decade or so, even if it’s only 50% as good as China.

Finally, with base rates in Vietnam at 6%, and cap rates at similar level.  Leverage doesn’t work as well (unlike in Japan where you are borrowing at 0.8% vs a cap of say 3.5%), as you are barely breaking even in cash flow.  Plus, since I know it will take years before Thu Thiem gets up and running  and the infrastructure is in place, plus there is an oversupply of units at the luxury end for now, the worst thing for us is that foreigners are super leveraged and any signs of downturn means they are squeezed out and thus collapsing the market.  It’s the same as China where your housing leverage and # of units are controlled to prevent a catastrophic collapse.  Vietnam is no where stable enough so warrant an aggressive leverage play, due to all the problems you listed (rule of law, dodgy title insurance, etc)

4) Cap rate is very high for Vietnam compared to things not in Latam or other dodgy EM countries.  People in Europe are begging for projects with a 2% gross cap as they are funding @ close to ECB repo rates of minus -0.4%.  Anything with a positive yield is quickly snapped up.

5) What do you mean real money?  Real money investors?  They will come in once the government shows that they can build up Thu Thiem and open up the banking industry slowly (like Thailand).  But until then they can’t buy due to lack of scale and unavailability of mortgage and rule of law.  But they definitely are paying attention and are involved via Vietnam ETFs for now to participate in the macro gains.

Anyway again no need to get all upset when others are interested in VN properties.  Afterall, why can’t it be a Win-Win situation for everyone where the domestic markets grows as one hoped and the local Vietnamese climbs the wealth ladder, while early foreign investors make money with their early faith in Vietnam and everyone’s quality of life improves at the end?  Why is it so much more pleasing to forecast a crash?  Is it like an intellectual ego thing where one thinks they are smarter than the ‘crowd’?

In closing, I’ve lived in and been personally priced out of 4 cities (Vancouver, London, Sydney, and Hong Kong) where foreign money outbids locals forever - I havne’t seen real a dip since 2004 - that’s long enough for me.   I’m simply arguing that this would happen in all the major metropolitan cities in the world (you can do your own research), and Ho Chi Minh is starting to appear on people’s radar to be the next one.

Good luck to all.

One last one, especially for the Win-Win part.  Just look at Vietnam.

http://www.pewglobal.org/2014/10/09/eme … uality-09/

All I can say is, I wish my own country shared this kind of optimism .

Unless we think 90% of the surveyed are idiots / blind, I think it's fair to say (and I also hope from a humanitarian perspective) that the country is due for a much brighter future than what she endured over the past 30 years.

For those following along.....no developer in their right mind is going to guarantee any buyer what their "Cap Rate" would be on any property they buy. The developer at the very least has a fool for a client if they believe this. This is because some of the key items that are used to calculate cap rate the developer has no control over. This story is sounding more and more like a Viet Kieu story. I would not be falling all over myself for a cap rate of 6.5%. There are better returns elsewhere. Especially when you consider a cash-on-cash return.
I have found though that if a person feels they are making great money let them believe that. Your not going to be able to educate them on the issue anyway. Then too a great deal depends where you have the ability to invest ( that is what country are you a citizen of).

Plaxarc :

http://www.pewglobal.org/2014/10/09/emerging-and-developing-economies-much-more-optimistic-than-rich-countries-about-the-future/inequality-09/

This link is from 2014.
How is the current situation?

Vagabondone :

I would not be falling all over myself for a cap rate of 6.5%. There are better returns elsewhere.

Saving books at Vietnamese banks.
Simple and without risk.  :lol:

@ Andy
Who needs current data when your investing!!!!! 1920...2014 you can still get rich. My point exactly on the cap rate return. And he is not even talking about real cap rate return. These types pass through here every once in awhile and try to impress there fellow Vietnamese that they went West became a big venture capitalist, made their millions and now come back to sell the story here. They throw around term, never knowing what they mean. It is fun chatting with them though. Kind of like a comedy show.

My two cents is not to invest any money into real estate here in Vietnam,  trust me because i have had experiences and unfortunately just got rip off by one of our trusted agents. Now still got a lot of money tied up into real estate which is not good.  Just dont trust any sweet word coming out from them because all they want is your money.

Sound advice

However, if you still want to buy property then it's up to you. It's your money so just go right ahead thinking that suffering a loss will not happen to you. When money comes in the door everything else goes out the window

Time will tell.

Just bought a house in Swan Park,

one apartment in Diamond Island,$

one apartment in New City.

Hope you will share your experience on each one own more detail.

@vagabondone

"For those following along.....no developer in their right mind is going to guarantee any buyer what their "Cap Rate" would be on any property they buy. The developer at the very least has a fool for a client if they believe this."

Obviously, they have a client that they have rented out at around a 8% gross, in which they will charge ~10% of it as handling fee / taxes and monetize the capital gains.  And yes, we know who the renter is - simple due diligence process.

The docs have been signed by our legal and is already in place.  If you think that's rubbish, so be it, since you obviously have visibility into every single transaction in Vietnam.

@Andy

With regards to current conditions, here is the latest from the official source:

https://tradingeconomics.com/vietnam/co … confidence

In case you are too lazy to click - TL;DR, it's at HISTORICAL highs as of Jul 2017.  I'm sure Vagabondone will of course say it's not updated to Jan 2018 but whatever, keep ignoring facts.

Last and probably most importantly, this was announced last week:

https://www.bloomberg.com/news/articles … al-spinoff

"Vingroup JSC, Vietnam’s biggest property company by market value, is planning a spinoff of its luxury residential arm that could raise as much as $1 billion, people with knowledge of the matter said.

The company’s Vinhomes unit, which offers serviced apartments and villas to residents in the country’s biggest cities, could sell shares as soon as the first half of this year, according to the people. Hanoi-based Vingroup is inviting banks to pitch for roles on the proposed offering, the people said, asking not to be identified because the information is private.

A $1 billion deal would be the biggest first-time share sale ever in Vietnam, according to data compiled by Bloomberg. It would surpass a stock offering last year from Vincom Retail JSC, a mall operator that’s also backed by Vingroup, that raised about $708 million, the data show.

[...]

Shares of Vingroup have risen 83 percent over the past year, giving the company a market value of about $9.1 billion. The benchmark VN Index of Vietnam stocks rose 43 percent over the same period.
"

So we have he BIGGEST equity deal in Vietnam *history*, from the largest company selling it's crown jewel to foreign sophisticated buyers, and Vagabondone will surely argue that it's a sign of excess and stupidity rather than a sign of confidence from well-informed and deep-pocketed institutional buyers trying to get exposures into Vietnam real estate.

I'm sure all us QII / Institutional Investors are wrong and stupid, and we have nothing better to do but to burn our money away.  Tell that to GIC (if you know who they are) who have been huge investors into VN.  I'm sure the Singaporeans are rioting that their state pensions and coffers are being wasted away in Vietnam.

For those others reading, hope you guys can benefit a bit from the big trend and the shifting of the tectonic plates.  Vietnam is turning into a serious destination as a frontier market.  Good luck to everyone.

ps. Vincom Retail did Vietnam's largest IPO at $713mm USD in Oct 2017 - but I'm sure it's just more stupid foreign institutional investors looking to throw good money away.

https://www.reuters.com/article/vingrou … SL4N1MR1FD

@Delafon

Diamond Island is awesome, we saw 10 transactions closed the 3 days we were there in November.  Best out of the Thanh my Loi area in our opinion.  Did you take a look at Feliz/Waterina Suites / and the upcoming Mapletree one (One Verandah)?

New City is interesting too we thought (and better valuations) but unsure about rental potential given the short hand-over and lack of facilities and community in that region for now.   Please let us know how you manage with the rental demand there.

Q2 Thao Dien was easily 4x oversubscribed and we couldn't persuade fraser to get us a preferential ballot so that was a big miss.  Along with D'Edge those 2 were probably the 2 most exciting launches for us in 2017.

Seems like 2018 will be year of Thu Thiem.  We'll wait for the Son Kim Land and HK Land launches, but don't expect them to be cheap at all...

There are 2 more projects from Capitaland and Masteri in D4 in 1H of this year and we think those will be heavily marketed overseas again.  Probably better rental stability than D2 but without the FDI-induced upsides.

Investing in an IPO or a public company is a great deal different than the issue this thread was addressing. Moreover as stated in the article provided the IPO proceeds were to be used to payoff the private investors. So apparently nothing is going into the future operations. And at 40,000 VND a share the big institutional investors are not going to be buying I suspect.
And back to your risk return narrative does not seem like a compelling story to me yet. Not to speak of the currency or liquidity risks. But I maybe wrong. maybe it is a great market. But so far no one has stepped forward and offered any convincing numbers or scenarios where it would outweigh many better investment arenas. Heck a " permanent portfolio" has had a better yield than any of those stated is is liquid. Of course, this depends on the country your from.
But even investing in many of the great stocks in China offer far better returns. The stated returns here are not much above bank yields in VN.

Plaxarc :

@vagabondone

"For those following along.....no developer in their right mind is going to guarantee any buyer what their "Cap Rate" would be on any property they buy. The developer at the very least has a fool for a client if they believe this."

Obviously, they have a client that they have rented out at around a 8% gross, in which they will charge ~10% of it as handling fee / taxes and monetize the capital gains.  And yes, we know who the renter is - simple due diligence process.

The docs have been signed by our legal and is already in place.  If you think that's rubbish, so be it, since you obviously have visibility into every single transaction in Vietnam.

@Andy

With regards to current conditions, here is the latest from the official source:

https://tradingeconomics.com/vietnam/co … confidence

In case you are too lazy to click - TL;DR, it's at HISTORICAL highs as of Jul 2017.  I'm sure Vagabondone will of course say it's not updated to Jan 2018 but whatever, keep ignoring facts.

Last and probably most importantly, this was announced last week:

https://www.bloomberg.com/news/articles … al-spinoff

"Vingroup JSC, Vietnam’s biggest property company by market value, is planning a spinoff of its luxury residential arm that could raise as much as $1 billion, people with knowledge of the matter said.

The company’s Vinhomes unit, which offers serviced apartments and villas to residents in the country’s biggest cities, could sell shares as soon as the first half of this year, according to the people. Hanoi-based Vingroup is inviting banks to pitch for roles on the proposed offering, the people said, asking not to be identified because the information is private.

A $1 billion deal would be the biggest first-time share sale ever in Vietnam, according to data compiled by Bloomberg. It would surpass a stock offering last year from Vincom Retail JSC, a mall operator that’s also backed by Vingroup, that raised about $708 million, the data show.

[...]

Shares of Vingroup have risen 83 percent over the past year, giving the company a market value of about $9.1 billion. The benchmark VN Index of Vietnam stocks rose 43 percent over the same period.
"

So we have he BIGGEST equity deal in Vietnam *history*, from the largest company selling it's crown jewel to foreign sophisticated buyers, and Vagabondone will surely argue that it's a sign of excess and stupidity rather than a sign of confidence from well-informed and deep-pocketed institutional buyers trying to get exposures into Vietnam real estate.

I'm sure all us QII / Institutional Investors are wrong and stupid, and we have nothing better to do but to burn our money away.  Tell that to GIC (if you know who they are) who have been huge investors into VN.  I'm sure the Singaporeans are rioting that their state pensions and coffers are being wasted away in Vietnam.

For those others reading, hope you guys can benefit a bit from the big trend and the shifting of the tectonic plates.  Vietnam is turning into a serious destination as a frontier market.  Good luck to everyone.

ps. Vincom Retail did Vietnam's largest IPO at $713mm USD in Oct 2017 - but I'm sure it's just more stupid foreign institutional investors looking to throw good money away.

https://www.reuters.com/article/vingrou … SL4N1MR1FD

Many apartments in places like Central Park can't be rented at the prices Vingroup spruik. My friend was told her apartment would fetch 1300 usd a month, she finally got 850 usd after a year of being vacant. Don't believe all the hype in the press here, much of it is false information.

And an  8% gross does not come anywhere near to an 8% cap rate. And your own website info  puts the VN interest rate at 6.25% and inflation at 2.65%. Heck even IBR is 4.33.
Just a far different way to figure returns the way Plaxarc does it. But if he feels he is making a lot of money that is all that is important. And who knows in the end maybe the capital gains will justify the investment. But so far I have not seen the "Beef". Either in this conversation or from those I know that have offered real numbers So for now I will miss out on this great investment opportunity. But I do hope someone will come forward with real numbers to support their position. I would love to be wrong and dive in. But these salesman are not cutting it when it comes to numbers.

@Vagabondone

Sorry did you read the bloomberg release correctly?  Vingroup is spinning off their *RESIDENTIAL* unit, which has everything to do with the topic on hand here.  Do you understand what is being sold here?

You think they are going to sell all $1bln of the shares to domestic investors?  Even the biggest Vietnam bull will not be this delusional right?  There is going to require massive take-up by international buyers and hence they are asking all the international investment banks to be book-running this. 

If you had done any public research into the Vincom Retail deal (and the subsequent upsizes) then you would know that there was big foreign interest and you better bet that they did their extensive homework on the country's fundamentals.

A $1bln USD spinoff is a landmark deal for Vietnam or any frontier market, so this is going to a heavily focused deal and will be a benchmark and a great mark-to-market on how far Vietnam has gone.  The fact that it's the residential arms means that all the housing stats / fundamentals we have discussed here at length are going to be heavily scrutinized. 

We might all have our biases on where we think / hope certain investments are going but we are not bigger than the market.  And right now the market has spoken that the international interests are coming and Vietnam will be bigger and bigger on everyone's radar going forward.

For the sakes of all let's hope the spin-off goes well.  This will be a landmark, benchmark deal for the whole industry and even the country.

@vagabond

I don't think you understand how housing investment and developer financing really works.  Yield isn't the only thing that matters.

Case in point.  HK base rates are <1%.  HK rental yields are low to to mid 2%.  If you buy through JLL they will usually guarantee you a cap rate (HK has negligible taxes) of around 2% which is higher than the base rate.

Also, you can buy in primary issuance where the developers will offer you a 2nd lien mortgage at sub bank mortgage rates to entice you to pay the expensive primary price.  This has attracted all the recent HK buying frenzy into primary issuance only since you can get 90% LTV instead of 50% LTV as mandated by HKMA.

Why would they do that?  Because they can mark up their primary properties maybe at 20% above where they would otherwise sell for which is worth more than the PV stream of your 0.5% loss in yield-spread over the life-time of the mortgage.  It's simple spot monetization vs PV discounting.

And once the cash has been realized, they can go around and bid for more land / build more condos / expand into new business etc which net-net increases your wealth overtime.  That's how it's always worked.  Same as drawing out home equity loans against a large positive MTM to invest (sensibly) in higher yielding credit/bonds to enhance your portfolio return.

Btw, since you've insinuated this so many times.  I have no ties with Vietnam nor do I have anything to sell.  I do enjoy debating on investments since that's what we've done for decades and internationally.  You learn a lot from these exchanges over the years.

And no, I'm not going to show you the minutes of the SPA and Leasing Agreement handover to prove to you the math.  If you don't believe the cap rate and return calculations, that's fine, we already have a few teams to verify those.  Let's leave it be.  Leave the ad hominem attacks out of it.

@Plaxarc
I am not trying to attack you in anyway. It is just your logic from the very start has made no sense when it comes to putting income in the pocket of an investor. You started out by saying how the MRT was going to put money into your bank account, you go onto argue that you have found developers RE people that will guarantee you a cape rate of a given number. Then you extrapolate more income in your pocket because someone had an IPO. These to me are all just empty platitudes that sound more like the argument an agent would advance then a seasoned investor. Yes, I agree to the thinking that an agent could peddle such a circular argument to an unknowing investor. And that goes exactly to my  point. Here a developer can promise you what you can rent a place for and you have no way to know if it is true. yet in my country I can get that data. I can have an appraiser appraise the property before I fall for the sales pitch. As @Colinoscapee attest to, you can be promised the moon. But when that place sets vacant for a year waiting for that false promise to come true figure you cap rate for that year of lost income. Then pull out your articles about how great your investment was going to be because the developer had an IPO. That IPO has no affect on me getting a willing renter to rent my property this month. I think maybe you are falling in love with the figures about how great it all is without even k owing the terminology you use. I just can not see how you understand how we calculate cap rate when you say the developer promised you a given cap rate going forward. Your entire argument seems to be supported with vague platitudes that have no real bearing on knowing markets rental rates or renting your property. And comparing all that to investments in other areas wand other vehicles. And that after all is what wise investing is all about. For a bit real estate will have the best yields, but then something else will take the lead. And unless you know cap rates (how we measure yield on RE) you can not compare it to other investments. And you yourself make the argument against investing here in that one can not use leverage. But the conversation is perhaps useful to others. I certainly hope so because you and I are sold.

As for my understanding of how developer financing works is nothing that concerns me. My concern is how much money goes in my pocket. I wish the developers of the world well. But Yield an capital gains are all that matters to me, if I can find a reputable developer or RE professional. But we are advisories  and I look with a jaundice view on all of them. They are sellers and I am a buyer. When I am a seller I think much differently than when I am a buyer. If I were selling you something I would offer you a great cap rate hoping you had no clue what it meant also.

BTW I was actually referring to the Reuters article. The Bloomberg as I understood it was just a proposed offering that everyone was real tight lipped and secretive about it seems by the article.

@Plaxarc
What a bunch of bullshit.
You are a troll, trolling for some poor sucker to put his/her hard earned CASH into someone's pocket never to be seen again.
That fact that you write and justify so much, tells me that this is your business.

Anyone who thinks this is a good idea, ask yourself why banks won't lend to foreigners?

The answer is simple, because they know when the investment turns sour, THEY will be left holding the bag of merde.

It’s all about “flipping” here, and nearly ALL foreign buyers are Asian.

It’s their game, their turf, their banks money  & their rules or lack there of, and more importantly it’s about “punter profile”...ie , You can’t really assess the credibility of ANY investment with someone until you understand their risk management profile.    Everyone is different.

I wouldn’t put $20 on a horse race , but have put six figures into blue chip stocks.   Unless your seriously connected here, & I don’t mean having a $1 coffee with the local $200 a month traffic cop,  it’s highly likely you’ll get left standing behind the door when the “easy” money comes in.

@wxx3
Well happy new year to you too.  To a prosperous year of the dog, and all that.

By the way, using your analogy, Japanese banks DO NOT extend residential mortgage to any foreigners either, but are happy to extend 90% - 100% LTV loans to locals or expats with a permanent Jūminhyō.  Are you trying to say that Japanese/Tokyo real estate is as much of a scam as Vietnam?

Please stop being an idiot and talking about things you have no idea about.

@vagaoboneone
The first quarterly lease agreement payment will take place in March.  Stuff is pretty black and white on the contract.  Of course we can have a case of blatant contract fraud (in which case our lawyers will be busy), but so far so smooth and everyone has been pretty professional.  Granted we are dealing with probably larger nominal prices than the average VN property so all the counterparties are somewhat more professional, but fingers crossed anyway.

@Yogi007
Don't worry no one is betting the farm on Vietnam.  This is like 10-20% of our holdings, at best.  Problem is everywhere else is unaffordable and losing 5-10% on a property in Europe / Hong Kong / Canada / Australia is the same ($ wise) as losing 100% of everything in VN.

Stuff in the aforementioned countries cost anywhere from 3mm - 5mm USD to buy as an entry cost into a decent unit.  A 10% correction drop is 300-500k USD, which will buy you a few properties in Vietnam.  We don't think the chance of Vietnamese properties going to zero is higher than a mere 10% correction in DM markets.

I think this is where most of the posters are missing - Vietnam is cheap on an absolute basis with a good potential story and is a reasonable punt for international investors with excess capital to take a bet on.  No one is betting our life savings on it and we are doing it comfortably unlevered.

3 million to 5 million for a decent unit in Australia........I don't think so.

to each their own.  We buy in prime locations (Sydney/Vancouver/HK Island Side/Tokyo Minato-Ku etc) only and to consider them "decent" as a wealth transfer to our next generation.

There's a reason why high-end properties have outpaced and exploded the way they have the past decade since QE started. 

Please understand how the wealth game works and how the 1% or 0.1% got to where they are.  Whether we like it or not, that's how things are.

I'm Canadian so let me share this:

https://www.mikestewart.ca/november-201 … ts-graphs/

Average price from 400k in 2002 to 1.83mm for an "average" detached home in Vancouver in end 2017.  The Lower Mainland and West-Van area will be double to triple this price.

4x Return over 16 years unlevered.  16x return using a standard 25% downpayment.  Where else are you going to get this kind of return.  I'm sure Sydney has returned similarly as Vancouver over the past decade.

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