Hotel real estate in Vietnam needs foreign investment
Hotel real estate in Vietnam is experiencing difficulties due to the pandemic and quarantine measures. Tourist business was one of the main points of replenishment of the treasury, and this year these revenues have decreased significantly. To support the segment, the government allowed foreigners to buy hotels in the country.
Such a step would increase investment in the tourism sector, as well as reduce the number of previously unsold objects. For foreigners to be able to buy hotel real estate, it is necessary to make changes in the legislation.
It should be noted that housing prices in Vietnam show regular growth. In Ho Chi Minh City at the end of last year, the cost per square meter rose by 24%. However, things are not so good in hotel real estate. According to statistics from the relevant ministry, demand for hotel complexes has significantly decreased, and there is an outflow of foreign investment. At the same time, the number of objects is growing, many projects were approved before the pandemic outbreak, and their construction is actively underway.
Vietnamese legislation assumes that foreign nationals can own apartments in the country, but the share of foreign owners should not exceed 30% of the total number of apartments in the residential building. However, such requirements for hotel properties are not provided. Therefore, experts say that the lack of clear rules in the field of these objects is an obstacle to market development, and limits investment by foreigners. For example, last year the country had 39100 condominiums, the acquisition of which foreigners would bring the country a good income.
Vietnam in this case lags behind its neighbors – Malaysia, Thailand and Indonesia, which have long had a legal framework for investment in hotel facilities. Therefore, one of the priorities for the development of tourism business is to designate regulations for the acquisition of local property by citizens of other countries.
However, not all experts see the positive side of the new rules. Some say that mitigation for foreigners may lead to a large number of objects being controlled by them, including in strategically important areas.
According to the latest data from the Ministry of Defense, Chinese citizens and Chinese companies own about 162 thousand hectares in Vietnam. This land was bought through intermediaries and is located mostly on the coast. Basically, this property is a hotel or restaurant. The scheme of acquisition is quite simple: the Chinese create companies where the Vietnamese investor initially has a controlling interest, but over time, foreign partners shift the other side by increasing equity. As a result, all processes are managed by Chinese people.