Land Opportunities to Invest in Saigon, Vietnam

Without any doubt, under the law of Vietnam, no one can or will be landowner – no one can or will own land, Land ownership, even of a piece of land cannot be attained as land collectively belongs to all Vietnamese people. The law – Vietnamese law – however, recognizes the fact that the desire of foreign investors – especially those from the leading investment nations – to have a plot of land to build their elaborate homes, has been dramatically increased – and will continue to do so.

Some newspapers have even reported and confirmed that yes, there are foreigners who eventually have purchased land and thereafter built their house on that land. The related areas that foreigners settled is mostly within the central coastline provinces in Vietnam. This fact seems against the law and causes confusion amongst foreigners. Therefore, the questions and answers below are designed for foreigners to have a better understanding of what the law actual says, and how likely or unlikely landownership is.

#1 Is it possible for foreigners to purchase land?

No. It is simply impossible for anyone to purchase land for any purpose. This is clearly stated in article 4, Law on Land 2013, which states that:

“Article 4. Land ownership

Land belongs to the entire people with the State acting as the owner’s representative and uniformly managing land.”

Therefore, the belief to be entitled to purchase a piece of land in Vietnam by anyone is not correct. The Law of Vietnam instead allows people (individuals or legal entities) to have the right to use land under a land use right and the land use right certificate is granted as evidence of this de facto “ownership”.

So, the true and correct understanding is that “anyone could have the right to use land” by ways of allocation, lease, a land use right recognized by the State, or transfer of land use rights, provided that such users meet the mandatory requirements, with respect to purpose and planning.

#2 Are foreign individuals eligible for land use rights?

No. As outlined below, the Law on Land specifies who are (can be) land users and who are not (cannot) – with respect to foreign individuals. In particular:

“Article 5. Land users

Land users may be allocated land or leased land, have land use rights recognized by the State, or receive a transfer of land use rights in accordance with the Law, including:

1. Domestic organizations, including state agencies, people’s armed forces units, political organizations, socio-political organizations, economic organizations, socio-politico-professional organizations, social organizations, socio-professional organizations, public non-business organizations, and other organizations as prescribed by the civil law (collectively referred to below as organizations);

2. Domestic households and individuals (collectively referred to below as households and individuals).

3. Communities, including Vietnamese communities residing in the same village, street quarter or similar residential area sharing the same customs and practices or the same family line.

4. Religious establishments, including pagodas, churches, oratories, shrines, monasteries, abbeys, religious schools, head offices of religious organizations, and other religious establishments.

5. Foreign organizations with diplomatic functions, including diplomatic representative missions, consulates, other foreign representative agencies with diplomatic functions recognized by the Vietnamese Government, representative missions of organizations of the United Nations, inter-governmental agencies or organizations, and representative missions of inter-governmental organizations.

6. Overseas Vietnamese as prescribed by the law on nationality.

7. Foreign-invested enterprises, including 100-percent foreign-invested enterprises, joint-venture enterprises, Vietnamese enterprises in which foreign investors purchase shares, merge or acquire in accordance with investment law.”

Therefore, it is established that foreign individuals absolutely cannot be named on the land use right certificate. In order to have a land use right, foreign individuals must, of course have only one choice – establish a company in Vietnam – and apply for the land use right.

Additionally, an allegation to have a foreign individual possess a land use right certificate is not correct. It must be done by way of some other legal mechanism.

#3 Land use rights are tenured without term limits?

No. Specific term limits on the land use rights of foreign-invested enterprises have been established – under either an allocation or a lease arrangement. Succinctly:

– Conventional terms for land allocation or a land lease to foreign-invested enterprises is a maximum length of 50-years (applicable for executing investment projects in Vietnam). For large investment projects that experience or will experience a slow recovery of capital; projects in areas with difficult socio-economic conditions or particularly difficult socio-economic conditions – which require a longer term – the term of land allocation or land lease must not exceed 70-years.

– Upon expiration of the term, if the land users’ needs are prolonged, the State will consider an extension which must not exceed the term prescribed in this Clause

– A term of land use under a transfer of land use rights with a definite land use term is the remaining period of land use defined in the initial term prior to the transfer of land use rights.

#4 Potential for users to use land – once allocated or leased – for a purpose other than those prescribed by the State?

No. Users can only use the land based on the specific purpose stated in the land use rights certificate. Users requiring a change of purpose, must apply for those changes and must meet the following requirements:

– Obtain permission by a competent state agency/agencies.

– Satisfy financial obligations as prescribed by law.

Therefore, foreigners are advised to investigate/examine the purpose specified in the land use rights certificate before placing any money for acquisition of land – otherwise resulting in unnecessary costs.

#5 4 x NO! So, how would any foreign individual realize land ownership and build a house?

As stated in question #2 prior, there must be some way to establish a company and obtain a land use right certificate. In reality, the existence of nominee investments in Vietnam are commonly recognized in Vietnam and can be used as the most practical means to secure foreign investors demands.

To see how the nominee structure works, please visit Investment in Vietnam through Nominee Structure.

#6 What services would a law firm or a licensed broker provide to assist foreigners during such transactions?

As a boutique law firm, CNC Counsel is pleased to offer dynamically diverse services to support foreigners to legally and practically use the land as they desire. Our services include, but are not limited to:

– legal advice with respect to real estate and business law.

– market research.

– investigation of land opportunities.

– structured transactions.

– preparation of contractual documents.

– case-by-case legal advice.

– dispute settlement.

#7 What are the recommended areas to invest?

The recovery of the real estate market helps investors invest in any area of Vietnam that potentially generates a profit. It is our recommendation that investors consider:

– Investment in the busy metropolitan areas – Hanoi, Ho Chi Minh City (f/k/a Saigon), Da Nang, and Can Tho.

– Investment in the coastal areas – Phan Thiet, Quy Nhon, Nha Trang, Ba Ria–Vung Tau.

– Investment in offshore (island) areas – Van Don, Bac Van Phong, Phu Quoc.

Per our expertise the investment in Saigon is more attractive than other areas and at this time, we suggest District 9 – an emerging “new” district.

The following market research is for investors information only.

A quick summary

This provides an overall picture of District 9, which includes: boundaries, traffic, important locations, and some projects that may attract investor attention and assist in their decision making.

The presentation Land Opportunity to Invest In District 9, Ho Chi Minh, Vietnam in pdf, and video below.

About District 9

District 9 borders Dong Nai Province to the east, Binh Duong and Thu Duc to the west, and District 2 to the south (see next slide – the map)

District 9 forms a part of East Saigon which has welcomed new waves of investment thanks to synchronous infrastructure and other billion-dollar projects being poured into Thu Thiem (District 2), High-tech Zones, Metro line 1 etc., all of which help to increase the market value.

HCMC’s development strategy is to make it a smart urban area. This will help to promote the growth and added value of East Saigon’s real estate market.

Considered Projects

These projects have been selected based on  their scales and impacts on the market; however this should not be considered an exhaustive list. Land available for development is listed for sale along the streets, while brokers can be found handing out leaflets on a daily basis.

Vincity:

Scale: The largest residential project in District 9

Legal Viewpoints: Unable to verify. Neither Vingroup nor its real estate agencies have disclosed or produced any legal documentation of the project at this time.

Dong Tang Long

Scale: Second largest residential project in District 9

Legal Viewpoint: Public and media scandals are available on the internet. The project owner is unable to request financing in advance from investors until the infrastructures and utilities of the project have been completed. The owner is required to construct the apartments, villas etc. before they can be transferred to the investors.

Centana Dien Phuc Thanh

Scale: Average in scale for the residential projects in District 9

Legal viewpoint: substantially legal established. Some pink books have been granted. Some are yet to issue. but our experiences indicates that this project can be a good option to invest.

Investment Strategy

#1 Location:

Preferable locations should be those which are easy to travel to central business districts.

#2 Price:

Projects like Vincity, Dong Tang Long (except apartment units) have comparatively high prices.

#3 Legal Issues:

The larger the project is in scale, the greater likelihood of legal issues arising.