The troubled economy and distressed property market in Vietnam might soon see a positive turn. Since the market hit a wall in 2007, most of the headlines from the country have featured a rapidly devaluating currency, reports of corruption, and generally a market most would-be foreign investors avoided.
Most economists agree that while Vietnam’s economy has not yet bottomed out, there are reasons to be optimistic. The government is on the verge of making some major modifications to existing policies that prevent non-citizens from purchasing individual residential properties. The policy changes are an effort to minimize the outflow of capital from the country and to eliminate an excess inventory of higher-end condos that were built during the country’s growth period.
To that end, NAR’s President’s Liaison to Vietnam, Vinh Nguyen, notes that the opportunity for growth in Vietnam lies in the suburban areas outside the major cities of Hanoi and Ho Chi Minh. “Because of the excess of higher-end condos in the cities, developers who are building lower-end units in the suburbs are doing quite well,” said Nguyen. “Those who focused on the higher-end condos, who prospered during the boom, are suffering now.”
Nguyen’s advice for agents wishing to do business in Vietnam is to build roots now. They are moving in a positive direction, and there is a lot of potential down the road for those who have cultivated relationships with local investment entities.
But the real opportunity, especially for American agents interested in working with Vietnamese clients, is in helping Vietnamese purchase properties in the United States.
“There is a major outflow of capital from Vietnam to the U.S., and a very real opportunity exists for U.S. agents to attract them,” said Nguyen. “Many Vietnamese have made good money in the last 10 years and they are looking for a safe place to diversify and invest their money.”
Nguyen also points out that a growing number of Vietnamese are sending their children to school in the United States, and are purchasing properties on or near campus. Some also have a keen interest in pursuing perceived “good value” commercial properties such as retail centers, office buildings, etc. Many investors are also exploring the possibility of setting up or purchasing existing businesses in the States so they can expand business here. A case in point, recently an investor is looking for a large farm or a large acreage lot to plant tropical fruits, with the intent of introducing them to the American consumers via our existing distribution network of grocery/food stores.
So how can agents reach out and serve Vietnamese clients in a better way? The first step, according to Nguyen, is building roots. Visit the country, attend events, and create business relationships. He also suggests sponsoring international student activities at colleges or universities in your area. Getting to know the students at local universities can yield excellent leads to parents looking to purchase properties.
Next, be prepared to explain the basics of a U.S. real estate transaction. The real estate industry in Vietnam is not mature, and licensing laws are not strict. There are no exclusive listings, buyers agency, or open houses in Vietnam. Since they don’t do business the same way U.S. agents do, it is important to take the time to explain and help them understand the differences in a real estate transaction. They want to know information like the tax implications of holding real estate property here, closing costs, management fees, types of ownership, etc.
“The Vietnamese people are yearning for opportunities to learn from Western Europe and the United States,” said Nguyen. “They are adopting cultural traditions like Halloween and Valentine’s Day, and are eager to take classes and learn so they can be ready when the time comes for their market to prosper again.”
For in-depth training on international real estate transactions, NAR offers the Certified International Property Specialists certification. To learn more, visit realtor.org/global.