Under the
applicable law on real estate business, generally, there is no limitation on
the percentage of foreign involvement in a company which engages in the real
estate business. The 100% foreign invested enterprise is entitled to
engage in the real estate business except for real estate advertising services
on which the foreign investor must create a joint venture with a Vietnamese
advertising service provider pursuant to limitations under Vietnam's
Commitments on WTO’s accession.
Under Vietnam's
Commitments on WTO’s accession, Vietnam did not commit to take any specific
action relating the participation of foreign investment in real estate
business. Therefore, it means that Vietnam has to authority to decide to open
or not the access of foreign investment into this market and basically, the
domestic laws or regulations will be applied to foreign investment.
However, the foreign investment in real estate business is subject to conditions in the scope of service provision. Under the Law on Real Estate Business which took effect on January 1, 2007, a foreign investor may establish a company in Vietnam to carry out the following real estate activities:
i.
investing to build
houses, construction works for sale or to lease out;
ii.
investing to develop
infrastructures on leased land in order to lease out land with infrastructure;
and
iii.
providing real estate
business services (including real estate brokerage services, real estate
evaluation services, real estate transaction floor services, real estate
consultancy services, real estate auction services, real estate advertisement
services and real estate management services.)
But, that foreign invested enterprise is prohibited to perform some services, i.e. buy houses or construction works for sale, lease or hire-purchase; lease houses or construction works and then sublease them to others.
In general, the Vietnamese government only encourages foreign investor to invest as real estate developers and real estate service providers rather than to invest in all areas of the real estate business.
Currently, Vietnam is on the process of amending the Law on Real Estate Business to create favorable conditions for those doing business in this field, especially to attract more foreign investment into real estate market. Thus, it is likely that some limitations to the foreign investor will be removed.