HCM City Clamps Down on FDI in Real Estate Sector
Mar. 19 – The Ho Chi Minh City government has canceled the licenses of 40 foreign direct investment projects in the real estate sector worth US$1.77 billion which have remained stagnant.
The real estate sector is one of the top avenues for foreign direct investment in the city although fund distribution has been slow and of the 143 FDI property projects worth US$9.61 billion only US$3.61 billion has been disbursed according to Vietnam Business Forum. Last year, authorities approved 13 FDI real estate projects worth US$682 million in the city, comprising of 3.39 percent of the municipality’s total FDI projects.
In terms of real estate investment, foreign developers are far more restricted as compared to their domestic counterparts. Foreign investors are not allowed to buy housing or construction projects for re-sale, lease or hire purchase and are also not allowed to lease housing or construction projects for sub-lease according to the city’s Investment and Trade Promotion Center.
Foreign investors can lease land from the government or organizations for up to 70 years . The land lease may be extended but shall not be more than 70 years for each contract. Foreign investors can lease and sub-lease industrial parks, economic zones or export zones for their business.
In addition, foreign developers can only invest in the construction of housing and buildings for sale, lease or granting of hire purchase; upgrading land and investing in infrastructure on the leased land in order to lease out the land with completed infrastructure; and other services in real estate such as brokerage, evaluation, trading floor services, consultancy services, auctioning services, advertising services and management services.
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