Real Estate Stars of Southeast Asia

In SOUTHEAST ASIA, one a rising economic star and the other one of the world’s favourite Travel destinations, Vietnam and Thailand have been attracting global property investors for some time.

Adding to their appeal is a coNFLuence of strong economic growth and legal reforms that promote market transparency and foreign ownership, making both countries increasingly ideal for those seeking long-term returns, strong growth potential and, of course, endless sunshine as a bonus.

Vietnam: A Rising Star

Recent forecasts are optimistic for the Vietnamese economy in 2024, with GDP growth expected to reach around 7 percent, exceeding the National Assembly’s target of 6.5 percent. Key growth drivers include manufacturing and foreign investment in property. In 2024 to May, foreign investors poured nearly US$1.98 billion into real estate, up 70 percent year-on-year. This sector was second only to manufacturing, which received US$7.43 billion, according to Vietnam’s Ministry of Planning and Investment.

Thanks to the country’s rise in the global supply chain, the iNFLux of multinational companies has led to a growing expatriate community, driving rental demand for quality housing. Many conglomerates from other Asian countries and regions, such as South Korea, Japan, Taiwan and Thailand, have established manufacturing and retail facilities in Vietnam. International companies, including Adidas, Nike, LG, Samsung and Apple, also have manufacturing operations in the country. Hong Kong’s Li family launched FWD Insurance in Vietnam through its Pacific Century Group (PCG), while its CK Asset Holdings has also shown interest in Vietnamese projects.

The property market continues to be boosted by sweeping legal reforms. Recent amendments to the Land Law, Housing Law and Real Estate Business Law, effective from January 2025, aim to remove legal barriers and promote transparency. These changes are expected gradually to address issues that have previously limited market growth.

Vietnam has a young, dynamic working-age population, which is approaching 100 million people. This demographic strength is driving economic activity and sustaining growth momentum. As local wealth continues to accumulate, investing in well-located property in Vietnam is a wise decision to capitalise on future growth, says Luffy Chiu, founder and CEO of VHome, a Hanoi-based real-estate agency.

“Most foreign home buyers, including those from Hong Kong, focus primarily
on buy-to-let properties, preferably condominiums in convenient locations,” says Chiu. “We’ve been operating in Hanoi for seven years, with offices and a showroom. Our local presence means that overseas buyers can rely on our expertise to select properties that meet their expectations,” he adds, noting that a personal visit to the country is highly recommended to assess the surrounding amenities first-hand and understand the local community. 

As well as visiting Vietnam to view properties, he advises potential investors to be aware of land ownership regulations, particularly the importance of securing the “pink book”, a legal document that certifies land use rights and ownership. As in Hong Kong, ownership of land in Vietnam is typically leasehold, usually for 50 years with the possibility of extensions.

An alternative pathway to home ownership is to sign a long-term lease with the developer, also typically for 50 years. This contract details payment terms, use
of land, renewal conditions, transferability and maintenance responsibilities. Chiu stresses the importance of due diligence, using local expertise to ensure that the property to be leased also has a valid pink book, which certifies the leaseholder’s rights over the leased land and structures.

Thailand: A Mature, Diverse Market

Already a popular destination for foreign property investors, Thailand continues
to evolve. Deputy prime minister and minister of commerce Phumtham Wechayachai recently announced plans to increase the foreign ownership limit in condominiums from 49 percent to 75 percent and extend the lease period from 50 to 99 years. The extended lease period specifically aims to eliminate the necessity for many nominee companies, which are currently under investigation, and to offer rights exceeding the current maximum lease term of 30 years.

To encourage foreigners to stay longer, the government has also introduced the Destination Thailand Visa (DTV) for digital nomads. This visa allows remote workers to live and work in Thailand for up to one year. These regulatory changes are aimed at stimulating the economy, attracting more foreign investment, and boosting property market activity.

Within Bangkok, locations such as Sukhumvit and Silom are already hotspots for foreign buyers and renters, attracted by the vibrant city life and proximity to key amenities. Phuket and Pattaya also remain popular choices, especially for those seeking holiday homes.

Kingston Lai, Founder and CEO of Knightsbridge Partners, observes a shift in investment patterns among foreign buyers, particularly from Hong Kong. “Initially, they focused on smaller, affordable apartments in easily accessible locations served by BTS or MRT stations. One- and two-bedroom condominiums in the 40- to 60-square-metre (430- to 645-square-foot) range remain popular.”

However, as familiarity with the market grows, there’s a trend towards bigger and better homes in prime locations. He notes that the majority of foreign property investors – around 70 percent – are interested in securing long-term rental returns. High-end tenants, including expats and local students from wealthy families, prefer to rent near major Business districts, universities and shopping malls, he says.

Lai advises foreign investors to exercise due diligence, especially when considering off-plan properties. “It’s important to check the credibility of the developer and ensure that the payment terms are reasonable,” he says. “Developers with an established reputation and those that are publicly traded companies tend to offer greater peace of mind.”

In addition to the current 49 percent cap on foreign ownership of condominiums, foreign property owners are unable to own freehold land, but they can lease for 30 years with possible extensions. Before the proposed regulatory changes, some foreign investors attempted to circumvent the ban on direct land ownership by setting up a Thai limited company using Thai nationals as nominees.

However, the Thai authorities have recently stepped-up investigations into such practices, investigating more than 400 companies in popular tourist areas such
as Phuket and Bangkok. Nominee shareholding, where Thai nationals hold shares on behalf of foreigners, is illegal under Thai law and can result in severe penalties. Lai advises against taking this legal risk as it can lead to unintended consequences, such as losing control of the limited company and the property it holds, ultimately undermining the very intention of owning a dream home.

To prevent money laundering, Thai law also requires that money used by foreigners to buy property must be transferred from overseas, with proof of the transfer issued by the bank. Even if a foreigner has sufficient funds in a Thai account, the money must be repatriated and then re-transferred, he says. The transfer of foreign currency to a Thai bank account is then evidenced by the issuance of a Foreign Exchange Transaction Form (FET) or bank letter. Lai points out that this FET is essential for property registration at the Land Department.

“We work with five of Thailand’s top 10 developers as their exclusive master agent, handling sales for 49 percent of their project quotas,” says Lai, adding that the company offers end-to-end services, from house hunting and legal advice to management and rental services for foreign home-owners.