Connect with James Lai:
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Email: [email protected]
Businesses always revolve around one common principle, and that is demand and supply. The Real Estate sector is no different. In recent years, Vietnam’s rising opportunities have drawn many outsiders into the country, which in turn increased the demand for both commercial and residential property.
Vietnam has been a hot topic in the industry lately, which is why today James Lai joins us to give you a deeper understanding of the Vietnam Real Estate market.
- Why invest in Vietnam Real Estate?
- How does Vietnam compare to other Southeast Asian property markets?
- What are the rules for foreign investors?
- Which areas to look into as a foreign investor?
- Are there any risks involved? What are they?
As it can be difficult to catch some minor errors, transcripts may contain a few typos or inaccuracies.
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One belt one road policy: The one belt one road policy (OBOR), now known as the Belt and Road Initiative(BRI) is a strategy initiated by President Xi Jin Ping of PRC. The main concept is to develop the country’s economy and relation with other countries by helping each other grow together. As of now, the one belt one road project involves more than 70 countries across the globe.
Flipping Real Estate: The term flipping refers to a specific strategy when it’s associated with real estate. This is when someone buys a property not to use it but to resell them for profit instead.
US-China trade war: The US-China trade war is an economic clash between the two countries which started in 2018 when US President Trump decided to impose tariffs on China as he believed them to be stealing intellectual property from the US.
SST (Sales and Service Tax): SST is composed of two elements; sales tax and service tax. Unlike GST (goods and service tax), which has a wider range, SST is a single staged tax system levied only on the service industry and manufacturers.
PST ( Provincial Sales Tax): PST is a type of tax service, which is imposed when a good or service is obtained by purchase and is brought inside a certain Province. The charges vary depending on the Provinces.
Alright, let’s get back to the transcript of the show. Enjoy!
Darren: So hey, James. Hey, how’s it going?
James: I’m good, I’m good.
Darren: That’s good. Yeah, thanks for coming to the show. And then it’d be great if the audience could know more about you like, would you mind telling me and the audience more about yourself and then your work.
Darren: I see. Yeah, because I think we talked about before, I really want to know more about Vietnam. So I’m sure we both know, right, in the recent years, a lot of oversea investors, especially Asian investors, are looking to Vietnam real estate and they’re very interested. Can you explain a bit more on like, how the trends got started?
James: Right. The trend actually started in 2015 July when Vietnam government allowed foreign investors to buy real estate in residential. Basically they allow overseas investor to buy residential projects in Vietnam. So that’s where the trend started. And, actually at that time where the ECP, Ho Chi Minh city like Hanoi, they went up a lot. So during the time actually Ho Chi Minh went up a lot in D one D two, D one D seven and that kind of area they went up a lot. And in the past one year due to the trade war between Hong Kong and new between China and US. There’s a lot of manufacturers going to Vietnam, to send up industrial plots and stuff like that. And there’s a strong demand for living, especially in northern Vietnam say Hanoi and horrifying and that Kind of area. So that drove another wave of demand for investment in Hanoi. So recently we are starting our seminars in Hong Kong, on our Vietnam projects, we see a lot of people realize the fact that they control the COVID-19 dynamic very well in Vietnam. So they have developed the confidence to invest in Vietnam as well.
Darren: Yeah, I see. Yeah, it seems like there’s a lot of things happening obviously before and after COVID. And actually for the audience who might not understand about Vietnam, what are some cities areas or type of assets that oversea investor tend to be interested in when it comes to Vietnam real estate?
James: It’s basically in key cities like Ho Chi Minh or Hanoi and some of the secondary cities we seldom hear about it, but mostly in the core areas in Ho Chi Minh D One or Hanoi in around Westlake and mining area and stuff like that.
Darren: Yes, I see and for those areas it sounds kind of odd but is there any areas that you think that is a bit overrated?
James: Right now I think Ho Chi Minh is overrated for sure because we see some of the Hong Kong developers like Hong Kong land they have projects in D one in Ho Chi Minh. They are selling for like 5-6000 per square feet. So it’s actually- we see it is quite overpriced because we can already buy another apartment in Bangkok and maybe in Hong Kong, some of the old apartments you can trade around 5000 square feet already. So we see the whole shipment is a bit overpriced. While other areas like Hanoi, we still see a beautiful opportunity around the area especially because our strategy is just to invest in the key areas and in the key cities.
Darren: Yeah, I see I see. So, when it comes to investing in Vietnam right, for the investment process or the norm from different cities, countries what are some things that investors need to be aware of, when it comes to that?
James: Actually, the reason why we started to invest in Vietnam is because the taxation and purchasing process is very simple. Say for example, all we need to do is to sign the offer and we can just go to the coast of Vietnam inside the former SMP and the Taxes, we don’t have any capital gain; we don’t have any PST, SST and stuff like that. And this stage Vietnam government is still encouraging investors from outside Vietnam, so they don’t have any taxation on foreign investor yet. While obviously, the process is very smooth. We just spend a weekend and sign the SMP and that’s really it.
Darren: I see. So, you know, like I heard a lot of people kept talking about how it’s very hard to get your money out of Vietnam after selling the real estate. Is that true? And also, what are some potential risks and for oversea investors that might not be aware of when it comes to investing real estate in Vietnam?
James: Okay, so we basically have experience on assisting our investors to get money out from Vietnam and as long as it’s properly taxed, and the money is record clean, then there is no problem for the money to get off from Vietnam. So, yeah, we obviously we heard about a lot about people complaining how difficult money can get out from Vietnam but in practice, we don’t see any problem with that.
Darren: I see. Okay, so in my head, right because like for the past couple years, like I think someone asked me about investing in Vietnam as well. And I now looking back it’s kind of missed out because there’s a huge trend as you mentioned before, there are a lot of manufacturers from China moving to Vietnam and whole ecosystems are popping out. So do you think that’s still a relevant thing for the next couple years? And then what do you think are the outlook opportunities like what is the mystic pieces coming together that you feel has opportunity and a reason why should invest in Vietnam.
James: Okay, it’s all about supply and demand, right? Because there’s a population growth with where the population has a good affordability as well as the demand for living. There’s no doubt the real estate price will go up. So we already see the trend in the past six to 12 months in areas like Hanoi because they are situated in the capital of Vietnam and also in northern Vietnam rich close by China, and previously they have benefits by one belt one road policy by China which is the first stop outside China. So there’s a lot of infrastructure coming in and Hanoi say that metro, they have demand for manufacturers around Hanoi and the price is still cheap around the area. So we do fall costs in the coming two to three years. The price, the real estate pricing in Hanoi will still have room to go up.
Darren: I see. I see. So for people who are curious because a lot of people will be like, “Hey, I just want to invest in Southeast Asia,” and obviously you’re pro Vietnam. How would you describe like, if you’re a Hong Kong investors or any investors in Southeast Asia? How would you describe different parts of Southeast Asia why you should invest in there why you shouldn’t and vice versa, like I want to know your point of view on that.
James: Okay, so as a family fund, I have always been questioned why we have to always look around. So I myself, always look around countries in Southeast Asia before I go get into Vietnam, I actually studied markets like Thailand, like Malaysia, Taiwan, Japan, and we always look into these kind of areas, but the problem with other areas is either the price never go up, or they already oversupply. Say for example, in Thailand, there’s a lot of small units coming in, in the market and especially in Bangkok, so it’s a bit of an oversupply there and the population is quite old. Why Vietnam is especially attractive to us because the population is young. And there’s a lot of rich people, and we see people getting rich and richer. So, obviously, if we’re talking about 1000-2000 per square foot in in Vietnam, in the core city and a really good area that’s an opportunity right now to get into.
Darren: Yes, I see. So it sounds like you’re among- Obviously you do different areas like I mentioned before UK, Canada and Vietnam. So it sounds like your focus is going to be mainly on Vietnam. And so I’m also curious too like what’s your next couple years plan for your funds because I want to know more about your projects coming up.
James: Right because doing this COVID-19 pandemic, our family fund actually learnt a lesson. Especially when we are trying to invest in UK and Canada. Because Canada and UK, they protect more. The problem we encountered right now in UK is some of the tenants we can’t take rent from them. And the government has already imposed measures where we can’t ask for out stamp, we can’t ask for it, we can’t sue them, we can’t kick them out because of COVID-19. And this is only one of them. One of the problems we faced in the past few months, but more importantly is we see we can’t kick out tenants that are right with the contracts fine. So that’s a huge problem for us because we don’t have any protection from the tenant because we don’t have a contract in place so they can actually consume our unit, depreciate our products. That’s not a good thing to us. And at the same time, we need to pay for mortgage and this is something we always need to bear in mind when we are investing in a mature market like UK and Canada. When it comes to an extreme, the case is going to vary extremely, we have a huge problem with our cash flow. While we see what we see in Vietnam, if the tenants stop paying rent, we have a system from the lawyer and a police to kick the tenant out no matter how the situation is. So this is more protection to investors like me. So, this is the problem we see. This is how we compare different markets right now.
Darren: I think it’s very fair. I mean, like, it doesn’t sound great, but then for a fun point of view, you might have to do some kind of measure like that. So no, it’s kind of interesting because like from every landlord or every investor they have different points of view. And then you know, whatever works, right. So like, I think I have one more last question in my head. So for someone who wants to learn more about, you know, become like a fund, you know, for example you help with family funds and stuff like that, what are some things that you do every single day that, you know, no one really talks because no one really talks about like, “Hey, if I’m a professional real estate investor, like a fund, what’s my daily look like?” I’m just curious about that.
James: Okay, so I basically receive projects every week, every day, from different sources, like agencies, bankers, and all that and all I need to do is to go through tech projects and make comparables that is very important, especially when the agency tells you “Oh you have like 7%-8% yield and you need to go into the area and find out is it really, that you’re talking about debits, especially because we are living in the internet era right now. It’s very easy to find out whether a statement is true or not right. So, whether the developer is reputable whether the information provided by the agent is true or not it’s actually very easy to find out. So what I practice myself in the past many years is to quickly scan through all the floor plans, all the projects very quickly and come up with an idea whether the project is reliable or not, that is very important. So once it’s reliable, we can talk about it on the next stage. We are going to meet and we’re gonna see if we’re gonna try that kind of area and all that yes.
Darren: Yeah, because like, I’m sure everyday, you’d be like, okay, “Is it just five or ten different investment coming to your table” and you’d be like, okay, it can be not what it said, it can be right or wrong. This is the kind of art that takes a long time to experience. To have someone like you, every single day, just practice and practice with practice. And 1000 units at once right, so it’s gonna be tricky. So I think that like the questions, I think it’s pretty good. Thanks for your answers. And then what what kind of takeaway would you like the audience know like one takeaway from this video?
James: Um, I think like I said before, Vietnam is still up, especially after the COVID-19 pandemic, we see way more opportunity in Vietnam, in the coming many months in all years in Vietnam. So obviously, we have seminars, we have events every week in Hong Kong. So if there’s an NPC interested they can come to me and we can we can have a quick chat about it.
Darren: Yeah, so for the call to action, right, like how would people try to find more or learn more about you or or meet up with you. You know, how would they find more about these events that you guys are hosting.
James: Oh, so, every week we have seminars in NorthPoint, our hotel. Basically my partner is doing the event Louis Chiu. And we just talked about right now, the latest project we have is our fund. So we have set fund last year and we have already purchased residential slash commercial projects in Hanoi and we are trying to sell the project right now. So I was very fortunate after the COVID-19 measures has been relaxed. In Hong Kong we have received very good reactions. But we still have units available in the project. So if any interested party can come to us.
Darren: That would be great. Okay, so I’ll add everything in the show notes, and then people can find you through the links. And then I want to say thank you for your time because like, I know, it’s a lot of time for you to do all that kind of stuff. So I really appreciate it. Thank you. Thanks for coming in.
James: Thank you very much. Thank you. You’re eyes are a little bit sweaty, are you okay? Are you tired?
Darren: No, just a lot of interviews, a lot of interviews with different people. So like, I’ve been kind of thinking about questions and it’s not easy, right? And at the same time is that like, we just want more people know more about real estate and what to do. And then I think that thinking about know, like, what kind of questions people are interested in, what are some kind of things that people want to know more so this is what Denzity is about. So it’s fine, but thanks for asking.
James: Yeah, yeah you look tired man, but anyway take some rest. Take care man.
Darren: Yeah, have a good one then. Thank you.
James: Thank you so much, bye!
James：對。這一趨勢實際上始於2015年7月，當時越南政府允許外國投資者投資住宅區。基本上，他們允許海外投資者在越南購買住宅項目。所以那是]趨勢開始的地方。而且，實際上在當時的ECP，胡志明市像河內，他們漲了很多。所以在這段時間裏，胡志明在D 1 D 2，D 1 D 7以及類似的地方上漲了很多他們花了很多錢。而在過去的一年中，由於香港和新中國之間的貿易戰還有我們。有很多製造商去越南，把工業用地之類的東西送到越南去。以及生活需求旺盛，尤其是在越南北部，比如河內的那種地方。囙此，這又推動了對河內投資的新一波需求。最近我們在香港開始了關於越南項目的研討會，我們看到了很多人意識到，他們在越南很好地控制了COVID-19的動態。所以他們有也培養了投資越南的信心。
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