Establish foreign-owned real estate trading company in Vietnam

With a population of over 90 million people and a fast growing economy. Demand for housing in Vietnam is currently very large. Foreign investors are allowed to set up real estate trading company in Vietnam. However, this is a conditional business, so investors should pay attention to the provisions of law.

>> Read more: Consular legalization of documents for investment in Vietnam

1. Features of real estate business activities in Vietnam

Unlike many countries in the world, Vietnamese law stipulates that land is “owned by the people” so organizations and individuals are not allowed to own land. The transfer of real estate in Vietnam is done through “transfer of land use rights”. As such, the Government of Vietnam does not recognize real estate ownership but instead of land use rights.

Because it is a special commodity in the economy (endless demand but limited supply). Activities of buying, selling, transferring land with foreign elements in Vietnam are very limited. This feature comes from the political and social awareness of the Vietnamese Government.

2. Vietnam’s commitment to receive investment in real estate business

Schedule of commitments on service trade of Vietnam when joining WTO does not have CPC code for real estate business. This means Vietnam does not have any negotiations or commitments related to real estate business. And the Vietnamese government’s investment receiving agency has no obligation to approve if the foreign investment project has a real estate business.

However, foreign investors still have the right to establish; contribute capital, purchase shares or contribute capital in real estate trading company as prescribed in Article 11 of the Vietnam Real Estate Business Law 2014.

3. Real estate trading company with foreign capital in Vietnam

Due to the activities of transferring, buying and selling land, real estate business is on the list of conditional business lines. Specifically, Vietnamese law stipulates that real estate trading company have legal capital of not less than 20 billion VND. The legal capital level is determined based on the charter capital of the enterprise. Real estate trading company does not need to carry out the registration procedure to certify the legal capital but it is responsible for the truthfulness and accuracy of the capital.

In addition to the legal capital, foreign-invested enterprises doing business in real estate have their business scope restricted. The Law on Real Estate Business stipulates that foreign-invested enterprises are only allowed to trade in real estate in the following forms:

– Rent houses or constructions for sublease;

– For land leased by the Vietnamese Government, the company is allowed to invest in building houses for lease; investment in construction of houses and construction works other than houses for sale, lease or hire purchase;

– Receive transfer of all or a part of real estate project of the investor to build houses, construction works for sale, lease, lease purchase;

– For land allocated by the Vietnamese Government, the company is allowed to invest in building houses to sell, rent or lease-purchase.

It can be seen that the establishment of a real estate trading company of foreign investors in Vietnam will be very difficult due to the large amount of legal capital required (from 20 VND billion or more) and the narrow scope of business. However, if foreign investors have sufficient financial capacity and determination, can still establish a real estate trading company in Vietnam.

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