CAN FOREIGN ENTERPRISES DO REAL ESTATE BUSINESS IN VIETNAM?

Real estate trade contains many market access opportunities with diverse customer sources, is associated with practical needs of all walks of life, and is rarely outdated. Therefore, the real estate market has always been an investment attraction, becoming a business line that domestic and foreign investors pay attention to. Facing this business opportunity, many foreign investors have been building strategies to penetrate Vietnam's real estate market. So, can foreign enterprises do real estate business in Vietnam?

According to Clause 1, Article 3 of the Law on Real Estate  2014, real estate business activities are divided into (1) capital investment in building, purchasing, and receiving real estate for sale, for transfer, for lease, for sublease, or lease-purchase; provision of real estate brokerage services; real estate trading floor services; real estate counseling services or real estate management for-profit purposes.

First of all, for capital investment in building, purchasing, and receiving real estate for sale, for transfer, for lease, for sublease, or lease-purchase.

According to law on land and real estate trading in Vietnam, specifically in Article 10 and 11 of Law on Real estate trading 2014, Any organizations or individuals wish to conduct real estate trading shall set up enterprises or cooperatives and the scope of real estate trading is determined for domestic organizations and individuals; Vietnamese living abroad; and foreign-invested enterprises. Thus, a foreign enterprise that is an enterprise established under foreign law is not entitled to directly conduct real estate trading activities in Vietnam but must establish an enterprise in Vietnam, called an enterprise with foreign-invested capital.

The amount of foreign investment capital to conduct real estate business is not limited by Vietnamese laws. Hence, foreign enterprises can establish 100% foreign-invested enterprises in Vietnam to conduct this business line.

At that time, according to Article 11 of this law which provides the scope of real estate trading conducted by foreign-invested enterprises:

“3. Foreign-invested enterprises may conduct real estate trading in the following forms:

a) Forms prescribed in Point b, d, h Clause 1 and Point b Clause 2 of this Article;

Specifically:

• Rent buildings for sublease;
• Build houses on the land which is leased by the State for lease; build houses or constructions other than houses on such land for sale, for lease, or for lease purchase;
• Receive total or a part of real estate project from investors to build buildings on it for sale, for lease, or for lease purchase;
• Build houses on land which is allocated by the State for sale, for lease, or for lease purchase;

b) Build buildings on land which is leased out or transferred in industrial parks, industrial complexes, export-processing zones, hi-tech zones, or economic zone for trading for the proper land use.”

Secondly, regarding real estate service trading

It is stipulated in Article 60 of Law on Real estate trading 2014 that “…foreign organizations or individuals are entitled to provide real estate brokerage services, real estate trading floors, real estate counseling, or real estate management as prescribed in this Law.”

Accordingly, foreign enterprises can provide real estate consulting services, real estate brokerage services, real estate management and real estate trading floors.

Along with these provisions, Vietnamese law also stipulates specific conditions, orders, and procedures for carrying out real estate business activities. Therefore, foreign enterprises doing real estate business in Vietnam need to prepare solid legal knowledge for smooth and safe business operations.

If you have any questions about real estate investment and business activities in Vietnam, please don'ts hesitate to contact FDVN.

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