Real Estate Sector Set to Attract More Investors

Vietnam Article

Nguyet Nguyen

This article first appeared in the August 18-24 the land is for agricultural or forestry issue of Vietnam Investment Review. purposes. This law provides that FIEs may invest in the real estate sector by a new form not previously provided for Vietnam’s real estate market has in the 2003 Land Law: investment witnessed several positive changes through acquisition of shares/capital in 2014, and investment in this as land use rights. Nguyet Nguyen sector from foreign-invested Third, pursuant to the 2003 Land Senior Associate enterprises (FIEs) is again on the rise. Law, land with an inland or coastal +84 8 3513 0351 Instrumental to this revival of the real water surface and fluvial or coastal nguyet.nguyen@ estate market have been the positive mayerbrownjsm.com alluvial sediments could only be used changes brought about by the 2013 for agricultural, forestry, aquaculture Land Law. or salt mining purposes. Nevertheless, First, the 2013 Land Law, by its investors in realty often wish to use provisions, promotes equality between such land for other business domestic and foreign investors by purposes, e.g., for marina, eco-resort, permitting FIEs to apply for land entertainment, commercial or other allocation with collection of land use housing businesses. The lack of an fees for development of residential adequate legal frame to govern the use projects for sale or sale/lease. Such of the above kinds of land for other provisions have solved the rather purposes, however, made it difficult for complicated problem in the (now investors to formulate their plans for superseded) 2003 Land Law, where development on such land. FIEs initially leasing land with a The 2013 Land Law has finally 50-year term for housing development resolved this problem by permitting were required later to perform development on land with an inland procedures to switch to leasing the or coastal water surface and fluvial or land with a 70-year term, or to pay coastal alluvial sediments for non- the difference between the land use fee agricultural as well as agricultural and the 50-year land rental when they purposes. sold their houses. Fourth, the 2013 Land Law allows for Second, the 2013 Land Law allows investors of residential development FIEs to acquire shares/capital in the projects in urban areas to assign the form of land use rights, except when land use rights through division into lots upon the completed construction of the And fifth, pursuant to the 2003 Land Law, investors infrastructure and the discharge of financial with real estate projects would have had their land obligations in respect of land. Pursuant to this recovered if such land was not used within 12 provision, investors with housing development consecutive months or if progress with the land use projects in urban areas do not necessarily have was more than 24 months behind the schedule stated to sell their houses; instead, they may sell land lots in the investment projects, starting from the date of to family households and individuals to construct the on-the-site land handover, unless permitted by their own residential housing. the competent State authority issuing the land assignment or land lease decision. Specifically, depending on the demand for urban development, the capacity to mobilise resources However, the 2013 Land Law has integrated positive and the investors’ requests, provincial People’s changes for investors in this issue by permitting Committees shall determine the areas where the them – where the land assigned or leased out by the land use rights in respect of land with constructed State for project implementation is not used within infrastructure may be transferred to family 12 consecutive months, or where progress with the households and individuals for their own land use is 24 months behind the schedule stated in construction purposes after having obtained the investment projects – to apply for an extension written approving opinions from the Ministry period of 24 months and pay to the State an amount of Construction. equal to the land use fees, the land rental payable in the behind-schedule period. Should the investors at Areas in which land use rights may be the end of the extension period still have failed to put transferred must have technical infrastructure the land into use, the State shall recover the land. works constructed in accordance with the approved detailed planning for connection to the general In fact, to develop a real estate project, investors infrastructure of the areas before land use rights must go through many steps and obtain many may be transferred to residents for their own different approvals and permits from the competent construction of residential houses. State authorities, so real estate projects that are delayed or behind schedule are quite common in The above provision is considered one of the most reality. With the changes in the 2013 Land Law, it is positive changes in the 2013 Land Law as it permits hoped that investors in real estate projects may be investors with housing projects in urban areas to more proactive and flexible in planning their project divide land into lots for sale. Previously, the 2003 development schedule. Land Law did not allow investors with housing development projects in urban areas to transfer to All in all, with the above provisions in effect, there is family households and individuals land use rights a strong belief that Vietnam’s real estate market will in respect of bare land lots without a built house. attract more investment from foreign individuals and entities in times ahead.

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