Impacts of land law on foreign investors

Meir Tlebalde, ceo, Sunwah Kirin Vietnam and Nguyen Vu Anh head of Industrial and Business Development, Sunwah Kirin Vietnam

The evolving market conditions present both opportunities and challenges, requiring a well-thought-out approach to leverage for positive investment outcomes. The implementation of the new land price table in 2026 adds urgency for investors to adapt and position themselves effectively in Vietnam’s dynamic real estate market.

There are several key modifications and their potential ramifications for international investors seeking opportunities in the Vietnamese real estate market.

The shift from one-time to annual land payments provides foreign investors with financial adaptability. This flexibility allows them to synchronise their payment strategies with business cycles, enhancing agility and accommodating specific operational needs. Foreign investors can now align payment structures with revenue streams, optimising financial planning for sustained success in the Vietnamese real estate market.

Repaying exempted or reduced amounts during land use rights transfers is a critical consideration for foreign investors. Rigorous adherence to these regulations is essential to avoid negative consequences. Meticulous financial planning becomes imperative, requiring investors to factor in these repayments within the overall transaction costs. Strategically navigating these requirements will be pivotal in maintaining a positive investment profile and relationship with Vietnamese authorities.

Meanwhile, the heightened transparency in land use rights transfer is a positive development for foreign investors. Additional regulations create a more secure investment environment by mitigating risks associated with undisclosed conditions. Foreign investors should embrace this transparency, incorporating these regulations into their due diligence processes to ensure a comprehensive understanding of the transaction landscape and minimise potential pitfalls.

The potential surge in agricultural land prices following the inclusion of “rice” land use rights for enterprises requires foreign investors to reassess their investment strategies. This change may impact the affordability of agricultural land, prompting investors to diversify portfolios or explore alternative sectors. Careful market analysis and risk assessment will be essential to navigate potential cost increases and identify new opportunities within the evolving agricultural real estate market.

In addition, the permission to sell assets on land and transfer land lease rights in industrial parks opens doors for foreign investors in this sector. Strategic investment in such real estate can yield favourable returns. Foreign investors should capitalise on this opportunity by identifying key industrial zones, understanding local demand, and aligning investments with the growing needs of businesses seeking industrial spaces.

The threat of land confiscation for financial non-compliance also serves as a deterrent against land hoarding by foreign investors. To mitigate risks, investors should prioritise timely financial obligations, aligning with Vietnamese regulations. This measure promotes responsible land use practices, fostering a more equitable distribution of land resources and contributing to a sustainable and balanced real estate market.

Elsewhere, the provision for enterprises violating land regulations to still secure land allocations or leases provides a chance for redemption. Foreign investors should view this as an opportunity to rectify past challenges. Engaging with local authorities transparently and demonstrating commitment to compliance can pave the way for a fresh start, allowing previously struggling businesses to contribute positively to the Vietnamese real estate market.

The exemption or reduction in land rent for industrial worker accommodation will influence the real estate rental market. Foreign investors can benefit by strategically positioning themselves in the rental sector, taking advantage of increased supply. However, a thorough understanding of local demand dynamics and adapting to potential shifts in the rental landscape will be crucial to maximising returns in the long run.

Furthermore, the removal of the land price framework signals a shift towards market-driven pricing. While landowners may benefit, foreign real estate businesses should anticipate increased land clearance costs. Strategic planning, risk mitigation, and aligning land acquisition strategies with market trends will be essential to navigate this change successfully and maintain a competitive edge in the evolving Vietnamese real estate market.

Adapting to the evolving market conditions, understanding and complying with regulations, and strategically positioning investments are key to success in Vietnam’s dynamic real estate market after the new law comes into effect.

A new property market cycle is beginning for Vietnam The new Land Law should promote market mechanisms, regulate interest groups, put people first, and minimise disparities between real estate businesses.

Vietnam's Land Law overhaul: transforming land acquisition Vietnam's land acquisition landscape is poised for a transformation with the upcoming enforcement of the recently approved Land Law, scheduled to take effect on January 1, 2025.

Fresh land law will offer beneficial economic utility The adoption of the revised Land Law in January was billed as one of the most important legislative tasks of the latest National Assembly. It will come into effect in January 2025 and should be viewed as a strengthening of the foundation underpinning the Real Estate Business Law and the Housing Law, both passed last November.