Industry Spotlight: Identifying Opportunities in ASEAN Real Estate

With the establishment of the ASEAN Economic Community at the end of 2015, many ASEAN members have witnessed increasing harmonization of economic policies. The removal of trade barriers and increased openness throughout ASEAN is partly a result of the implementation of pre-arranged regional integration and standardization measures, but is also caused by growing competition between ASEAN members themselves to attract foreign investment. Real estate is one area which has been the target of liberalization efforts in many ASEAN member states in recent years, and has subsequently witnessed considerable growth.

Between 2005 and 2014, investments reached US$28.19 billion, largely coming from investors outside the region. Investment in the sector is poised to continue growing at impressive rates in the coming years as restrictions on foreign investors are eased and the region’s emergent middle class exercises increased spending power. Emerging markets including Vietnam, Indonesia, and Cambodia have been conducting reforms to make foreign involvement in their real estate markets more accessible, presenting a wide range of opportunities. However, considerable obstacles remain when investing in ASEAN’s real estate market. Despite an improving investment landscape, many countries continue to have highly restricted land ownership laws, including short land tenures and restrictions on the ability to re-lease and renew land. As much of the region grapples with high urbanization rates and inadequate infrastructure, governments must balance the desire to attract foreign capital with providing their citizens with affordable housing.

On July 1, 2015, Vietnam’s Housing Law and Law of Real Estate Business came into effect, greatly liberalizing foreigners’ access to purchasing real estate and making Vietnam one of the most open countries in Southeast Asia to overseas real estate investment. Together, the new laws allow foreign investors to own, sell, and transfer properties. While land is owned by the Vietnamese government, foreigners can hold titles on residential properties for up to 50 years, with the opportunity for a 50 year extension. Further, individuals married to Vietnamese nationals can own for a longer term.

Meanwhile, foreign companies, branches, and representative offices licensed to do business in Vietnam may purchase and sell properties for the length of the period declared on their investment or operation certificate, and developers are permitted to lease houses and buildings. In an effort to protect consumers, developers intending to sell or lease units before construction is finished must receive a guarantee from an authorized bank. Foreign buyers may purchase property that is part of a development, such as an apartment, condominium, or townhouse, but not standalone units. Previously, foreign investors could only rent property for up to a year at a time unless receiving a land use right when operating under a joint venture with a Vietnamese partner, and individuals faced a multitude of restrictions.

The new legislation makes Vietnam an attractive location for foreign investment in real estate, as is evidenced by a study by the Urban Land Institute and PwC that rated Ho Chi Minh City as the fifth best real estate investment prospect in the Asia-Pacific region, trailing only Tokyo, Sydney, Melbourne, and Osaka. In 2014, FDI inflows into real estate was three times 2013 levels and construction five times 2013 levels, making them the second and third largest recipients by sector, behind only manufacturing.

Together, real estate and construction captured US$3.6 billion in FDI during 2014, representing 18 percent of the country’s total. Leading extra-ASEAN investors in 2014 included South Korea, Hong Kong, Japan, while the U.S., EU, and Canada all saw sizable increases in real estate investments in Vietnam.


Though it lacks the size and industrial capacity of Vietnam and Indonesia, Cambodia is a frontier market which has experienced an increase in foreign participation in real estate in recent years. Though foreigners cannot own land in Cambodia, 2010’s Foreign Ownership Property Law opened foreign investment in condominiums and strata-titled units. Foreigners are restricted to the upper floors of buildings, limited by certain locations, and cannot comprise over 70 percent of a given building.

According to the consultancy CBRE, the number of condo units in Phnom Penh has risen from just 178 in 2009 to 2,095 in 2014, and projects an additional 9,000 between 2015 and 2018. Property Guru notes that investors have been registering rental returns between five and seven percent per year and annual capital growth of between five and 7.5 percent. However, the rapid growth in units may outpace local demand, as most are unable to meet the costs. Further, there are suspicions that Cambodia’s real estate sector is being used for money laundering. Chinese developers have been aggressive in the region, and some see Cambodia as a vehicle for Chinese entities to get their money out of China and convert their wealth to US dollars. Despite these concerns, Cambodia has potential to grow thanks to increasing regional integration and consistently strong GDP growth figures.


The real estate market in ASEAN is undergoing a period of reform, bringing both opportunities and uncertainty. Several countries have eased their restrictions to foreign ownership in recent years, though the breadth of property rights is often unclear. For example, Myanmar’s draft Condominium Law allows foreigners to own up to 40 percent of a condo building, but does not allow them to manage them. As such, it remains unclear whether owners will be allowed to rent out their properties. Despite liberalization efforts, foreigners still face considerable restrictions throughout the region, and political instability in countries such as Thailand lead to additional uncertainty. Even developed markets like Singapore pose questions. Although the city state is an alluring locale for new office projects as it emerges as a headquarters for companies operating in ASEAN, concerns over affordability and foreign influence have led to restrictive measures controlling foreign participation. Nevertheless, ASEAN is a dynamic and rapidly changing real estate market trending towards liberalization, presenting intriguing opportunities both in the short and long term.

Source: Asian Briefing