The Expert’s Eye – May 2021

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The Expert’s Eye – May 2021

Interview with Jean-Nicolas Phan, co-founder of Redstone Asia Ltd

Hello Jean-Nicolas, give us an overview of the activities of Redstone, and for how long you have been established in the region.

Hello Nicolas, first of all thank you for granting us this interview. Redstone was established 5 years ago in Hong Kong to meet a growing need for support from foreign investors wishing to enter the Vietnamese real estate market. Being French of Vietnamese origin, creating this bridge is the natural conclusion of a desire to establish a link between these two countries which are close to me.

We provide a local connection and essential support in a growing market but still very recent, the language and cultural barrier can sometimes be difficult for foreign investors to understand and manage. This adds to the challenge of operating a real estate market that is quite different from the French market.

We offer complete and diversified services, including of course residential real estate intended for individuals, for which we cover the purchase, furnishing, management and resale, but we also work with professionals seeking opportunities in the fields industrial, commercial and tourism. We share our knowledge of the market with our clients in order to allow them better decision-making in the management of their investments in the country.

Our customer coverage is now international, and we work with customers from all over the world, such as the United States, Canada, France, Spain, Switzerland, as well as Australia, New Zealand, Hong Kong and Singapore.

Since you started working with Vietnam, what are the major changes that you have noticed?

The evolution of Vietnam has been considerable in recent years, and in particular since the implementation of the new law of July 2015 by the government which allows foreign investors to buy real estate with title deed for a period of 50 years renewable 50 years.

The country is opening up to the outside world, signing more and more business partnerships with countries around the world such as the countries of the European Union recently. Important changes are also underway in the internal market, especially regarding the development of infrastructure on which the government has made it a priority. This includes transport with the arrival of new metro networks in Ho Chi Minh City and Hanoi, the construction of several airports are also planned in the country to meet the growing demand for tourism, including the new Ho Chi International Airport. Minh Ville scheduled for 2025. The development of the road network is also a priority for the country’s authorities to solve the problems of fluidity of the network. This requires the construction of new roads, highways, bridges and tunnels across the country.

The cityscape of Ho Chi Minh City can be compared to Shanghai 25 years ago and aims to follow the same astronomical evolution to become a central economic zone in Asia within the next ten years. The city also aims to build its own “Silicon Valley” in Vietnam, which is already the 3rd largest e-commerce country in Southeast Asia, despite a still limited digital infrastructure, and aims to be in the top 50 worldwide. in the Artificial Intelligence industry by 2030.

You have just explained to us the progress already made by the country, but in your opinion which are the areas where Vietnam should focus its attention and its investments?

The peculiarity of Vietnam compared to its neighbouring countries is that the country is trying to develop on several fronts. For example, Vietnam competes with China in manufacturing and industry, Singapore in new technologies, and Thailand in tourism. So there are different areas of the country that specialize in different aspects of the economy.

The capital Hanoi is the center of political decision-making with geographical proximity to China. The border area is the largest industrial area in the country with the port of Haiphong near Hanoi covering nearly 50% of the country’s maritime traffic. Ho Chi Minh City in the south-east of the country is the economic and technological capital of the country. Other cities like Vung Tau, Nha Trang, Hoi An and Phu Quoc are strong developing tourist areas, while a city like Da Nang in the center of the country offers both investment opportunities in industrial areas. like tourist.

Vietnam being a developing country, the middle class of the population is growing very strongly every year, similar to China a few years ago. In addition, the country is ranked 2nd globally in terms of growth of wealthy people and this generates at the same time a strong demand for a better quality of life.

What is the place of the French community today in the economic development of the VN and its influence?

Although the French community has always been present in Vietnam, in particular thanks to the historical side (former French colony until 1954), the attraction for the quality of life and the food, this has developed strongly in recent years. thanks to the country’s economic development and its international openness. The French community is estimated at over 10,000 people, made up mainly of entrepreneurs, VIEs and retirees. Most of them live in Hanoi, the political capital located in the
north of the country, or in Ho Chi Minh City, the economic capital, a very dynamic and more cosmopolitan city. Meetings are regularly organized by the various local organizations such as, for example, the French Chamber of Commerce and the Association of French Abroad.

One can very easily notice a strong French influence in the Vietnamese lifestyle, especially by the architecture of the buildings or the many cafes available on every street corner. On the real estate and administrative side, France has clearly left a strong influence in the country. A good example is the use of the services of a notary as an intermediary between two parties in a transaction, as in France.

As we have just seen, the VN seems like a promised land for a lot of investors or entrepreneurs. What about real estate investors? Does the market still have room for appreciation, or is it already a little saturated?

As mentioned above, the real estate market, although it has changed a lot in recent years, is very young and is only at the beginning of its evolution. Compared to different Asian cities such as Hong Kong, Singapore, Bangkok, etc. prices are much more affordable and the potential for capital appreciation is substantial.

Although some areas like District 1 in Ho Chi Minh City have seen prices increase faster than others in recent years, opportunities are everywhere, especially during these complicated times of the pandemic. This price increase was mainly caused by the fact that downtown Ho chi Minh City is very dense and free spaces are scarce, which created a feeling of scarcity, unlike Hanoi which is spread over a larger area and therefore did not experience the same evolution of property prices.

To give you an idea of ​​the potential, there is a total of 97 million people in Vietnam, the 3rd most populous country in Southeast Asia. The country's three largest cities have a combined population of around 20 million. The rural exodus should therefore continue and drive the development of large cities, in particular thanks to the increase in professional opportunities created by the development of the economy.

As for tourism, with more than 3000 km of coastline, Vietnam has countless tourist areas with great potential.

Under what main conditions can a foreign investor buy real estate in the VN, and are financing possible?

Any foreign investor can invest in Vietnam as long as they can enter the country legally with a visa. Not all projects are open to foreign investment, builders must first obtain government approval, and the quota of real estate sold in each project to foreigners must not exceed 30% of the total number of apartments (or 10% maximum for houses).

It is possible to obtain a bank loan but only for investors living on site and for residential purposes. For non-resident foreign investors, it is not currently possible to obtain a mortgage, but it is possible to take advantage of a payment plan for certain projects under construction when the developer offers it.

What are the pitfalls to avoid for someone considering a purchase from VN, and what advice can you offer?

While there are more and more options and information available to an investor, particularly through the internet or with the help of a local agent, a lot of difficulties can easily arise if the process of investment is not well controlled. This can lead to financial losses of course, but it can also lead to the loss of good investment opportunities for the buyer.

Too often, we have been contacted by clients who have invested on their own or through a local agency and then come back to us, subsequently understanding the limitation of not having an expert at their side to support them in this process. investment, and this with the sole aim of reducing costs to the strict minimum.

Communication with local people can be complicated, especially during more advanced discussions such as the legal part or the terms and conditions of purchase. Some builders or agents do not hesitate to sell before they have acquired all the necessary authorizations, or to sell projects which have low potential, but which earn them a higher commission.

Being supported by an expert to invest in a foreign country like Vietnam remains a key element in ensuring that the investment goes in the best way. It is important to have trusted representatives on site who can monitor your property and intervene quickly if needed.

A word from Alpha Prime

As explained by Redstone, Vietnam is a country that has made tremendous progress in recent decades, whether in real estate, or in economic development and free trade with the rest of the world.
It has become the backbone of many Asian companies, especially Chinese, anxious to produce at lower cost, but with high quality standards, and export possibilities facilitated by its network of free trade agreements.
Vietnam has also become a promising market for foreign companies wishing to distribute or sell their products there, with a local population that gets richer from year to year, adopting Western consumption models.
The regulatory framework, in particular to obtain a business license for foreign companies, or a work permit for individuals wishing to settle there, remain quite restrictive, and the assistance of a professional remains necessary to avoid pitfalls, and optimize its installation in this developing country.

Alpha Prime assists you for all your projects in Vietnam, and provides you with services calibrated to your needs thanks to its experience, its expertise, and its network of local partners.

Contact our teams for more information, or get our 2021 guide to Vietnam!

Redstone Asia Ltd Contact

Jean-Nicolas Phan
Redstone Asia Ltd
Tel: +852 9444 0329

Contact our professionals for more details

Tel: +852 9248 4192

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