Over the next two decades, Vietnam will be in a demographic golden age. Employment in manufacturing and services has increased. Twenty-five per cent of the population is aged between 10 and 24; the median age is around 30. According to the Brookings Institute, Vietnam has the fastest growing middle-class in Southeast Asia – 18% per annum over the period 2016-20, accelerating from 15% per annum in 2005-15. 

Demographics and a rising middle class: Vietnam’s population has grown rapidly from 66 million in 1990 to 91 million in 2016. This makes Vietnam the third most populous country in Southeast Asia after Indonesia and the Philippines. While the birth rate is low at 2.09, internal migration from the countryside to urban areas will drive urban population growth. The World Bank expects Vietnam’s urban population to grow by 2.4% per annum until 2025, the highest in Southeast Asia 

Employment in the services sector: Vietnam’s economy is still immature, with about 47% of employed persons still working in the agriculture, fishery and mining sectors, compared to 28% in Southeast Asia. Employment in the manufacturing and services sectors has increased substantially in the last two decades. Employment in the services sector in Vietnam has increased from 19% of the workforce in 1996 to 32% of the workforce in 2016. We expect this to continue to rise in the next ten years, boosting income growth. 

Why are sales so strong?
We believe investment into the residential market picked up momentum in 2015 due to stronger economic fundamentals as well as regulatory changes. Since 2011, Vietnam has attracted strong FDI into the manufacturing sector as it became a lower cost alternative to China. Vietnam’s exports grew by 16% annually on average in 2011-16, compared to just 6% for China. As the trade deficit narrowed after 2011, the Vietnamese dong stabilised at USD 21,000 for an extended period. Inflation declined from 9% in 2012 to an estimated 1.4% in 2016, allowing deposit and borrowing rates to fall to 5.0% and 8.5%, respectively, in 2016. 

As confidence in the economy grew, interest in property investment was revived. In November 2014, regulatory changes were made to allow foreigners to buy up to 30% of any single condominium building or a maximum of 250 houses in any one administrative ward. This was implemented in July 2015. Foreigners will be able to own the property for 50 years and enjoy the same rights to lease, transfer or sell the property. Foreigners may extend their home ownership after 50 years, subject to approval. This further stimulated investor interest in Vietnam property. 

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