What You Need To Open A New Real Estate Company In Vietnam

Legal/Law, New incorporation, Trending, VNBG

What You Need To Open A New Real Estate Company In Vietnam

By 2050, the population of Vietnam is expected to reach 120 million, having increased steadily from 97.33 million in 2020 to reach that number. In addition, there is a limited amount of inhabitable territory because 75% of the country’s area is comprised of rugged mountains. As a result, the demand for homes, departments, and other real estate assets has expanded significantly.

In addition, the IMF’s October 2021 forecast predicts that Vietnam’s gross domestic product (GDP) will surge from USD 343.1 billion in 2020 to an amazing USD 630.5 billion in 2026. As a result, an increasing number of individuals are considering real estate investments, such as purchasing homes, land, or other real estate properties for a variety of purposes. As a matter of fact, in the following years, the real estate industry is projected to spike up.

If you are interested in starting a real estate business in Vietnam but do not know how to do so, this article will provide you with the necessary information. Let’s dispel the myths about the opening of a real estate company in Vietnam.

What are the conditions for opening a Real Estate business in Vietnam?

According to Vietnam’s Business Law, foreign investors can own a Real Estate company 100%. However, the Government of Vietnam still set a few rules for this business establishment and operations, making it a conditional business.

In addition, Real Estate is a vast company category that encompasses numerous sectors, each of which has distinct setup needs. Let’s examine the primary areas in which the majority of foreign investors in this field are interested…

Sector 1 – Real Estate Development Company in Vietnam

A real estate development company allows you to build property for lease or sales, in Vietnam the most popular Real Estate developers that you can heard of are Vinhomes, Novaland. The law allows foreigners to do business in these fields and it can be 100% foreign owned. But our experience shows that corporate ownership would be an easier structure to be approved for setup than individual ownership.

Therefore, we advise our clients that, either they start out as a prestigious company overseas in the Real Estate development field, or you should open a simple company before adding the Real Estate development business code (VISIC-6810) in the future.

One more thing, foreigners are still not able to buy/own land in Vietnam (as of current laws). Therefore, a foreign owned business, also, cannot buy/own the land where the property will be built. It can, instead, rent the land for long-term and build the property upon.

As an alternative, the foreigners can buy shares from an existing local real estate company, however, the land will be excluded from the list of asset transfer.

The previous Investment Law stipulated that investors must have at least VND 20 billions in capital to establish a Real estate company. However, the new law has removed this requirement; you can now register with a “sufficient amount of capital”, depending on how you can explain the fund to start the business. In fact, as is common sense you cannot rent the land and build a building with low capital. Billions of VND is believed to be sufficient for this Real Estate sector to start. Get ready to be challenged by the authority regarding How you are going to fund your business if you set the capital too small.

Sector 2 – Real estate brokerage, consulting, or management services in Vietnam

To run this business, you must obtain the business code VISIC-6820, and CPC-821 into your license.

This business sector does not require large capital to start with. It used to be subject to the VND 20billion capital requirement before (old Investment law), but has been removed for now. The Government also does not ask you to prove to have significant fund to start your brokerage, consulting or management service in Real Estate. However, you will be required to have at least two Vietnamese employees who have a Real Estate Brokerage Certificate to operate the business.

Steps to establish a 100% foreign-own real estate company in Vietnam

In order to set up a Real Estate business in Vietnam, you must submit your dossier to the Department of Planning and Investment (DPI) in order to gain the Business Registration Certificate (BRC) and the Investment Registration Certificate (IRC). In order to register these certificates, you must have a business address and a legal representative. The subsequent steps are creating a company stamp/seal and opening a bank account. The company capital must be deposited within 90 days from the business license’s issuance, following the opening of the bank account (meaning AFTER the company is opened).

To open a business, besides meeting the specific requirements of the industry, you need to prepare the followings:

A business address: the real estate industry does not have any unique office requirements. Therefore, you have the option of utilizing either the Virtual Office or the Physical Office to register the company. If you are unable to locate an appropriate office, VNBG provides you with a virtual address to use during the process.

Note: Since residential addresses (i.e. apartment) cannot be used to register a business, you should consider twice before accepting someone’s offer to use their residence as your business address.

A legal representative: Every company operating in Vietnam must have at least one legal representative, who might be a Vietnamese national or a foreigner (including you). However, they must acquire a permanent address to be considered citizens. Under any circumstances, if you are not in Vietnam or do not have a legal representative in Vietnam. You can consider hiring a director nominee from VNBG for six months, after which you can send your own candidate or hire one of your own.
Paid-up capital: Since the law does not mention a minimum amount, it merely states that it must be ‘fair’ based on the evidence presented. On the other hand, this capital is the available fund, which will be utilized to cover the business’s operating expenses ( such as paying taxes, paying vendors and personnel, etc). Therefore, you should consider a significant amount of funds till your business can support itself. Specifically for the Real Estate Development Business, the minimum amount of capital should be at least a couple of billions Vietnamese Dong.
Processing time: Approximately three to four weeks pass between the date of paper submission and the registration of a corporation is completed. If the application is challenged or questioned on its feasibility, there will be a few more weeks to be added into the timeline until the doubts from DPI is completely cleared.

Know more from our channel for 10 steps to open and operate a business in Vietnam.

How can VNBG support you?

With our experience assisting many businesses established in Vietnam, your firm will be established in a manner that minimizes both time and expense. In addition, we provide services to help you recruit and manage employees in Vietnam. The services included business operation management (such as accounting, bookkeeping, tax, delivering employment benefits, etc).

The opportunity in the real estate industry in Vietnam is real. It is the result of the large population driving the high demand, the government’s support, and the scarcity of land, rising living standards ect.. The combination of these factors creates chances for entrepreneurs to take part in this business in Vietnam. VNBG is pleased to provide you with cost-effective business solutions to enter the market and operate your company successfully and efficiently in order to help you seize this lucrative opportunity.

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