Commercial real estate investment in Ho Chi Minh City – A level playing field for foreign and domestic investors?

•The commercial real estate market in Vietnam is moving towards an open market economy.•Unequal level playing field for foreign developers.•The main differences include leasing period, building type and rent price.•Foreign and local investors can still operate satisfactorily next to each other.

In Vietnam, similarly to other countries with the same system, transformation of the economy from one based on central planning into one founded on market principles, provides incomplete property rights in land and property markets. Nonetheless, cities like Ho Chi Minh City (HCMC) are experiencing strong growth in commercial property markets. Although the real estate market is still suffering from the recession in many parts of the world, commercial property development in HCMC is booming. This paper explores the present privatization process and the changing property rights regime related to the real estate market in Vietnam. Employing logistic regression analysis, this study also examines opportunities of foreign and domestic investors in the commercial real estate market in HCM city centre. The findings of this study show that there is not yet a level playing field for foreign and domestic investors, mainly caused by a different property rights regime for both groups of investors, especially related to land lease conditions. We also find that both groups invest in different categories of commercial real estate. However, this does not necessarily lead to reduced foreign investment in Vietnam's real estate market, which means that the transition and privatization process in Vietnam is still moving in the right direction.