There has been an argument that under the Law on Real Estate, foreign investors may not engage in the activities of purchasing or leasing of buildings for further second sale or subleasing in Vietnam. This is because under Article 10.1 of the Law on Real Estate, a foreign investor is expressly allowed to:

• invest in the creation of buildings, construction works for sale, lease and finance lease. Article 18 of Law on Real Estate defines "creation of a building" to include: (1) investment in construction of new houses and buildings or (2) investment in upgrading and repairing existing houses and buildings; and

• invest in the renovation of land and infrastructure attached to land for lease of land with attached infrastructure.

The scope of real estate business of a foreign investor under Article 10 of the Law on Real Estate Business does not include any reference to purchase or lease of buildings for further secondary sale or sub-leasing.

However, by virtue of the definition of “creation of a building” under Article 18 of the Law Real Estate, one could also argue that if a foreign investor (1) purchases or leases existing buildings and then (2) invests in upgrading and repairing such buildings, the foreign investor should be allowed to conduct further secondary sale or subleasing. However, a recent official letter of the Ministry of Construction dated 12 February 2014, without giving a clear reason, the Ministry of Construction takes the view that a foreign investor leases a building or construction work and repairs or upgrades such building or construction work for subleasing is not within the permitted scope of real estate activities under the Law on Real Estate. According to the Ministry of Construction, a foreign investor should wait until the amended Law on Real Estate for subleasing of existing buildings.