Property investment in Vietnam, especially from foreign real estate investors, is rising with a growing confidence in the market boosted by government initiatives and greater transparency, it is claimed.
Official figures show that the number of property transactions has begun to increase, particularly for land-related ones. And land prices have increased 10 to 30% in certain parts of Ho Chi Minh City since the end of last year.
In the country’s biggest real estate hubs, Ha Noi and HCM City, there are currently 10 major projects underway that have absorbed more than US$1 billion in bank loans and half of all foreign direct investment this year has been in the real estate sector.
Independent analysts said investors have been interested in a number of new projects, especially luxury developments, indicating that there is money available. The fact that the State Bank of Vietnam has decided to maintain the interest rate at 7% is also encouraging native property investors.
There is concern that Vietnamese property investors have been increasingly looking aboard to buy rather than in their own country and worries about the effect this would have on the growing real estate sector.
The property market slump in the US and Asia has given wealthy Vietnamese the opportunity to own a home abroad and many have actually visited countries like the US with a view to buying, according to Do Thi Loan, secretary general of Ho Chi Minh City Real Estate Association.
She said that demand was high because real estate prices in some US areas were six or seven times lower than those in Vietnamese high-end areas like HCMC’s Phu My Hung.
‘Prices need to come down to attract more investors, but there is no doubt that interest is increasing. We now need to get over the view that everything is a bargain elsewhere for our own real estate industry to flourish. But an increase in the number of foreign real estate investors is encouraging,’ she added.
According to Marc Townsend, managing director of CB Richard Ellis Vietnam, some Vietnamese wanted to own properties abroad so their family or relatives could stay for education, medical treatment, or holidays although many also buy as an investment.
Indeed Loan said that she thinks the government should be clamping down on those that take their money abroad in order to further boost the home market.
Currently there are restrictions on Vietnamese on the amount of payments overseas for real estate in a single transaction. This means that to buy abroad they can only pay in instalments.