Vietnam ‘in vogue’ with ex-pats

Property prices in Vietnam increased by 50% on average in 2007, largely fuelled by investors shunning the stock markets in favour of the more gainful investment sectors...

Obelisk International reports that, in 2007, Vietnamese expatriates purchased property en-mass, creating an exponential hike in housing and land prices, prompting the Vietnamese government to draft new laws in a bid to curb soaring prices. The estimated capital injection into the Vietnamese property market reached US$5 billion, mainly foreign direct investment (FDI). 85% of the FDI was pumped into the Ho Chi Minh City (HCMC) property development. Many districts within HCMC saw land prices increase 70-200%.

At present only transfer taxes are payable on the sale of a property, but as most sales are paid in cash, making it difficult for the government to gage exact volumes and collect on capital gains tax.

Property prices in Hanoi & HCMC have tripled in the past year alone – especially in the luxury sector. In 2006 new apartments were sold for US$80,000 but by the summer of 2007 this rose to a massive US$240,000 in Hanoi.

Foreign investors can buy into ‘Pure investment’ property, such as hotels and resorts for rental and leasing contracts by investing in construction and development of the projects – none of which can be for their own personal use.

A foreign citizen can own property outright as long as they are a registered Vietnam resident. However, if the Vietnamese residency is relinquished, the dwelling will automatically become state property - unless it is sold, donated, or bequeathed etc. within 90 days of departure.