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.

Hanoi prices triple

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.

A spokesperson for Obelisk, commented: "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.