News: Vietnam property market soaring

Tue, 27 Nov 07

Vietnam’s property prices have risen exponentially since the beginning of 2007 fuelled by investors shunning the stock markets in favour of the more gainful property investment market...

Policy makers and economists are now pushing for the new legislation in a bid to avoid a bubble and sustain the country’s high growth rates, for many years to come.

50% property price increases since the beginning of 2007 have prompted a preliminary draft of new laws to curb bulk buying and create a sustainable market for property in Vietnam.

Annual tax

The draft proposal details measures to impose an annual tax on owners who have acquired more than one property, however, the law would not come into effect until 2010. At present only transfer taxes are payable on the sale of a property, but most sales are paid in cash making it difficult for the government to gage volumes and collect on capital gains tax.

Property agents remarked that the government plan allowing both Vietnamese living overseas and foreign investors to own freehold property has accelerated the rush to purchase real estate for future resale and thus affected prices.

Currently, scores of investors are queuing overnight to join the immense competition for off-plan property apartments, and property news has shown hundreds of buyers camping outside Singapore’s CapitaLand to pay deposits for a newly released project.

Prices have tripled in the last year

Nguyen Xuan Dao, chief executive of property developer Vietnam Property Inc. commented, "In some areas in Hanoi and Ho Chi Min City (HCMC), especially in the luxury condominium sector, prices have tripled in the past year alone,"

Dao commented that local real estate companies reported projects in Hanoi and HCMC had sold out prior to completion with developer PT Ciputra Development Tbk, now selling apartments for US$240,000, as opposed to US$80,000 in the previous year.

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