Mr Nam told reporters that the prices of prime real estate in Ho Chi Minh City are the highest in the country at just under US$5,000 per square metre, well below the going rate in Jakarta or Bangkok.
Since the laws related to foreign ownership were changed in 2016, foreign purchases have increased but there hasn’t been anything close to what could be described as a buying frenzy.
In fact, the Ho Chi Minh Real Estate Association reports the number of foreigners buying property is only a tiny fraction of the number of the estimated 45,000 foreigners residing in the city.
Matthew Koziora, director of transactions at VinaCapital Real Estate said they have experienced a small bump in sales since the ownership rules were loosened, primarily by wealthy foreigners buying vacation homes and second residences.
A luxury four or five bedroom home on an 800- to 1,000-square-metre-plot in the coastal regions of Danang, Hoi An, Phuc Quoc and Nha Trang runs about US$1 million to US$2 million, which is relatively inexpensive compared to other regional markets.
Most of the buyers come from Hong Kong, Taiwan, the Republic of Korea, Japan or Singapore, said Koziora.
High mortgage rates have kept sales in check and less than they otherwise might have been if rates were lower.
Currently rates are running around 9-10% compounded monthly, which means the effective annual rate is higher. Most foreign buyers don’t bother to get one, and instead collateralize their existing homes to secure more amenable financing in their native country.
Or in some cases they just pay cash and buy the property straight out.
The lack of transparent guidance on how the money from a future sale of the property can leave the country is also a sticking point holding back sales to foreigners, noted Koziora.
In other words, Koziora is saying that there needs to be clear laws and regulations passed and put in operation that clarify specifically how the proceeds from the sale of property in Vietnam owned by a foreigner can be repatriated to the foreigner’s native county upon its sale.
There is a considerable amount of contradictory (and in many cases just plain wrong) advice being tossed about between government officials, lawyers and real estate professionals, he added, which isn’t beneficial to the market.
The new rules limit foreigners to owning no more than 30% of the units in a building and no more than 10% of total units within any one specific project, Koziora pointed out.
This means that if a building has 10 units and three of them are already owned separately by unrelated foreigners, then a fourth foreigner would be precluded from purchasing a unit in that building.
He said the only project he was aware of that touched the limit in Ho Chi Minh City was Nassim, a 238- unit luxury condo project that won’t be completed until the end of 2017. The project is a joint venture between Vietnamese based Son Kim Land and Hongkong Land.
So, to be clear, the 30% limit applies to all foreign ownership in a building and the rules are applied at the aggregate level and not on foreigners on an individual by individual basis.
The real estate market in southeast Asian and Vietnam is high risk, just like it is most places around the world, said Koziora. Asia is an anything can happen kind of place, but in his view, the market is humming along on a sound and sustainable footing for now.