Vietnam: A Property Market

Hoang is a successful manager of a foreign company who lives with his wife in a modest apartment in the capital of Vietnam, Hanoi. Five years ago, he bought a second apartment in an “expat” residential area for $100,000.

Loans from commercial banks were almost unavailable, so he used all his savings and borrowed from friends and relatives to pay the entire amount upfront in four installments. Hoang has been renting the apartment to a Japanese executive since then. At present, Hoang’s apartment is worth three times more. He is confident that he could easily sell it for more than $300,000 now, if he would.

Hundreds of construction sites are mushrooming in Hanoi. The real estate market is booming. Middle-class and new riches nationwide pour money in real estate, considering it the safest haven for their personal savings. New apartment complexes, hotels and storehouses are changing the city’s landscape. Last week, the Hanoi People’s Committee gave green light to three new five-star hotel projects. The construction delirium has brought hundreds of young people from the countryside to work on the scaffold. Their remittances are already a critical resource for their impoverished provinces of origin.

Some observers of the local economy are concerned by the soaring prices of new houses and the effervescence of the real estate market in Hanoi. They think that these are the symptoms of a bubble. But Hoang, like many Vietnamese, has complete faith in his new El Dorado. He believes that this upward trend will continue and he is waiting for the appropriate moment to sell his property and buy another one.

Doing Business 2008 ranks Vietnam #38 in world on the ease of registering property. This is the highest rank for Vietnam among the ten Doing Business topics.