Earlier developers rushed to get as many condominium units onto the red hot HCMC market as possible, and output reached mammoth proportions. Attractive, low-priced condos in Ho Chi Minh City within a housing program launched by a group of two local property developers supplied 30,000 condos during the year.
The rapid uptake was fuelled by support from local banks and it proved a big boost to the local property market which had been enduring a comparatively stagnant period. 36-square-meter condos were going for around 175 to 190 million VND ($11,000 to $12,000) and were snapped up, largely by speculators. Higher-priced condos in the property market at that time were selling at 5 to 13 million VND ($316 to $822) per square metre also sold strongly and units leaped upwards in price. The pattern was repeated across the city with speculators able to rent out their otherwise empty units to foreigners who were not permitted by law to buy into property themselves. This meant the yield from renting in the city remained high. However, this restriction will be halted and both overseas Vietnamese and foreigners will be allowed to buy into condominium developments once they meet certain conditions.
The law states that foreign organisations and individuals are allowed to buy and own an apartment in a commercial housing development project and that foreign individuals can own an apartment for 50 years and extend ownership once for another 70 years. They must be backed up by documents that prove that they will stay in the country for a year or that they already have stayed for a year.
Each foreigner can own only one apartment at a time although foreign organisations can own an apartment for as long as the period specified in their investment license. Those eligible for the programme include individuals who invest directly in Vietnam or who are hired for management positions by local or foreign-invested companies. Foreigners who receive certificates of merit or medals from the president or government for their contribution to the country qualify as do those who work in socio-economic fields, hold a bachelor’s degree or higher and who possess special knowledge and skills “that Vietnam needs”. Foreigners married to Vietnamese residents can get involved as can foreign-invested enterprises operating in Vietnam that need to buy houses for employees.
The move, it is hoped, will come as a timely shot in the arm for the industry and a host of high-rise condo developments are rising out of the ground across the city to cater for the expected demand. However, there numbers are such that oversupply, in terms of developments geared specifically towards foreigners, is a possibility, especially when the difficult start to the year globally and the new capital gains taxes have turned off their share of potential customers. It could also leave thousands of speculators with units that they don’t intend to live in, without a pool of expatriates forced into the rental market.