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Wednesday, January 23, 2008

Expats Not Immune to Vietnam Property Price Fever

THIS STORY WAS RECENTLY PUBLISHED ON THAN NIEN NEWS: "Vietnam's property price fever is infecting not only locals and the national media. It's getting foreigners and overseas media hot and bothered as well. Singapore-based The Straits Times ran a report in November headlined Vietnamese feel the pinch of red-hot home prices. Roger Mitton, the correspondent in Hanoi, tells a story of physician Nguyen Thu Huong who lives with her husband and daughter in a small suburban apartment in Hanoi.

"Huong has to pay US$60 a month rent, which is half of her monthly salary, for the 35-year-old apartment.

"In another story, Tran Minh Phuong, 23, an accountant at a toy-making company in Ho Chi Minh City (HCMC) says she earns VND1.8 million ($113) a month and has to pay a third of that in rent for her little one-room apartment.

"They all dream of owning their own apartments but with property price sky-rocketing that is simply impossible.

"Not only locals but about 81,000 expats in Vietnam have also suffered from soaring rents and greedy landlords, even though their income is much higher..."

(For full story click here.

As Lonely Planet were saying way back in the early 1990s, Ho Chi Minh is an expensive city to rent or buy property in. According to one source I have encountered on the Internet, "In Ho Chi Minh City, renting an apartment can be difficult. Conditions are squalid and prices are high. Privacy is hard to come by and neighbors are often nosey. Having said that, once you are in town and have built up some contacts, the people are helpful and will do their best to make you feel at home." Elaborating further, another source reported that: "A lot of rooms, equipped or not, are for rent. Comfort will be just ok but at that price you can expect a clean place. Most of the time, you won't have air conditioning but a fan. For a minimum of 350$/month (sic) you can get a central address. Ideal to feel really at home, alone or with one's family, you will have the choice between two kinds of place: Vietnamese architecture with long house or more recent house/Occidental style house. Central address for an apartment is at least 800$/month and 1000$/month for a house. Again, make sure that the people who rent you the place have the legal paper to do it."

Never forget the importance of having "the legal paper" to do anything in Vietnam!

It is not just residential properties which are expensive as well -- commercial properties are also hitting statospheric prices. According to The Guardian newspaper in Britain: "The hundreds of bustling market stalls that make up Ho Chi Minh City's Ben Thanh market could not be more different from the sparkling shopfronts of Rodeo Drive in Beverly Hills or London's Bond Street. But data released by the tax office in Vietnam's commercial centre shows that shop space in the 147-year-old market is changing hands for probably more than anywhere else on the planet.

"Prices in Ben Thanh have jumped about 40% in the past two years to 230 taels of gold, or �91,000, a square metre, Reuters said yesterday.

"The prices even eclipse Tokyo's Ginza shopping district, long-reputed to be the world's priciest shopping district, where retail space sells for �69,000 per square metre. And this despite an average annual salary in Vietnam of �338."

In the mid-1990s, Ho Chi Minh City (formerly Saigon) enjoyed a heyday as an Asian Tiger. It hoped to become the next Singapore, as the abundance of skyscrapers built during that time can attest. Although it took a beating with the crash of 1997, it didn't completely collapse, and these days the city is back in action. Construction/project management is big business, ranging from hotels and resorts to planned residential communities and factories. Interviewed in Britain's The Telegraph newspaper, "There are a good selection of internationally managed apartment blocks in Ho Chi Minh City as well as long term rates available at almost all of the hotels. If you are planning on being here for a long time and you have a family then it would be worthwhile renting a house. Prices range from 250 GBP to 1500 GBP per month. Most expats live in District 2 which is only five minutes away from District 1..."

It has been said that elderly Japanese are contemplating retirement in Vietnam beecause the cost of living is so low there. It is true that a bowl of pho can cost you something like a couple of cents -- ditto for the other necessities of life. That said, real estate prices in Vietnam remain higher than comparable properties in Thailand. Visiting Vietnam in 2005 after an absence of 30 years, writer Tuan wrote: "At present what is known as the property fever is raging, houses are very expensive because big enterprises and rich individuals have bought everything. Prices have risen by at least 80 per cent over the last year. Everything is more expensive than in Paris or New York."

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