Tuesday, January 15, 2008

xpats not immune to Vietnam property price fever

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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.

The Financial Times covers the situation in a recent report entitled “Vietnam housing costs go through the roof” by Amy Kazmin.

According to the article, not so long ago a foreigner could rent a house with a backyard and a swimming pool in downtown Ho Chi Minh City for about $2,000 a month.

Those good old days have gone.

Just recently, a foreign business-man found an apartment in the city after a three-month search.

He signed a three-year rent contract and was preparing to move in when the landlord told him he wanted to cancel the deal.

It turned out that someone else was willing to pay twice the price to rent the house.

The poor foreigner was lucky enough to finally secure the apartment by agreeing to increase his rent by half.

The story reflected vividly the shortage of housing for high-income foreigners.

According to local real estate agents, the high rent in Vietnam would be a shock to anyone who thought he or she could afford a luxury place here.

Vietnam’s booming economy has lured an increasing number of foreigners to the country, creating a high demand for housing.

Meanwhile, according to statistics from CB Richard Ellis (CBRE) real estate agency, HCMC has nearly 400 apartment buildings for rent, 97 percent of which were occupied even though rent soared by 12 percent to 20 percent between late 2006 to mid-2007.

Villas in big cities have enjoyed rent rises by up to 15 percent every year.

Property prices in Vietnam are, in fact, on a par with those in Bangkok and Kuala Lumpur.

The rent rise has discouraged investors.

The Financial Times report quoted Fred Burke from the Baker & McKenzie law firm as saying that housing became a big concern to investors - and law firms - who wanted to transfer staff to Vietnam.

The problem hit not only the newcomers, the report said.

Richard Leech, CBRE executive director, had recently had to move out of his rented house.

His landlord had sold it to another person who wanted to double the rent.

By Thuc Minh