Wednesday, July 09, 2008

Selling land for gold, not VND

07:34' 08/07/2008 (GMT+7)

VietNamNet Bridge – After a long period of quoting land prices in VND, landlords are now setting prices in gold instead of VND in order to avoid risks from the VND’s devaluation.

“Seeking buyers for a house of 42 sq m x 4 storeys at No 79 Cau Giay alley. Price VND1.65bil or 88 taels of gold”. Advertisement pieces like that can be seen in many local newspapers. Landlords now prefer making transactions in gold instead of VND for fear that the VND will further decrease in value, while the gold price keeps rising.

Statistics released by the Ministry of Planning and Investment show that the gold price has been increasing for the last few years. In2001-2007, the gold price increased by 2.52 times, or 14.1% a year. The figure proves to be much higher than the consumer price increase (1.54 times or 6.35% a year) and dollar price increase (1.11 times, or 1.55% a year).

Lam, who has sold his apartment at Trung Hoa-Nhan Chinh urban area, said that it is wiser to get gold for selling houses nowadays. After getting gold from the apartment sale, Lam made a deposit at a bank. Gold keeps rising in price and it seems to be free of inflation impacts.

A staff at Sacomreal, a real estate trading floor, said that there have been more transactions in gold recently, though it is too early to say a new tendency of making transactions in gold has begun.

According to Tran Huu Dang, a staff at Bao Tin Minh Chau Gold and Gemstone Company, gold is still considered the safest investment channel; therefore, it is understandable why people prefer VND to gold. Those who have assets in VND also want to convert the money into gold to protect their assets.

However, opinions still vary about the tendency of selling land for gold. Vu Minh, Director of a real estate firm on Khuat Duy Tien street in Hanoi, said that this is more seen in the south than in the north.

Nguyen Trung Vu, General Director of The Ky Moi Real Estate Company, said that no successful deal in which land and houses were sold for gold has been made at his company for seven years.

Vu said that it is quite complicated to quote prices and make transactions with payment in gold, and sometimes cause difficulties for both buyers and sellers. When the gold price increases, buyers hesitate to sell land, and when the gold price decreases, sellers do not want to sell land. Therefore, it is difficult for sellers and buyers to find common voices.

“I think that making transactions with payment in gold will become a trend. It will become more popular when the gold market is stable for a long time,” Vu said.