market-oriented policies, domestic investment
in the real estate sector rose quickly. In
large part, the investment boom was fuelled
by speculators and the lack of alternative
investment options. Over that period, new
construction boomed in both urban and
coastal areas.
Then in 2008, the global economic crisis, plus a
downturn in Vietnam’s own economy, caused
a sharp drop in real estate investment. High
inflation and other macroeconomic problems
contributed to the malaise. Borrowers
defaulted on loans, most notably those
linked to real estate, and banks consequently
curtailed lending. Property was no longer an
attractive investment and supply far exceeded
demand. The real estate market froze.
Now, however, there are strong indications
that the property market has turned a corner.
Inflation has been tamed, and the bad debts
that permeate the banking system are being
slowly addressed. Prices have fallen from
their heights to more reasonable levels as
speculation was tamed.
Now major new developments are planned,
including a USD2.5 billion residential and hotel
project on the south-central coast. As well,
individual villa sales have increased markedly
in the resort area of Da Nang, according to a
January report in The Wall Street Journal.
Legal Framework for
Foreign Purchasers
A key fact non-residents must be aware of in
Vietnam is that expats are prohibited from
owning land. All land belongs to the people
and is administered by the state. As such, land
is allocated or leased to land users. For foreign
individual buyers, residential property can
only be leased (albeit on a long-term basis of
50 years) instead of owned outright. Indeed,
until a few years ago, foreigners were generally
prohibited from purchasing residential
property in Vietnam altogether.
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