Buying guide: Vietnam

It is only recently that foreigners were granted the right to own property here and, while the procedure can still prove laborious, there is much to be gained from sticking with it. So from sky-high apartments in Hanoi’s vibrant centre, to the cooling calm of Phu Quoc Island, Vietnam’s certainly worth considering if you’re hunting for property gold.

Country Overview
Full name: The Socialist Republic of Vietnam
Population: 89.5 million (Source: CIA)
Currency: Vietnamese Dong (VND)
Capital city: Hanoi
Major cities: Hue, Danang, Nha Trang, Dalat and Ho Chi Minh City
Languages: Vietnamese (official native language), English, French, Chinese, and Khmer

Climate
Vietnam’s climate varies greatly from one region to another as it is located in both a tropical and temperate zone. Largely it is characterised by strong monsoon influences, but has plenty of sunshine and rainfall, as well as high humidity. Areas located close to the tropics and the country’s mountainous regions tend to have a more temperate climate with few extreme but generally changeable conditions.

Location
Vietnam is in south-eastern Asia, and borders the Gulf of Thailand, the Gulf of Tonkin, and the South China Sea. It is just along the coast from China, Laos and Cambodia.

Economy
Inflation rate (consumer prices: 11.1 percent (2010 est.)

GDP (official exchange rate): $102 billion (2009 est.)

GDP (purchasing power parity): $278.1 billion (2010 est.)

GDP (real) growth rate: 6.8 percent (2010 est.)

As a densely-populated country still recovering from the ravages of war, Vietnam is still classed as developing. While the country’s authorities have reasserted their pledge to bring economic liberalisation and international integration, the economy remains in a phase of reassessment with inflation and interest rate pressures. Meanwhile, the country is fighting unemployment at a national level, and struggles to meet the challenges of a labour force that is increasing annually at a rate of over one million.

Advancements are already being felt. Vietnam joined the WTO in 2007 following 10 years of negotiations, giving it more weight on the international market and encouraging domestic reform. The shift towards a more market-oriented economic model has certainly enhanced the quality of life for many Vietnamese.

Property facts

Restrictions
It is only recently that setting up home in Vietnam has become easier for foreigners, as in the past you would have been required to set up a company first.

Today the rules have been changed to allow ownership of apartments in certain, designated areas via renewable leases that provide usage rights for a minimum of 50 years. Additionally, you will still only be allowed to own one property and this can only be re-sold after a minimum of 12 months.

Applying for residency can be a trying process that can take a while, and you will also be required to have a visa.

Forms of ownership
Foreigners cannot own property freehold, but must work through the country’s lease system – which is for 50 years initially, and can be extended indefinitely after that.

Apartments are your easiest bet, and can be bought within approved apartment complexes. Aside from that, foreign residents can purchase a house, but will still lease the land from the government. You could also purchase property by forming a joint-venture company with a local partner, a wholly foreign-owned company, a Build, Operate and Transfer (BOT) company or one of its variants.

How safe is it?
While violent crimes against foreigners in Vietnam remain rare, it is important to be aware of your surroundings at all times. Pickpocketing is rife in the larger towns, markets and nightclubs, as well as on the most popular beaches. It is also best to avoid arguments with locals, who can be aggressive when confronted. The Vietnamese are fiercely traditional and will thank you for adhering to their traditions and practices, and can be easily offended if you don’t.

Meanwhile, corruption is considered to be a big problem in Vietnam and it is vital to be wary of possible scams. Appointing a recommended, English-speaking lawyer is a must before you choose to sign any contracts or hand over any money.

Finally, consider any health concerns too. Tropical diseases, such as malaria and dengue fever, are endemic to rural Vietnam. While you will be considered ‘safer’ in the big cities, it is always best to carry insect repellent.

Mortgages
The idea of foreigners securing mortgages from Vietnamese banks is still quite new, but it can happen. Typically you will only be allowed to borrow a maximum of 60 percent of the property’s value, and will have to repay it within 15 years – although some lenders are now stretching that to 30. International banks operating in Vietnam include HSBC, ANZ Bank, DBS Bank and OCBC Bank.

As with most other countries, the amount you borrow will be proportionate to the amount you earn and cannot exceed 75 percent of your income. A cap of 10.2 percent per annum has been placed on in order to protect the borrower.

It is, however, vital to bear in mind the fact that all property transactions in Vietnam are carried out in pure gold, which can suddenly make it all more expensive. You will need to keep a close eye on the cost of metals so as to determine the best time to buy.

Since foreigners have been allowed to purchase property, the Vietnamese real estate market has exploded with a variety of purposely-built developments. Specialist realtors will be able to showcase these properties until you have found the right one, and you will then be required to sign a reservation agreement with the vendor, as well as to pay a deposit.
In the weeks that follow, your notary, lawyer or property conveyor will need to check that certain paperwork is in place, including proof of the seller’s identity, the property’s planning permission and assurance that the project will be completed (for off plan developments).

Once the above has been carried out to your satisfaction, the contract can be exchanged and the first payment to the developer made. Finally, you will be given the property’s Land Use Rights Certificate, guaranteeing the rights over the land as well as the description of the property attached to it.

Choosing an area
From city blocks to beachfront villas, there are plenty of diverse spaces to explore across Vietnam.

The majority of Vietnam’s population still lives in the countryside, while it is the country’s most developed cities, like Hanoi and Ho Chi Minh, which have attracted most foreign attention. Both of these regions are now home to millions of residents, and sprawling cosmopolitan developments have become the order of the day. Additionally, somewhere between the two, sits Da Nang, which while very up-and-coming, still retains and air of traditional charm and plenty of unspoilt spots to explore.

But while these cities make sense for business investors, most would-be purchasers want to make the most of the country’s beautiful beach resorts and more rural locations. The majority of the resorts currently in development are on Vietnam’s southern coast, including Vung Tau and Phu Quoc.

Viewings
While the most popular property choice for foreigners living in Vietnam is an apartment located within specially approved developments, you don’t have to limit yourself. There are all sorts of properties available, from beachfront villas to more traditional homes that you can design and build yourself.

Vietnam has numerous internationally recognised real estate firms, and each will happily guide you through the process of viewing and selecting your ideal home.

Legal representation
It is essential to appoint an independent, Vietnamese and English-speaking lawyer to review all contracts that are to be signed. You local embassy will be
able to provide impartial advice, as well as a list of trusted professionals.

Taxes
You will have to pay property tax when purchasing or selling a property in Vietnam. Property taxes include value added tax, land use right fees, income tax, withholding tax and capital gains

Area Guide

Hanoi
Hanoi, Vietnam’s capital, lies on the banks of the Red River, some 100km from its mouth. It is very much the country’s heart and soul – and it’s not difficult to understand why people quickly fall head over heels for its diverse charm.

There’s a lot to see and do here, with a 1000-year history that includes the charming Old Quarter. There is no denying that it’s busy, complete with lanes of manic cars, bikes and scooters, but the aura is fascinating, with street vendors and affable locals. Lakes, parks, shady boulevards and more than 600 temples and pagodas add to the city’s appeal.

The architecture here is also interesting. Vast parts of present-day Hanoi were built during the French colonial occupation, and that relationship is still almost palpable – you’re just as likely to happen across a vendor selling fresh baguettes, as you are one selling rice or noodles. Meanwhile, there’s plenty to keep night owls happy, with bars and nightclubs open till the early hours.

Ho Chi Minh City
As Vietnam’s business and financial hub, Ho Chi Minh City is buzzing. Having been ravaged by the Vietnam War, the region has recovered to become a centre for excellence and millions of tourists flock here every year to revel in the myriad of activities and historic sites on offer.

While it is certainly one of the fastest growing cities in the region, it has managed to hang on to much of its traditional charm. It is divided into 19 districts, each with their own distinct nuances. District 1, for instance, is the place to find centuries-old buildings, umpteen hip hangouts, and the famous Pham Lao quarter. Meanwhile, Chinatown in District 6 boasts the largest Chinese community in the country.

It is probably the stark contrast between the old and the new that makes the region a very exciting place to be. The property market reflects that, with a huge variety on offer including modern apartments within the popular downtown Sailing Tower, and classic French-style villas in beautiful An Phu.

Da Nang
Previously occupied by both the French and the Americans, Da Nang marks the halfway point between Hanoi in the north and Ho Chi Minh City in the south. As a major port city on Vietnam’s south central coast, it is regarded to be the country’s regional commercial and education centre.

Located within just 100km of several UNESCO World Heritage Sites, including the Old Town of Hoi An, and the My Son ruins, it is listed as a first class city and has a substantially higher urbanisation ratio than many of Vietnam’s other regions. Meanwhile, aside from its bustling shopping districts and many historical sites, it is popular for its proximity to the well-known China Beach, Lang Co Beach, Hoi An and My Son.

As a result, the local economy has long been fuelled by tourism. More recently, it has also seen a boom thanks to the new beachfront developments that are successfully attracting foreign investment. Transport to this region is organised and modern, with daily flights to airports across the country.

Phu Quoc
It is only very recently that foreigners have been allowed to purchase property on this island paradise set in the turquoise waters of the Gulf of Thailand. Now special developments are being built along the white-sand coast, all boasting the best in luxury facilities, and the area is certainly on the up-and-coming list for both travellers and would-be property buyers.

As a region Phu Quoc has plenty to offer. Life on the Island is very traditional, with plenty of markets and remote spots to explore. It is particularly popular with nature buffs, as the untouched environment, virgin forest, offshore coral gardens and excellent scuba-diving opportunities ensure there’s plenty to discover.

Phu Quoc is a 50 minute flight from Ho Chi Minh City and daily flights are available