Thirty-year-old construction engineer Cao Xuan Lam has never imaged he could easily earn so much money after only one year of engaging in realty business in Vietnam's Hanoi capital.
In the country with annual per capita income of over 800 U.S. dollars, Lam, previously owning two apartments in western-style blocks, has just made a profit of nearly 50,000 U.S. dollars from selling one.
"Nothing can bring about huge benefits like real estate trade. So, I have spent all my savings and loans from relatives and banks investing in it," he said while scrubbing his newly-bought apartment's white-washed wall.
Like Lam, many speculators in Vietnam enjoy their newly-found wealth from a real estate bonanza that has doubled urban property prices over the past year. They are willing to even buy apartments or villas yet to be built.
Recently, hundreds of people in southern economic hub, Ho Chi Minh City, have queued since mid-night to try to buy flats on a site where the developer has not start any construction yet.
At real estate trading floors, supply can not match demand. Apartments or villas with prices of 1,500-2,500 U.S. dollars per square meter attract most of customers.
Catching lucrative business opportunities from the booming market, a number of local people who have earned a lot of money from the domestic bourse have invested in the property field.
"Real estate investment is safer and easier to recoup capital," said 30-year-old freelancer Nguyen Duc Long. He is seeking property business opportunities, after steering clear of the stock market, which has seen a downturn in 2007 compared with its most prosperous time in 2006.
Besides, the country's high inflation rate this year has made banking interests less attractive, leading to the fact that some people have withdrawn their deposits to pour money into the real estate market. This has also helped push up property prices.
The boom has also been driven partly by a fast-growing flow of foreign direct investment in the country, which reached the biggest-ever level at over 15 billion U.S. dollars in the first 11months of this year.
In addition, policy of allowing overseas Vietnamese to buy houses in the country, the stronger migration of people from rural areas to urban ones, and the clearer legal corridor for the real estate market have contributed to the increasing property purchasing power.
However, the property fever is a result of speculation, and loose state management, according to some local experts.
To cool the bonanza, the Vietnamese government has instructed the Construction Ministry to draft an instruction on preventing property speculation to make the market more transparent.
The draft will focus on adjusting tax policies and ensuring balance of supply and demand, said Nguyen Manh Ha, head of the ministry's Housing Management Department.
The country will issue a realty ownership tax policy, under which those owning many properties, or trading them many times, will be subjects of the accumulative taxes, he said, adding that speculators will also be taxed.
Besides, the country will mobilize more investment sources, including both central and local state budgets, and official development assistance (ODA) for housing development to gradually adjust the market, he said.
According to Vietnam's Urban Development Strategy, the 84-million population country will have to annually build additional 35 million square meters, aiming to fulfill the target of increasing the average urban housing acreage per head to 20 square meters in 2020 from current 10.4 square meters.
Vietnam's urban land acreage is expected to rise to 460,000 hectares in 2020 from current 105,000 hectares. Its urban dwellers are expected to surge to 46 million in 2025 from current 23 million.
Source: Xinhua
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