Get set - the big land grab is on

But not for rice or meat purchase, a common image in the early 1980s when the economy was subsidised by the Soviet Union and goods were scarce.
These people were hoping to win a lucky draw that would allow them to purchase an apartment at Green View, a new project by Phu My Hung Corporation in the south of the city. It was an unusual scene considering Vietnam’s annual per capita income is $740 and a Green View apartment costs around $200,000 on average.
But no matter in a property market that is expanding rapidly, drawing even the least-likely of potential owners. Only 42 lucky people would become new residents of Phu My Hung, a high-profile developer that has sold more than 6,000 housing units over the last few years.
Phu My Hung International marketing director Alpha Cheng said at the recent Euromoney conference that the company initially expected to sell villas to foreigners but that most buyers were instead Vietnamese.
It stands as an indication of the real purchasing power of Vietnamese in their new market-based economy. While much of the population is still living on agriculture, urban residents are quickly getting richer on the back of high economic growth, fast-expanding foreign investment and foreign remittance of some $4 billion per year.
The stock market, which grew 134 per cent last year, also creates an impetus for those daring enough to get in to own a house. Lacklustre performance since the end of March is pushing investors into the real estate market.
The economy is expected to continue at the current 8 per cent growth rate for the next few years, creating more potential buyers for real estate. These nouveaux riche are snapping up luxury apartments and villas in major cities.
Keppel Land-developed Villa Riviera has sold out all 101 of its villas on the banks of the Saigon River at prices of at least $400,000 and buyers have registered to buy all 256 units of V-Star, launched recently at prices of $72,000 to $105,000 each.
To capitalise on rising buyer interest, Bitexco last week launched a new condominium project aiming at clients who have earned considerably on the stock market. The company is selling 20 apartments in the Manor Hanoi at prices of at least $2,000 per square metre.
Bitexco deputy director Le Phuong My Linh said buyers had shown strong interest since the beginning of the year and most were in the 30 to 40 age bracket.
“We have sold all of the apartments at the Manor Hanoi that have prices between $150,000 to $300,000. Only 20 luxury apartments, penthouses and villas are available for sales at $400,000 to $1.25 million,” said Linh.
Housing transactions have been active over the last few months after two years of lacklustre performance. Prices for Saigon Pearl, the Manor, Horizon Tower, and Hung Vuong Plaza have increased 30 to 50 per cent since the end of last year. Prices in several areas of Ho Chi Minh City have also doubled within the first three months of 2007.
Van Phat Hung has also sold all 482 units of Phu My Condominiums within three months and prices have doubled to $1,250 per square metre.
However, Minister of Natural Resources and Environment Mai Ai Truc, denied that Vietnam currently had a case of ‘land fever’, saying prices were increasing only in several areas of Hanoi and Ho Chi Minh City.
“I do not think there will be another land fever as it happened between 2000 and 2002 because a legal framework is now in force to prevent land speculation,” said Truc.
He argued that strong buyer interest had driven prices up.
“People tend to buy when prices have a tendency to go up because they fear prices will continue rising. That will eventually push up prices,” said Truc.
He also pointed out that housing supply was not adequate to meet demand. The number of apartments and villas launched over the past year remains modest while demand is growing. Yet supply will increase significantly when new development such as the $314 million Tay Ho Tay in Hanoi and the $130 million Saigon Sports City come on the market this year.