Vietnam’s real estate transparency is the lowest in the Asia-Pacific region, and has not improved over the last two years, a report on 56 countries by the international property and money management firm Jones Lang LaSalle showed.
The country is at the bottom of the company’s 2006 Real Estate Transparency Index (RETI), which measures 56 countries and territories based on five attributes, including the availability of investment performance indices and market fundamentals data, listed vehicle financial disclosure and governance and regulatory and legal factors.
“Vietnam is a clear stand-out at the low end of the scale and continues to have substantial property rights issues, beleaguered information flow within the market and few regulations regarding public reporting,” the surveyors said.
Transparency improvements for the countries in Southeast Asia have been generally smaller than in the rest of Asia with Thailand, the Philippines and Vietnam not experiencing any meaningful improvement.
In comparison, the 2006 RETI actually suggests that Vietnam and the Philippines are slightly less transparent than two years ago.
Dang Hung Vo, deputy minister of Natural Resources and Environment, said the real estate market’s low transparency was due to a lack of a property registration system.
“For the real estate market to be transparent, the prerequisite is to have a public and clear property registration system on the net so that there will be nothing hidden. This system is what we are looking for,” said Vo.
The Property Registration Law is being built to create such a system but the draft has been turned down several times as opinion differs on whether the property owners should be required to register their ownership or transactions only.
Vo said 50 per cent of land and assets on land have not been granted use right and ownership certificates, indicating the lack of transparency.
He said there was an overlap of management of the real estate market without clear accountabilities, adding that land use planning was not of high quality and publicity.
Market observers estimate 70 per cent of housing and land transactions in the country are not registered with state agencies.
However, on a positive note, Jones Lang LaSalle said Vietnam is experiencing a resurgence of interest from multinational companies and this often works to promote transparency.
Another encouraging sign is the development of the Real Estate Trading Law, which is to take effect early next year. The law provides a legal framework for real estate investment, trading, brokerage, and market support services.
The law will also force property transactions to be conducted via real estate exchange to promote transparency.
Commercial real estate markets around the world have become increasingly transparent over the past two years and Australia, the US and New Zealand cited as most transparent real estate markets.
No. 773/August 7-13, 2006