“Foreigners who buy apartment will have usable time is 50 years on that apartment and have extension time 20 years more. If you hadn’t finished a period of 50 years and you sell your apartment to a Vietnamese individual, he or she will permanently own your apartment. And a Vietnamese individual buy apartment and in the period of 30 years and that individual sell apartment to foreigners, foreign individual will have a ownership right on that apartment in the period of 50 years. After that, foreigner sell it again to Vietnamese and Vietnamese individual will permanently own that apartment”
Above explanation is from the head of business department of one real estate agent and Fransis Kok, Singaporean who wants to buy a premium riverside apartment besides Saigon River after the fact that foreigners can buy and own a property in Vietnam from 1st of July, 2015. Francis said that he will immediately pay in cash worth VND 2.5 billion to buy 1 bedroom apartment of 50sqm on 19th floor he really loves it.
In calculation in Singapore currency (SGD), this apartment values SGD150.000 and this budget is just enough for him to deposit an apartment in surrounding area of Singapore. By schedule, this apartment will be finished in 2017 and have expected rental price at least $500 a month. In case he found that he can have return in this apartment, he will sell it to buy a bigger one in this area too.
But after finding information, asking question on forum and hearing information form some places during 3 days visiting Saigon (Ho Chi Minh City), Francis set decision to postpone buying that apartment. He smells that something is not clear and he explained that a period 50 years of ownership than have an extension 20 years more and he is not sure about if he could have 20 years more. Fransis thought that if Vietnam Government should issue a fair law for foreigner to buy property in Vietnam. Like in Singapore, the government will have an extra money at the initial period with foreigner but after that, foreigner is the same shoe with the local one. In fact, in Singapore, there are many kind of ownership on property such as 30 to 50 years of ownership of industrial properties, 99 years of ownership on government-built apartment, private apartment or condominium (premium apartment, 999 years ownership and permanent ownership (freehold).
The Sun Avenue Apartment in District 2As the rational thinking, which apartment has a longer period of ownership will have a higher price. Following the law of Singapore, foreigners are not allowed to buy a land include the house and only allowed to buy apartment. Frasis said that his 120sqm apartment that was built in 1995 has only 75 years more to own then it will be handle back to Singapore government without extension.
Period of 50 years is a long period in compare with a lifetime of human beings and with a project of apartment. If we calculate that without inflation, bank interest, transaction fee, rental of Francis’s apartment in Vietnam is SGD5.000, Francis will reach to a breakeven after 30 years.
Along with me on the way back to Singapore on Tan Son Nhat International terminal, Francis frankly told me that the reason he still doesn’t want to buy property now is not only on the reason of 50 years of ownership but also the reason of living environment on the point of fair and freedom.
And in my opinion, the question raised that who foreigners will come to rent Francis’s apartment while the apartment market is in the status over supplying and most of Vietnamese likes house with land under and apartment is an investment to have rental return every month.
Literatured by Saigon Investment