Vietnam’s luxury property sector has been surprised by a rise in local Vietnamese buyers, filling the void left by the exodus of foreigners at the tail end of 2008.
Last year saw locals buy into the Hyatt Regency Residence and Ocean Villas in Danang or Sanctuary Ho Tram Resort in Ba Ria Vung Tau province where an apartment is priced at at least $180,000 and a villa up to $1.7 million.
Even more surprisingly is the fact that some analysts have linked this to the fact that Vietnamese citizens are hiding stacks of wealth in other investment vehicles including gold and securities, because the official average salary in Vietnam is just $1,100.
It is far more likely to be explained by the massive gap between rich and poor in Vietnam, the large proportion of society living in poverty, and the section of society that is becoming increasingly wealthy as leaders of industries like manufacturing, tourism, and banking.
1, 2, 3 or even 10 luxury developments seeing sales to a majority of local citizens is not enough to become a representation on the pictures the world has of a Vietnamese nation which is still a poor country by international standards.
That aside, of course the increasing number of sales to locals in the luxury sector can only be a good thing for the economy and the real estate sector. The reliance on foreigners will hopefully be a mistake never again made by developers, so an increase in sales to locals may mean that a luxury sector can still exist in Vietnam. It is also an indication that affluence is rising in the country, which contrary to the belief of some is still a good thing for a beleaguered nation such as Vietnam.
On the downside, Vietnam property became grossly overvalued, as it did in many other countries in Asia and around the world as foreign speculators drove markets crazy. In most places the exodus of foreign buyers has been a sobering experience for the market, especially the luxury sectors therein, such an increase in local demand in Vietnam’s local sector may prevent the market from being sufficiently corrected.
That being said, if there is such levels of foreign demand, maybe the market has already corrected far enough.
Photo credits: Vietnam Real Estate Blog