Red Hot Real Estate Market in Vietnam August 2, 2007 While the US is experiencing a housing slump and is getting worse by day, real estate market in Vietnam is red hot, especially after Vietnam's entry into the World Trade Organization (WTO). Combining a policy of economic liberalization and a stock market boom, in a decade, the country has tripled its income per capita to more than $US 700. Foreign direct investment (FDI) in 2007 could exceed $US 12 billions, about double that of 2005. With the growing number of FDI, the demands for office and retail spaces have surpassed the current supplies. Due to a shortage in available space, office rental rates are continuing to rise. Rental rates are so high, about $US 35-40 per square meter per month, in high-end office buildings in Hanoi and Ho Chi Minh City (Saigon). The influx of foreigners working in Hanoi and Ho Chi Minh City have push demand so strong that office rental will inevitably become a hurdle for many small and medium foreign businesses that want a present in Vietnam. Although the Vietnam stock market is a bit cooling in the past few months, the VN index was excessively hot in 2006 with an astonishing increase of 146%. As a result, the money made from the fast growth in the stock market in the last few years have been re-invested in more stable real estate market. In Ho Chi Minh City, with population of over 8 millions, there is a growing number of upper middle class. The increase of high-income households leads to more demand on higher living accommodations and entertainments and home prices are increasingly expensive. High-end real estate market is super-charging as the domestic demand for high-rise apartments and villas continues to grow. The prices of high-end condos/apartments have increased more than 50% in six months from October 2006 to March 2007, especially in District 1, 2, and 3 of Ho Chi Minh City. With growing population (85 millions, est. 2006) of which more than half are under 30, most low-income earners from this pool of young workers do not have enough money to buy a house or apartment. They are squeezed further due to the shortage of low-income housing and increasing demand for more rental units. The boom in real estate market is fired up by the explosion in tourism has changed the face of country in many ways. Vietnam had more than 3.5 millions international visitors in 2006, an increase of 3% over 2005. Vietnam is also considered one of exotic travel destinations. And with the arrival of budget airlines (AsiaAir, Jetstar and Tiger Airlines), tourism market is refreshingly brisk. As the result, in major urban centers such as capital Hanoi, Ho Chi Minh City, Vung Tau, Nha Trang and Da Nang, hundred of millions of US dollars are pouring to build office buildings, five-star resorts, entertainment and shopping centers to accommodate a fast growing number of international and domestic tourists. Despite the lack of transparency and over regulation, the Vietnam real estate market is one of the fastest growing markets in the region and is expected to continue to sizzle into next year.