Land price in poor Vietnam among world’s highest
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The media reported last week about the record price that a company paid for land at a prime site in Hanoi.
Times T&T Joint Stock Co agreed to pay VND47 billion (US$2.3 million) to five families jointly owning a 52-square-meter site at 22-24 Hang Bai Street.
Depending on their location in the building, each will get from VND200 million to VND500 million ($24,300) for every square meter.
Hanoi authorities approved the project in 2004 but the company was unable to get the land since the families asked for exorbitant prices of almost VND1 billion (US$48,780) per square meter.
The highest rate at which the deal was finally clinched is over 31 percent of the world’s priciest property now as ranked by Finance News magazine -- $78,200 a square meter on Hong Kong’s Severn Road.
However, the maximum official price for land in Hanoi, set by the city government at the beginning of this year, is VND81 million on Hang Ngang and Hang Dao Streets.
In Ho Chi Minh City, the 2011 price frame has around the same peak rate -- VND81 million in Dong Khoi, Le Loi, and Nguyen Hue in District 1.
How wealthy is Vietnam?
Vietnam’s GDP topped $100 billion for the first time last year, and per capita income was $1,168.
The International Monetary Fund ranked Vietnam 142nd out of 183 nations based on nominal GDP while the World Bank ranked it at 139th.
But in terms of purchasing power parity (PPP), the IMF ranked Vietnam 41st out of 184 nations with a GDP of $276.57 billion, and the bank, 43rd out of 178 nations.
But Vietnam’s income and housing price index is by far the highest in the world.
This is a major reason why most workers and civil servants find it difficult to own a house, the Department of Housing and Real Estate Management said.
Vietnam’s index is between 24.5 and 26.6 against 4.14 for East Asia, 2.21 for Africa, 6.25 for South Asia, Europe, the Middle East, and North America, and 2.38 for Latin America and the Caribbean.
The United Nations says an index of 3 to 4 is reasonable for a country’s residents.
Tong Van Nga, chairperson of the Vietnam Real Estate Association, told newswire Vietnamnet that many big investors and people with idle money had been flocking to Hanoi to buy land.
The head of a Hanoi-based real estate group told the newswire that prices in Hanoi were sky high because developers have to pay very high additional expenses.
Under current regulations, the cost of turning one square meter of agricultural land into urban land is VND14-16 million. Thus, real-estate firms have to sell at not less than VND20 million to earn a profit.
However, they sole at VND35-40 million, the executive said.
“If developers do not have to make under-the-table payoffs, prices in Hanoi will be 30-50 percent cheaper.”
Deputy Minister of Construction Nguyen Tran Nam said land prices in Hanoi, and in Vietnam in general, were unreasonably high.
Vietnam is a country whose income ranked 120th in the world while its real estate price ranked 20th, he said.
