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As recently as three years ago, foreigners were buying most of the beachfront properties in Vietnam, planning to use them as vacation homes or long-term investments.

But now Vietnamese outnumber foreign buyers four to one, says Marc Townsend, managing director of the CB Richard Ellis real estate agency in Vietnam.

“It’s interesting how the Vietnamese property market is localizing so quickly,” Mr. Townsend said. “Throughout Asia, a lot of projects have been dropped or put on hold, but there is still a lot of construction going on in Vietnam right now.

“The rich Vietnamese are the ones buying a second home, the same way a lot of Asian families were aspiring to buy in Phuket or Langkawi a few years ago.”

For example, Vietnamese account for about 55 of the 80 sales that have occurred since the Hyatt Regency Danang Residences debuted in late May, said Michael Piro, a sales and marketing director at Indochina Land, the project’s developer.

The project, scheduled to be completed in 2011, is to have 202 villas and condominiums. By comparison, foreigners in 2006 bought all of the 40 villa residences at the Nam Hai in nearby Hoi An, another Indochina Land project.

Mr. Townsend said the Hyatt Regency Danang Residence might be interesting to local buyers because many units are smaller, and more affordable, than some of the high-end developments put on the market recently.

The 75-square-meter, or 807-square-foot, one-bedroom apartments are selling for an average of $180,000. (Most top-end real estate in Vietnam is valued in U.S. dollars.)

Andrew Brown, who heads the Vietnam offices of the Jones Lang LaSalle real estate company, said the recent shift in buying power partly is due to fewer foreign buyers, who are either holding tight in the current environment or turning to more established and transparent markets.

But, he added, it also reflected the increasing availability of local financing to local investors — and the fact that the basic interest rate has dropped to 7 percent from 14 percent in October 2008.

Last year, financing all but dried up when the government told commercial banks to stop lending as a way to contain rampant inflation.

The shift in buying power is taking place at a time when the Vietnamese government has started to make some slight changes to its restrictions on foreign property purchases.

Last year a pilot plan was announced that would allow foreign organizations and individuals working in Vietnam to buy one residential apartment freehold; it was not implemented until June.

Prospective buyers who do not live in Vietnam still are limited to 70-year leaseholds on condominiums, with an option to renew for another 70 years. Foreigners also can lease land for 50 years to build a home, but they have no title rights.

The looser limits on foreign buyers will help Vietnam stay competitive with its neighbors and maintain its position as a growth market, Mr. Brown said.

The country’s property market enjoyed a boom from 2006 to early 2008, with prices rising in some cases by as much as 50 percent in the mid- to high-end residential sector in Ho Chi Min City, Mr. Brown said.

“The market did get ahead of itself, as it did in most parts of the world, but much of this rise was due to pure speculation. It wasn’t the true market,” he explained. “Now we’ve fallen back quite considerably to the levels of 2007, but I think the market has now reached a point of stabilization.”

Source: The New York Times

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